The International Monetary Fund predicts that Ukraine’s gross domestic product may grow by 2-3% in 2025, but at the same time warns of “exceptionally high” risks of a negative scenario in which the economy may shrink by 1%. Macro forecast for Ukraine published on the IMF website.
According to the negative scenario, the active phase of the war will last until mid-2026, while the baseline forecast is based on the assumption that it will end at the end of 2025. Under such conditions, Ukraine’s need for financing may increase by $12.4 billion.
This will make it necessary to take additional measures to maintain debt stability and attract new financing both from external sources — in the form of loans on conditions as close as possible to grant ones, and from internal resources. One of the options is considering an increase in the value added tax and accelerated approximation of excise duty rates to European standards. “Both options can be effectively and quickly implemented to increase revenues,” the IMF notes.
A realignment of priorities in the expenditure side of the budget is also possible — in particular, reductions in capital and social spending, as well as a partial return to the currency restrictions that were in place at the beginning of the full-scale invasion.
In the event that the impact of negative factors exceeds the predicted scenario, the IMF admits the need for additional measures, such as another increase in the military levy, an increase in excise taxes, the introduction of a tax on luxury items and more active involvement of domestic financing through domestic government loan bonds.
The level of expenses for individual categories will probably have to be adjusted depending on the volume of external support in the form of grants or soft loans. All these measures should be temporary and carefully thought out, taking into account the macroeconomic situation and social consequences in the conditions of war.
Despite the risks, the IMF considers Ukraine’s support program to be stable thanks to the high readiness of the Ukrainian authorities to fulfill their obligations, as well as financial guarantees from international partners. In the medium-term perspective, the Fund expects that key economic indicators of Ukraine will gradually approach the baseline scenario thanks to the EU integration factor, migration trends and the growth of private investments.
