IMF opens Ukraine loan review that could unlock $1.67 billion

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IMF Ukraine loan review

Highlights

IMF has started the second and third programme reviews with Ukraine, which could lead to a $1.67 billion disbursement upon completion.
Ukraine faces a $70 billion funding gap next year amid ongoing war, with continued IMF cooperation pivotal for unlocking other international aid.
Ukraine's GDP fell 0.7% year on year in Q3, central bank expects a 0.4% GDP decline in 2026, and inflation could reach 12.5% in 2024.

Programme review and financing agenda

As reported by Reuters, citing the IMF, discussions with Ukrainian officials begin on Monday and cover macroeconomic and fiscal policies as well as key structural reforms. Priscilla Toffano, the fund's resident representative in Ukraine, says the review combines the second and third assessments of the country's four-year programme and could open the door to a disbursement of about $1.67 billion.

Prime Minister Sergii Koretskyi says the meetings also cover the budget and international financial aid for 2027. The central bank says the IMF team and Ukrainian officials are holding meetings in Lviv and Warsaw, with some experts joining online.

War damage deepens economic strain

Continued cooperation with the IMF remains critical for Kyiv because it helps unlock support from other international partners and underpins economic stability as the conflict with Russia continues. Ukrainian officials say the country faces a funding gap of about $70 billion next year.

Ukraine's economy, weakened by more than four years of war, is in one of its most difficult periods as intensified Russian air attacks hit businesses, energy infrastructure and other revenue-generating sectors. Gross domestic product falls by 0.7% year on year in the third quarter, the central bank expects GDP to decline by 0.4% in 2026, and inflation is expected to reach 12.5% this year.

With exports through Black Sea ports blocked and key exporting sectors such as agribusiness and steel severely damaged, budget revenues are also coming in below plan. That adds pressure to Kyiv's financing needs as it tries to maintain state spending and economic resilience.

Our earlier report on sovereign resilience in a higher-rate environment explained how prolonged geopolitical tensions and elevated public spending are increasing refinancing risks for governments as borrowing costs stay high. We noted that emerging and frontier markets are especially exposed because interest-service burdens are heavy relative to narrower revenue bases, while war-driven energy and food price spikes add inflation pressure and weaken fiscal room.

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