Ukraine has sufficient funding for 2025, but challenges with the 2026 budget are growing

On 30 January, the RRR4U consortium presented the latest issue of the Monitoring of IMF and EU assistance under the Ukraine Facility. Ukraine is making significant progress in fulfilling its commitments to international donors, while adherence to the implementation calendar is deteriorating, which may lead to delays in funding.

“We have reached a historic high as we have successfully completed the sixth review of the IMF programme. Ukraine has never gone this far before. This indicates that we have done our homework effectively. However, the question is what’s next, because Ukraine has not fulfilled two structural benchmarks required for the seventh review. The programme is already 63% complete in terms of funding. In the coming years, we will receive less money. For 2025, the maximum we can get is USD 2.7 billion if we complete all the beacons. We are facing a difficult seventh review in March, as we have not cancelled the Lozovyi amendments and have not established the Supreme Administrative Court. These structural beacons have already been postponed several times,” said Yuriy Romashko, Executive Director of the Institute of Analytics and Advocacy.

The review added three new structural pillars: an operational strategy for the securities regulator, minimisation of operational risks of financial institutions, and assessment of the NEURC’s performance. At the same time, Ukraine has not fulfilled two commitments that expired on 31 December.

As for the Ukraine Facility, the experts did not record any unfulfilled obligations, although there were still some difficulties. According to DiXi Group project expert Alyona Korogod, in 2024, Ukraine successfully coped with its homework and managed to receive €16.1 billion to the budget. In 2025, subject to the fulfilment of the indicators, Ukraine will be able to receive €12.5 billion.

After meeting the third-quarter targets, the European Commission disbursed the €4.1 billion tranche only in mid-December. Due to the absence of a mechanism for partial payment for the fulfilled indicators, Ukraine received the entire amount, despite the delay in the implementation of indicator 4.4.

On 23 January, the Ministry of Economy reported to the EU on the fulfilment of 13 indicators to receive the next tranche of €3.5 billion. “We have submitted a report to the European Commission that we have fulfilled all the indicators for the 4th quarter. I hope the Commission will give us a positive assessment. This will be the first time in many years that Ukraine has promised something and fulfilled it word for word,” First Deputy Minister of Economy Oleksiy Sobolev said.

EU and IMF funding are not the only sources of Western support for the budget. “2025 is primarily about the ERA funding mechanism. This is the USD 50 billion that Ukraine will receive from the G7 countries at the expense of the proceeds from frozen Russian assets.

This year, the ERA will cover most of our funding needs. And despite all the geopolitical and military challenges facing Ukraine, from a budgetary point of view, we are entering the year in a more stable position than in 2024,” explained Maksym Samoiliuk, economist at the Centre for Economic Strategy.

Ukraine needs $38 billion in financing in 2025, of which $2.7 billion is expected from the IMF, $13.1 billion from the EU under the Ukraine Facility, and the remaining $22.2 billion will be covered mainly through the ERA mechanism.

Oleksandra Betliy, Senior Research Fellow at the Institute for Economic Research and Policy Consulting, believes that significant funding prevents difficult decisions from being made. In her opinion, there is a risk that it will be more difficult to make important decisions on both the IMF and the Ukraine Facility because ‘we don’t need the money as critically.’ But without funds and an active IMF programme, which Ukraine is implementing, it will be very difficult to get funding for 2026.

Yaroslav Tashuta, Head of the Public Investment Management Sector at the Ministry of Finance, noted that recent changes to the Budget Code have united budget planning and the investment component. He stressed that everything will be public, transparent, and everyone will see what is happening with the projects.

Roksolana Pidlasa, Chair of the Verkhovna Rada Budget Committee, stressed that the changes to the Budget Code on public investment management made it possible to depoliticise the project selection process: “Not all MPs used their powers in good faith, and most often these objects became unfinished later.”

IMF Resident Representative in Ukraine Priscilla Tofano stressed that their priority is to strengthen institutions. “When the reconstruction starts in earnest, I hope soon, then the space for financial misconduct will increase. And the task is to prevent this,” she said.

The monitoring and the event were supported by the International Renaissance Foundation.