Page 11 - UKRRptNov23

The IMF wants the Ukrainian government to optimize tax collection against a possible decrease in international financial support as worries over sourcing support from Ukraine’s international partners grow. The government recently released a draft of Ukraine’s 2024 budget where just under half of all its anticipated funding will come from international donors.
Gray said tax revenues need to increase as “the need to finance social expenditures will increase after the war's end.”
"That's why the authorities need to focus on strengthening the capacity to collect revenues - both tax and customs," added Gray. He noted that by the end of this year, Ukrainian authorities plan to launch the National Income Strategy. At the same time, the IMF representative reminded observers that the IMF developed a program of extended financing with Ukraine, considering the main scenario, which assumed the end of the war by mid-2024.
"But we also predicted a more negative scenario with a longer war and, accordingly, larger amounts of external funding," Gray said. The government’s draft budget also noted that the main risk to the budget forecast was growing uncertainty over international financial support.
Gray noted that international financial assistance should increase under a more pessimistic scenario. In the case of implementing the base scenario, it is about $115bn in aid, and the negative is $140bn.
The IMF recommendations and the government’s own priority list follow on from a letter from the White House outlining the key reforms needed to continue the West’s support for Ukraine, many of which concern the fight against corruption.
Separately, a leaked internal report by the White House showed that the US is more concerned about rampant corruption in Ukraine than it is publicly admitting to. Fears of corruption and the lack of accountability for the Ukrainian government spending have undermined the US enthusiasm for providing Ukraine with the necessary funding to continue the war. As detailed in a feature by bne IntelliNews, Ukraine has a bad corruption problem despite real progress made by the Zelenskiy to bring graft to heel.
The successful defeat of corruption is rising in importance as it become increasingly clear the $300bn of frozen Central Bank of Russia (CBR) reserves will not be available to pay for Ukraine’s reconstruction. At the Ukraine Recovery conference held in London in June Western leaders called on the assembled captains of Western industry to invest in Ukraine, but investors’ enthusiasm will remain tepid unless corruption is eliminated and property rights as well as Ukraine’s corporate governance are improved.
2.4 Ukraine opens debt restructuring talks on $20bn worth of bonds
Ukraine has opened talks with its bond investors on restructuring $20bn worth of state debt, Reuters reported on October 9.
The preliminary talks with foreign bondholders earlier than originally scheduled and have been ongoing for several weeks, Reuters reports.
11 UKRAINE Country Report November 2023 www.intellinews.com