IMF chief Georgieva arrives in Kyiv for first visit since 2023

KYIV: International Monetary Fund chief Kristalina Georgieva arrived in Kyiv early on Thursday for high-level talks, two sources familiar with the matter said, as Ukraine prepares to mark the fourth anniversary of Russia’s full-scale invasion on February 24.

The IMF managing director is expected to meet with Ukrainian President Volodymyr Zelenskiy, Prime Minister Yulia Svyrydenko, and central bank chief Andriy Pyshnyi, as well as business executives during her trip, one of the sources said.

Details of Georgieva’s visit to Ukraine were tightly held given security concerns.

The IMF chief, who has close family ties to Ukraine, last visited the country in February 2023.

Georgieva’s brother is married to a woman from Ukraine and was in Kharkiv, the second-largest city, when Russia invaded.

Ukraine and the IMF reached a preliminary agreement on an $8.2 billion, four-year lending program in November, contingent on several actions, including passage of a budget and shoring up donor financing assurances.

IMF officials say Ukraine has made progress and expect board consideration in several weeks.

Approval of the funding is critical, since it will unlock additional external investments needed to close Ukraine’s financing gaps, which the IMF has calculated at around $136.5 billion for the period through 2029, given the ongoing war.

The war - soon to enter its fifth year - has hit the Ukrainian economy hard, with the country slated to spend the bulk of state revenues - 2.8 trillion hryvnias or around 27.2% of GDP - to fund its defence efforts in 2026.

Georgieva will review Ukraine’s progress on several actions, including passage of a 2026 budget, taking steps to boost domestic revenues by broadening its tax base, and ensuring large-scale external donor financing on grant-like terms.  

Focused on ending tax evasion

When it announced the preliminary deal, the IMF said Ukrainian authorities had also agreed to accelerate efforts to prevent tax evasion and avoidance, including by taxing income earned through digital platforms, closing customs loopholes for certain imports and removing exemptions for value-added tax.

The IMF expects Ukraine to introduce some of these measures in parliament, but isn’t counting on higher revenues until 2027.

In addition to working to “de-shadow” the economy, which has a high level of informal businesses that lack balance sheets, Ukraine also vowed to keep anti-corruption institutions independent, and fix loopholes in the current labor code.

Ukraine passed a big milestone toward closing financing gaps last month when European Union leaders agreed to lend it 90 billion euros ($105 billion) for two years.

Ukraine must only service the loan if Russia pays reparations after the war ends, which means it won’t pose a burden on the budget. It also completed restructuring of $2.6 billion in growth-linked debt, easing pressure on Kyiv, which had warned that the instruments could have cost as much as $20 billion through 2041.

The new IMF program will replace its current four-year $15.5 billion program, of which some $10.6 billion has been disbursed, which had assumed the war would end in 2025.

The new preliminary agreement assumes the war will end this year, but includes a “downside scenario” that the war winds down slowly and does not end until 2028.