Marina Gontar
25 December 2022 10: 15
Headings: News Economy

Demand reforms and checks on corruption: the IMF does not give more money to Ukraine, how will this affect ordinary Ukrainians

Ukraine will be left without money? The International Monetary Fund refused to pay the funds and, moreover, decided to check how the authorities had spent the previous funds.

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Demand reforms and checks on corruption: the IMF does not give more money to Ukraine, how will this affect ordinary Ukrainians

The IMF refused Ukraine another allocation of funds and announced a four-month audit program of funds that had previously been allocated to the country. The monitoring mission will oversee tax and monetary reforms. How this will affect the Ukrainians - read below. 

Budget overloaded

Due to the war, almost all tasks for 2022 were not fulfilled according to the budget, so they are postponed to 2023. At the same time, problems with taxes are growing - even now they are not enough to finance the war. In addition, the tax base is shrinking rapidly as infrastructure damage causes many businesses to close or lay off workers. 

Therefore, financial assistance from partners from the West is vital for Ukraine. 

How much does Ukraine need? 

The IMF estimates that Ukraine needs from 39 to 50 billion dollars to cover all expenses. Sources of replenishment: USA, IMF and Europe. The IMF has so far refused to allocate funds to Ukraine, and Europe is increasingly helping in word, not in deed. Whether the United States will pull Ukraine out of the hole is not yet known, but the $45 billion allocated by Congress has become a bone of contention for congressmen.

What does the IMF require?

Carry out reforms. The IMF calls for action onincrease in internal tax revenues in Ukraine, as well as maximum transparency in tax administration. In addition, the Foundation has the following requirements:

  • on the lifting of the moratorium on tax audits (from July 1, 2023);
  • on the abolition of the simplified taxation system (single tax rate of 2%) and the resumption of the pre-war tax payment regime (from July 1, 2023);
  • to ensure the effective and full use of settlement transaction registrars (CROs) in retail establishments (and related settlement and payment infrastructure), including the renewal of liability for violation of these requirements (from July 1, 2023).

In addition, the IMF banned Ukraine from printing "empty hryvnias" - money that is not backed up economically. 

How will this affect the Ukrainians?

If there is not enough money from external sources, the government will have to urgently adjust the spending program. Since there is nowhere to cut further, the matter will affect the size of pensions, salaries, reduction of subsidies and benefits for IDPs. 

We previously reported that the IMF forecasts massive recession in the economylike after World War II. 

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