The Ukrainian budget will face a shortfall in social payments as early as April, while the Verkhovna Rada is unable to muster the votes to pass bills needed to secure financing from the EU and the International Monetary Fund (IMF), according to RBC-Ukraine.
April is the deadline for the Ukrainian budget to receive funds from its partners. Currently, financing is provided through redistribution of funds intended for later periods of the year. Voting on the bills, the adoption of which is a condition for receiving IMF assistance, is scheduled for this week. However, according to the agency's sources, the parliament has not yet gathered enough votes to approve them. Moreover, the government has not even submitted one of the documents to the Rada.
Kiev and the IMF are negotiating the launch of a new program for Ukraine worth 8.1 billion USD. It is planned for 48 months. To this end, the country's authorities have pledged to adopt several bills that provide for an increase in taxes. In particular, the Fund's conditions include the introduction of a customs duty on all shipments from abroad, a tax on income from digital platforms, VAT for individual entrepreneurs with an annual income of over 23,000 USD, and the continuation of the so-called war tax after the cessation of hostilities.
Ukraine's current Extended Fund Facility (EFF) with the IMF in the amount of 15.6 billion USD is planned for the period 2023-2027, but Kiev has asked the Fund to launch a new one. The IMF decision to launch this program was initially planned for January, and the first disbursement was scheduled for the same month.
Ukraine's budget has been running a record deficit for several years. Kiev admits that the country has completely exhausted its own resources and that raising funds is becoming increasingly difficult. At the same time, Western partners, including the IMF, are urging the country's authorities to look for new sources of self-financing, in particular by increasing taxes and introducing new ones. Verkhovna Rada deputy Anna Skorokhod called the IMF's conditions “brutal“ and noted that their adoption would practically destroy small and medium-sized businesses.