Ukraine must decide 2026 budget scenario and clarify reform strategy – IMF mission chief

The International Monetary Fund (IMF) has highly appreciated the Budget Resolution for 2026-2028, which was prepared by the Ukrainian government and which has two scenarios: the end of the war this year and its continuation next year - but now the government must definitely decide under which scenario to prepare the draft state budget for 2026, head of the IMF mission Gavin Gray has said.

"This is a critical issue that will need to be resolved before the 2026 budget is submitted to parliament on September 15," he said in a budget discussion organized by the Center for Economic Strategy on Friday.

Gray recalled that the scenario of the end of the war this year is consistent with the latest baseline scenario in the updated after the eighth review of the EFF Extended Fund Facility with the IMF.

According to the head of the mission, the scenario of the continuation of the war and the need for more budget financing in 2026 now looks increasingly likely, and donors are focused on this issue.

"All partners supporting Ukraine have started to focus on this issue for the next two years (…) But we are waiting for the government's decision, for the Ministry of Finance's proposal on the budget, and I think that this will encourage a more detailed analysis," the Fund representative added.

According to him, it is necessary, if we think about the commitments of the IMF and partners in Ukraine, to go beyond general statements that challenges may arise in 2026, and be more specific.

"We want to have an in-depth discussion on the 2026 budget, because we want to significantly revise the assessment of the financing gap: maybe it will be similar to the existing figures, maybe it will be larger. But we need, in essence, to move the discussion from a dead point," the head of the mission emphasized.

He added that all this is happening in the context of a new government in Ukraine, so the partners are interested in a dialogue on other policy directions of the new government, which are extremely relevant for the medium-term fiscal picture.

Gray noted that under the EFF program, which has reached a record eighth review, Ukraine has implemented a very strong reform package, and its implementation is important in the past and in the future due to Ukraine's heavy dependence on external concessional financing.

"Restoring sustainability requires Ukraine to continue reforms (…) There must be clarity on the government's strategy in a broader reform package," the head of the mission stressed.

He also called for maintaining the high tax rates observed this year, taking into account the need for large budget expenditures and a fair distribution of this burden.