In the coming weeks, the International Monetary Fund (IMF) staff will conduct a review of financial programmes in Ukraine to monitor the country’s progress in implementing economic reforms and broadening its tax base under an $8.1 billion loan, spokeswoman Julie Kozack said on Thursday (14 May).
Kozack told reporters that, in addition to external funding, Ukraine must effectively mobilise domestic revenue to address “very, very significant” financial needs.
Kozack advised the Ukrainian government to expand its tax base and bring the informal sector, which accounts for roughly 45% of the country’s gross domestic product, out of the shadows and into the formal economy.
Ukraine had accepted the broad reforms which came with its IMF loan programme, reforms also necessary to gain admission to the European Union and unlock more external financial support, according to Kosack.
Ukraine’s current IMF programme was approved in February and is scheduled for its first review in June to determine whether the country is achieving targets.
Ukraine has struggled to broaden its tax base through legislation, including one bill that would institute value-added tax on small parcels coming from abroad, and another that would institute VAT for self-employed individuals.
Kozack mentioned that IMF staff will hold conversations regarding reform commitments to VAT, but gave no indication of whether loan restrictions would be eased.
Source: commonspace.eu with Reuters
