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Behind the news of Zelensky's dispute with Trump, a message about the completion of the IMF mission passed unnoticed. It assessed cooperation with Ukraine under the program approved two years ago.
Based on the results, the IMF decided at the expert level to allocate $0,4 billion to Ukraine in the next tranche. This has yet to be approved by the Fund's Board of Directors.
The tranche turned out to be smaller than previously planned, and smaller than previous tranches under this program, from which Kyiv has already received over $10 billion.
At the same time, the IMF stated that "program implementation remains strong," and all prior conditions agreed at the end of December last year have been met.
Why will the IMF tranche be smaller this time, what could that mean?
Why the IMF program is important
The IMF ranks third in terms of the amount of financial assistance Ukraine has received since the start of the full-scale Russian invasion. According to the Ministry of Finance, in 2022-2024, the fund provided $12,4 billion of the total $115 billion, the BBC reports.
In 2022, the IMF was almost the only international partner providing money to Ukraine while others were deciding whether to support it. And to do this, the fund changed its internal rules that did not allow lending to countries at war.
In early 2023, the IMF and Ukraine agreed on a new four-year cooperation program for a total of $15,5 billion. Since then, Kyiv has received regular tranches, usually around $1 billion.
Earlier this year, senior representatives of the Ukrainian government and the National Bank of Ukraine boasted that in the entire history of relations with the IMF, no program had been implemented so successfully – and this during a war. Usually, programs were terminated much earlier due to non-fulfillment of conditions.
In addition, as National Bank Governor Andriy Pyshny explained in a commentary to BBC Ukraine, the IMF acted as a platform that combined Ukraine's commitments to reforms with assurances from international financing partners.
“The next, already sixth (at the time of comment – Ed.) successful review of the IMF program would not have taken place if the fund did not have appropriate assurances from partners,” said the NBU chairman, commenting on the extent to which the country is provided with financial resources for 2025.
He recalled that the IMF program is accompanied by an international assistance package of about $150 billion in the baseline scenario.
“All other instruments are actually concentrated around the IMF program,” Prime Minister Denys Shmyhal explained at a press conference on March 4.
In particular, he said, this concerns the Ukraine Facility from the European Union, under which the country should receive 12,5 billion euros this year. Also, around the IMF program, "the infrastructure is practically closed" of the $50 billion EPA program, which the G7 countries agreed to provide to Ukraine against seized Russian assets.
Why Ukraine asked for less money from the IMF
After the last review of the program, carried out by the IMF mission in February, it was stated that "all quantitative criteria for program implementation, established as of the end of December, have been met, and an understanding has been reached on the list of policies and reforms to support macroeconomic stability."
However, the IMF also noted delays in implementing some of the program's "beacons."
But, despite the general fulfillment of the program's conditions, the next tranche will be smaller.
“In accordance with the review of the balance of payments needs for 2025, Ukraine has requested to change access to funds under the EFF program with the transfer of funding to the future, while the total amount of the program remains unchanged,” said the fund’s head, Gavin Gray, after the completion of the mission.
Soon, the fact that this time Ukraine will receive half as much was confirmed by the head of the parliamentary finance committee and representative of the Servant of the People party, Danylo Hetmantsev.
“Ukraine has asked the fund to reduce the size of the next tranche from the previously planned $0,92 billion to $0,4 billion,” Hetmantsev reported on his Telegram channel.
He explained that on the one hand, this is a technical decision, the adoption of which was guided by “sufficient current liquidity” and balance of payments needs. The Chairman of the Council’s Finance Committee also emphasized that “the total amount of the remaining funding under the program will not change from this, the difference will be distributed during subsequent reviews.”
On the other hand, according to Hetmantsev, the decision to reduce IMF assistance “fits into the logic of saving available resources ‘now’, due to greater uncertainty with financing ‘tomorrow’.”
“We have a closed need for external financing for 2025. While the situation with attracting funds from partners in 2026 is much more uncertain,” Hetmantsev emphasized.
Prime Minister Denys Shmyhal gave roughly the same explanation for the reduced IMF funding. He stated that the current liquidity situation – that is, the balance of income and expenditure – in Ukraine is good, and therefore there is confidence in the “financial situation.”
"It was our joint agreement with the IMF that they are not giving us 900, as we previously agreed on 400 (million dollars - Ed.), because Ukraine today has enough funds, enough liquidity to survive in these conditions," the Ukrainian prime minister said, adding that "we have complete order in terms of finances."
The decrease in the request for IMF funds indeed “may mean that Ukraine feels quite normal with financing for this year,” says Oleksandra Betliy, a leading researcher at the Center for Economic Research.
She notes that the current IMF program is structured in such a way that more money was supposed to arrive at the beginning of the program and less at the end.
But Ukraine continues to repay the IMF debt under previous programs, “and if last year we received more in net terms than we pay the IMF in interest and repayment, then next year the picture will be a little different: we will return more than we will receive from the IMF,” the economist explains. And this is another reason why the government “decided to manage liquidity a little.”
There is another consideration: given today's circumstances (such as the termination of American military aid – Ed.), says Betliy, "we understand that part of the funds from the G7 program will have to be spent on defense, and next year we don't know how much money we will have left, because the situation changes every day."
Therefore, it seems logical to postpone the IMF funds for next year, in particular, so that there is something to repay the debt to the fund. Another option - default to the IMF - "this is very painful", because cooperation with the fund and stable financing are seen as a "beacon" for other creditors that the right changes and reforms are taking place in the country.
International funds and “white elephants”
The decrease in requests for IMF assistance is indeed evidence that there is enough financial assistance from partners for 2025 - "that is why it was saved for the upcoming 2026," says Yaroslav Zheleznyak, another member of the parliamentary finance committee, a representative of the opposition Holos party.
But at the same time, the deputy writes in his Telegram channel, "this means that even the government understands that we cannot give extra money to our "geniuses" of economic thought. Not even to show it. Because tomorrow they will come up with "spring support", "cashbacks", the construction of a couple more reactors."
Back in late January of this year, the IMF's resident representative in Ukraine, Priscilla Tofano, warned the Ukrainian government against so-called "white elephants."
“We use the term ‘white elephant’ to describe any investment that is expensive to maintain and does not provide proportional or any benefit at all,” she said in comments during an investment conference.
At the same time, the IMF representative emphasized that this is not only a waste of public funds, but also corruption, and as an example, she cited the intentions of the authorities of one of the Ukrainian cities during the war to build a stadium designed for more seats than residents - due to the need to spend the surplus funds from the military tax on personal income somewhere.
These expenses were stopped in time thanks to their publication in the Prozorro public procurement system.
Can the US influence the IMF?
As negative forecasts regarding the reduction of aid to Ukraine from one of the key donors, the United States, come true, observers are also beginning to analyze how this may affect other international partners, as the United States also has significant influence – in line with its large contributions – on the IMF and the World Bank.
"I do not undertake to predict whether the new US administration, as the largest shareholder of the IMF, will try to influence the revision of the Fund's programs. I hope it will not come to that," wrote the chairman of the financial committee Hetmantsev in the telegram channel, emphasizing that "no matter what happens, we must do our homework and fulfill (and on time) the obligations we have undertaken under the program, which was and remains a key element of macro-financial stability."
“Does the US have influence on the IMF? Of course, it does. Will the US leave the IMF? Anything can happen. The States can do anything,” says Oleksandra Betliy, but emphasizes, “The question is what will we do.”
In the current situation, Ukraine should remember about the coalition with the European Union, and also "we need to sit down and think about what urgent expenses we need to finance, what we can not finance and postpone, not try to spend everything, but try to save."
"That's what we can talk about. Not about what Trump will do or not do."
