Ukraine is preparing for IMF pressure to devalue hryvnia and raise taxes
– Bloomberg
Ukraine is preparing for pressure from the International Monetary Fund (IMF) to devalue hryvnia and raise taxes.
About it writes Bloomberg with reference to its own sources among Ukrainian officials who asked not to be named.
IMF officials began talks with Ukraine this week on expanded funding for Ukraine. According to the review, the country could receive $ 1.1 billion if the fund staff decides that Ukraine is achieving the goals of the program. and has sufficient funds to finance.
Bloomberg recalled that according to the latest estimates by Prime Minister Denis Schmigal, Ukraine has a budget deficit of $ 15 billion next year, which has not yet been filled by donor financial obligations.
To help close the hole, the IMF plans to encourage the National Bank of Ukraine to devalue the hryvnia faster and ease its monetary policy amid moderate inflation. These steps are designed to increase revenues to Ukraine's budget in the national currency and reduce borrowing for the Ministry of Finance.
In discussions ahead of this week's meetings, sources said, the IMF also criticized the government's plan to raise several taxes as too lenient and called on the Ukrainian government to consider increasing the wider range of duties.
One possible proposal is to increase the value added tax.
The agency recalled that on Tuesday, the Ukrainian parliament was unable to pass a law that would increase the so-called military tax on personal income and also extend it to individuals engaged in business activities, reflecting the unpopularity of such steps among Ukrainians.
In addition, Ukraine also plans to receive additional support from $ 50 billion in frozen Russian assets.
Let's remind:
IMF mission on September 4 started discussions with the Ukrainian authorities on the revision of the $ 1.1 billion expanded funding program.
IMF mission starts fifth review of Ukraine program as Kyiv reshuffles government
Kyiv is spending about 60% of its total budget to fund its army and relies heavily on financial support from its Western partners to pay pensions and wages to public sector employees and finance social and humanitarian spending.
An IMF statement said the fund's monitoring mission had started policy discussions with the Ukrainian authorities.
President Volodymyr Zelenskyy is reshuffling his government to reset the team ahead of the critical autumn and winter months, and six ministers tendered their resignation.
“Day of Dismissals”: Ukrainian Ministers Resign Ahead of Major Government Reshuffle
Kyiv Announces Extensive Changes as President Zelensky Seeks to Boost Government Confidence
Lagatar24 Desk -- September 4, 2024 Lagatar News, National & International
The ruling Servant of the People party indicated that a major government overhaul is imminent. David Arakhamia, the head of the party’s parliamentary faction, announced the upcoming changes on Telegram, stating,
“As promised, a major government reset can be expected this week.
More than 50 percent of the Cabinet of Ministers’ staff will be changed.”
Olena Harmash and Tom Balmforth - Reuters
Wed 4 September 2024 at 2:53 am GMT-7
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- More resignations and appointments are expected over the coming days after five ministers stepped down on Tuesday, in what a senior Zelenskiyy ally cast as the start of a government "reset" before the cold autumn and winter seasons.
Opposition MP Iryna Herashchenko said: "It's a government without ministers ... an intellectual and personnel crisis that the authorities are closing their eyes to".
She called for a government of national unity that would end the tight grip on the reins of power held by Zelenskiy's political team.
- the Minister for Strategic Industries,
- the Minister for Justice, and
- the Minister of Environmental Protection.
- In addition, Vitaliy Koval, the head of Ukraine’s State Property Fund, and
- Deputy Prime Ministers Iryna Vereshchuk and
- Olga Stefanishyna also stepped down.
- This isn’t the first time President Zelensky has ordered significant changes within his government since the war began.
- Last September, he dismissed his defense minister following several corruption scandals. More recently, Zelenskiyy replaced his top military commander amid ongoing challenges on the battlefield.
Marchenko has previously said the government faced an uncovered gap of about 500 billion hryvnias ($12 billion) to fund its defense for the rest of the year.
The government plans to raise taxes and has already implemented other measures, including increasing import and excise duties and borrowing more on the domestic market, to raise extra revenue.
Ukraine also won an agreement from bondholders to restructure and write down its debt.
- The successful completion of the IMF review would enable Ukraine to secure $1.1 billion in new financing in the coming months, officials have said.
- Ukraine has received about $98 billion in financial aid from its Western partners since the start of the war, Finance Ministry data showed.
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