The International Monetary Fund (IMF) staff and the Ukrainian authorities have reached staff level agreement (SLA) on the Seventh Review of the four-year Extended Fund Facility (EFF) Arrangement worth $15.5 billion, which subject to approval by the IMF Executive Board, paves the way for the eighth tranche of about $400 million (SDR 300 million), bringing the total disbursements under the program to $10.1 billion.

"Program performance remains strong. All end-December quantitative performance criteria (QPCs) have been met and understandings were reached on a set of policies and reforms to sustain macroeconomic stability," the IMF said in a press release on its website, following the work of the mission, which has been working in Kyiv and Warsaw since February 20.

According to it, the structural reform agenda continues to progress: seven structural milestones have been achieved, another one has been implemented late, and firm commitments have been recorded to advance other key reforms.

It was previously expected that Ukraine would receive $917.5 million based on the results of the seventh review.

"Reflecting a revised profile of balance of payments needs in 2025, Ukraine has requested to rephase access under its EFF program, shifting IMF financing to future reviews while the overall size of the program remains unchanged.

"Taking into account the current balance of payments needs, the Ukrainian side has asked the mission to change the structure of payments under the EFF program, transferring funding to future reviews," said Governor of the National Bank of Ukraine (NBU) Andriy Pyshnyy, commenting on the reason for the reduction in the volume of the tranche following the results of the seventh review.

He assured that the total size of the program remains unchanged - $15.5 billion.

“The 2025 budget targets a deficit (excluding grants) of 19.6% of GDP and remains the anchor for fiscal policy this year. It incorporates the additional revenue derived from the increase in tobacco excise taxes and enactment of this tax policy change is a requirement for completion of the review. Financing the large fiscal deficit will require significant and timely external support, notably from the G7’s ERA initiative, to support macroeconomic stability. Responding to high budget risks will require preparedness with offsetting measures; in particular broad-based, durable, and efficient revenue measures and accelerated implementation of Ukraine’s National Revenue Strategy (NRS)," the IMF said.

"Restoring medium-term fiscal sustainability requires determined implementation of reforms to mobilize domestic revenues, tackle tax evasion and avoidance, and improve the investment climate. Tax policy reforms need also to be coupled with improvements in tax administration with continued reforms to the State Customs Service (SCS) and State Tax Service (STS). Restoring debt sustainability hinges on this revenue-based fiscal adjustment and continued implementation of the authorities’ debt restructuring strategy (where completing the treatment of the GDP warrants remains important). The upcoming 2026-2028 budget declaration that is to be submitted to parliament in June will be an important opportunity to provide both the context and strategic objectives of the medium-term fiscal strategy," said the report.

“Given the risks from rising inflation, the recent increases in the policy rate by the NBU are appropriate. Further action would be warranted if inflation accelerates further or inflation expectations deteriorate. The exchange rate should increasingly act as a shock absorber. Maintaining adequate reserves is a priority, particularly in view of risks to the outlook," the fund added.

“The independence, competence, and credibility of anti-corruption and judicial institutions should continue to be enhanced. Parliamentary adoption this week of the law establishing the High Administrative Court, a benchmark under the program, is a landmark step in this direction. Swift enactment of the law would pave the way for prompt establishment of the court. Effective public investment management (PIM) is critical for post-war recovery, reconstruction, and growth against a backdrop of limited fiscal space and tough demographic realities. To tackle these challenges, the government of Ukraine is implementing a comprehensive PIM framework that is in line with best international practices," according to the document.

“The financial sector remains stable, but continued vigilance is warranted given elevated risks. Developing financial markets infrastructure will be critical to support prompt reconstruction and recovery by facilitating much needed private investment, including attracting foreign capital. Comprehensive consultation and collaboration with financial market participants is essential to facilitate preparation of a prioritized reform agenda, which the NBU has begun in collaboration with other relevant stakeholders," the fund noted.