Ukraine repays IMF debts: what it means for the budget and future financing
9 June 17:27
june 9, 2025, marks the beginning of a new stage in Ukraine’s cooperation with the International Monetary Fund: the country makes the first payment of SDR 125.7 million (about $171 million) under the Rapid Financing Instrument (RFI) emergency financing program, received after Russia’s full-scale invasion in 2022. This is the first payment on external debt raised during the war economy, "Komersant Ukrainian" reports citing Forbes.
As part of the RFI, Ukraine received approximately $2.67 billion in two tranches in 2022. The repayment of this loan is scheduled for the period until October 2027. In total, the payments are divided into 16 tranches, which are to be made evenly. Thus, the first installment repays approximately 6% of the total debt.
In 2025, Ukraine has to pay $3 billion to the IMF. Of this amount, $2.3 billion is the principal, and another $0.7 billion is interest payments. Some of the obligations have already been fulfilled: since the beginning of the year, the country has paid $1.3 billion in principal and $0.4 billion in interest. In turn, the IMF has disbursed one tranche of $0.4 billion under the EFF program, with three more tranches expected by the end of the year totaling $2 billion.
The spring meetings of the World Bank and the IMF in Washington (April 21-26) became a platform for strategic negotiations on financing the 2026 state budget. According to the participants, the issue of increasing Ukraine’s fiscal independence was discussed, among other things. One of the possible ways is to raise taxes.
The Extended Fund Facility (EFF) program is a key instrument of Ukraine’s cooperation with the IMF. on March 28, the Fund’s Board of Directors approved the seventh review of the EFF and disbursed the eighth tranche of $0.4 billion. The memorandum signed as a result contains four new structural beacons: an audit of the National Securities and Stock Market Commission, reform of the selection of state-owned enterprises’ management, IT modernization of tax and customs, and new approaches to public investment management.
In addition, at the end of May, Ukraine and the IMF agreed on the eighth review of the EFF program, which paves the way for the ninth tranche of $0.5 billion. It should strengthen financial stability amid a difficult budget balance.
However, the government remains cautious in its forecasts. Speaking at the Forbes Money conference on May 30, Finance Minister Sergii Marchenko named the unpredictability of the military situation and the completion of the current EFF program in the first quarter of 2027 as the main challenges for fiscal policy. This means that in 2026, Ukraine will have to look for new formats of cooperation with donors or intensify tax reforms to reduce its dependence on external financing.
Thus, the start of debt repayment under the RFI program is not just a technical payment, but a signal: Despite all the difficulties, Ukraine is taking responsibility for fulfilling its obligations. But at the same time, it is a reminder that fiscal sustainability remains fragile, and the future of external financing requires active work today.
What you need to know about the EFF program
The Extended Fund Facility (EFF) program is an instrument of the International Monetary Fund that provides financial assistance to countries with long-term balance of payments problems or in need of structural economic reforms.
Key characteristics of the EFF program
Duration: usually 3-4 years (4 years in Ukraine).
Goal: not just to “patch holes” in the budget, but to reform the economy – to improve public administration, modernize the financial system, increase tax efficiency, etc.
Format: the country receives funding in stages – in tranches that are tied to the fulfillment of clearly defined conditions (the so-called beacons or structural benchmarks).
Control: before each tranche, the IMF reviews the program, analyzes the progress of reforms and the economic situation.
Interest: lower than market rates, but not free of charge.
Flexibility: allows borrowing countries to adapt reforms to national specifics, but without breaking fiscal discipline.
Why does Ukraine need the EFF program?
To ensure stable external financing in times of war.
To keep the budget balance when own revenues are falling and expenses (especially military) are growing.
To show international partners that Ukraine is fulfilling its obligations and thereby attract grants and loans from other sources (the EU, the US, the World Bank, etc.).
Launch and monitor key reforms that would otherwise be postponed, such as transparency of state-owned enterprises, digitalization of customs, auditing of state bodies, etc.
How the RFI program works and why it is needed
The RFI (Rapid Financing Instrument) program is an emergency financial assistance mechanism provided by the International Monetary Fund to countries facing sudden economic shocks.
Key features of the RFI
Speed: money is disbursed as quickly as possible, usually within a few weeks of the request.
No reforms: Unlike the EFF, it does not require comprehensive structural reforms or long-term commitments.
Purpose: to cover acute currency shortages, imports of critical goods, and support the financial system in times of deep crisis (e.g., war, pandemic, natural disaster).
Repaymentterms: funds are provided for a short term (3-5 years), with disbursement in several equal tranches, according to a fixed schedule.
In the case of Ukraine, in 2022, immediately after the start of the full-scale invasion, the IMF provided the country with $2.67 billion through the RFI mechanism. This was an anti-crisis injection of funds that helped maintain macrofinancial stability in the first months of the war.
How the program differs from the EFF
The RFI program is designed to allow countries to quickly receive financial assistance in times of emergency, such as war, pandemic, or natural disaster. In such cases, money is provided quickly, without requirements for economic reforms or deep changes in governance. In other words, the RFI is a quick support for emergency patching of budget holes, without structural commitments.
In contrast, the Extended Fund Facility (EFF) program is a long-term instrument aimed not only at financial support but also at economic reform. EFF funds are disbursed in stages, and each new tranche depends on whether the country has fulfilled a number of reform conditions – the so-called structural beacons. These may include, for example, transparent appointments to the supervisory boards of state-owned enterprises or upgrading the IT infrastructure of the tax and customs authorities. In other words, the EFF is a full-fledged contract for economic modernization under the supervision of the IMF.
Thus, the main difference is in the depth of commitments and speed. RFI is a quick financial transfusion without a reform package. The EFF is slower, but with a deep commitment to reforms and fiscal discipline.
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