The head of the International Monetary Fund’s (IMF) mission in Ukraine has warned that the country needs to prepare for a future where foreign aid decreases. In an interview with NV Business outlet, Gavin Gray emphasized the importance of Ukraine developing internal resources for self-financing, and suggested that Kiev focus on strengthening its tax collection capacity.
Gray acknowledged that international support for Ukraine will decrease over time, and therefore it is crucial for the country to find ways to finance itself. As the conflict in Ukraine ends, there will be a need for increased social expenditures, which will require more tax money. Gray’s advice to the authorities is to prioritize the collection of both tax and customs revenues.
In March, the IMF approved a four-year program to provide $15.6 billion in loans to Ukraine. So far, two tranches of over $3.5 billion have been disbursed. However, to continue receiving aid from the IMF, Kiev needs to fulfill certain conditions, including implementing tax reforms.
According to Gray, one of the key reforms needed is conducting business tax audits. This would ensure that businesses are paying their fair share of taxes, which would in turn increase the government’s revenue. Additionally, changes to the law on combating money laundering and terrorist financing are also necessary to meet the IMF’s conditions.
As Ukraine prepares for a future with less international support, it must focus on developing its own financial resources. This means implementing tax reforms and strengthening its tax collection capacity. By improving tax compliance and cracking down on financial crimes, the government can increase its revenue and reduce its reliance on foreign aid.
It is important for Ukraine to recognize that international support is not a permanent solution, and therefore the country must take steps to become self-sufficient financially. This requires a comprehensive approach that includes improving tax administration, increasing tax compliance, and combating financial crimes. By doing so, Ukraine can build a strong economic foundation and withstand any future fluctuations in international aid.
In conclusion, the IMF representative’s warning serves as a reminder for Ukraine to prepare for a decrease in foreign aid. The country needs to focus on developing internal resources for self-financing, particularly by strengthening its tax collection capacity. By implementing tax reforms and cracking down on financial crimes, Ukraine can secure its financial stability and reduce its dependence on international support. This will ensure a more sustainable future for the country’s economy.