IMF commences critical fiscal policy discussions in Kyiv to address Ukraine’s 2024 budget deficit

July 16, 2024 05:20 AM PDT | By Invezz
 IMF commences critical fiscal policy discussions in Kyiv to address Ukraine’s 2024 budget deficit
Image source: Invezz

An International Monetary Fund (IMF) team commenced discussions with Ukrainian officials on Tuesday.

The talks are aimed at identifying strategies to bolster revenue streams for Ukraine’s war-torn economy and addressing the substantial budget deficit projected for 2024.

Fiscal policies and budget plans under scrutiny

The IMF announced that the meetings in Kyiv would concentrate on evaluating Ukraine’s fiscal policy plans for the remainder of 2024 and the medium term.

This year, the IMF has already disbursed $3.078 billion to Ukraine under its $15.6 billion Extended Fund Facility program.

Ukraine’s government is grappling with a budget shortfall estimated to be between 400 billion hryvnias ($9.8 billion) and 500 billion hryvnias, according to Roksolana Pidlasa, head of the parliament’s budget committee.

Officials and analysts indicate that the government intends to address this deficit through increased taxation and enhanced domestic borrowing.

Defence spending and international aid: Key financial pillars

Ukraine’s 2024 budget dedicates over $40 billion—approximately half of its total expenditures—to the defence sector.

The government remains heavily dependent on international financial aid to support social and humanitarian spending.

The IMF is a crucial multilateral creditor for Ukraine, with its funds forming a significant portion of the $37 billion in foreign aid that Ukraine anticipates receiving this year.

To date, Ukraine has secured about $16 billion from Western partners, as reported by the finance ministry. Since the onset of the Russian invasion in February 2022, foreign aid to Ukraine has amounted to $73.6 billion by the end of 2023.

Economic turmoil and recovery efforts

The invasion has severely disrupted Ukraine’s economy, resulting in massive displacement, widespread destruction of cities and infrastructure, and significant interruptions to supply chains and exports.

Consequently, Ukraine’s economic output plummeted by approximately 29% in 2022.

The economy began showing signs of recovery in 2023, with a growth rate of 5.3% as businesses adapted to the conditions of war.

Despite these gains, the government revised its economic growth forecast for this year down to around 3%, citing a growing energy deficit caused by recurrent Russian missile and drone attacks on Ukrainian power facilities.

Urgency in debt restructuring

In addition to addressing its budget deficit, the Ukrainian government faces the critical task of restructuring its foreign debts amidst the ongoing conflict.

The urgency of this endeavour is underscored by the impending expiration of payment moratoriums on August 1.

As Ukraine navigates these multifaceted challenges, the ongoing discussions with the IMF will play a pivotal role in shaping the country’s fiscal strategy and securing necessary financial support.

The outcome of these talks is expected to influence forthcoming budget adjustments and potential tax increases.

The post IMF commences critical fiscal policy discussions in Kyiv to address Ukraine's 2024 budget deficit appeared first on Invezz


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations, and video (Content) is a service of Kalkine Media LLC., having Delaware File No. 4697309 (“Kalkine Media, we or us”) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.


Sponsored Articles


Investing Ideas

Previous Next