The document notes that the budget for 2025 anticipates a deficit of 19.6%, and the functioning of the economy necessitates radical reforms, combating tax evasion, and improving the investment climate. The IMF also sees the possibility of further increases in the key interest rate and allows for additional depreciation of the hryvnia. Inflation reached 12.9% in 2024, as stated in the release.
"Given the risks associated with rising inflation, the recent increase in the NBU's key interest rate is justified. Further actions will be warranted in the event of continued inflation acceleration or a deterioration in inflation expectations. The exchange rate should increasingly serve as a buffer. Maintaining adequate reserves is a priority, especially considering the risks to the forecast," the IMF report states.
The growth of Ukraine's GDP in 2025 is expected to slow to 2-3%, according to the Fund, linking this to a labor shortage, damage to energy infrastructure, and the ongoing war. The risks of worsening economic conditions remain "exceptionally high," given the uncertainty regarding the war and the prospects for peace and recovery, the document indicates.