The International Monetary Fund (IMF) has set out two projections for when the Ukraine conflict will be resolved, suggesting that hostilities are likely to end by late 2025 in a baseline scenario, or sometime in mid-2026, as per the downside forecast.
In its sixth review under the extended fund facility (EFF) for Ukraine, published on the IMF’s website last week, the organization claimed that the Ukrainian economy is “stable” and that Kiev has continued to achieve target indicators set out by the fund.
In light of this, the IMF approved a $1.1 billion tranche to support Kiev’s budget, bringing the total amount of financial assistance to Ukraine under the program to $9.8 billion. The total value of the EFF program, which runs through 2027, is $15.5 billion.
According to the IMF, Ukraine’s performance under its program “remains strong” and its economy showed “better than expected resilience to energy shocks.” However, the fund said a slowdown is expected next year due to “an increasingly tight labor market, the impact of Russian attacks on Ukrainian energy infrastructure, and continued uncertainty about the war.”
According to the fund’s baseline scenario, Ukraine’s GDP is expected to grow by 4% in 2024 while inflation is projected to rise to 10%. In 2025, the fund predicted that the country’s GDP growth would be between 2.5% and 3.5%.
However, in the downside scenario, which foresees a prolonged conflict, Ukraine is predicted to experience deeper economic shocks, including slower GDP recovery, higher inflation, and significant fiscal deficits of over 20% until 2026.
In this scenario, Ukraine’s external financing gap is also expected to reach over $177 billion, compared to $148 billion under the baseline forecast.
The IMF’s report comes as Ukraine faces a record budget deficit of $43.9 billion in 2024 and has heavily relied on its international backers to cover a significant portion of its financial needs.
Since the escalation of the Ukraine conflict in 2022 up until now, Kiev has received an estimated $238.5 billion from the West, accounting for slightly less than 90% of the countries’ budget expenditures for this period, according to calculations published by RIA Novosti on Sunday, based on data from the Ukrainian Finance Ministry and other open sources.
The largest donor to Ukraine over the past three years has been the US, which has given Ukraine some $95.2 billion, with two-thirds of the aid being military aid.