The EU will make part of a 90-billion-euro loan to Kyiv conditional on Ukraine improving its finances, increasing the pressure on the country to move forward with a series of politically sensitive reforms it has so far resisted.Kyiv will have to improve its revenue collection and how efficiently it spends money, the European Commission said in a press release on May 20, if it wants to access more than $8 billion of the loan.The statement closely echoes unpopular demands from the International Monetary Fund that the country's parliament has been slow to implement, in some cases missing deadlines completely. To receive the first tranche of the loan, Kyiv will need to take steps toward taxing income earned on digital platforms, such as Uber, adopt sectoral strategies for public investment, and update its customs code, the Commission said in the statement.If successful, Kyiv can expect a first package of 3.2 billion euros ($3.7 billion) in June this year, the statement said. The tranche is part of $8.35 billion in micro-financial assistance, according to EU documents earlier seen by the Kyiv Independent.
Ukraine Business Roundup
European countries agreed to the 90-billion-euro ($104 billion) loan to Ukraine at the end of last year, which is intended to cover two-thirds of Ukraine's needs in 2026 and 2027. Ukraine relies on continuous injections of foreign cash to fund its military and keep the state afloat.While previous EU aid has been tied to more closely aligning Ukraine with European standards on corruption and rule of law, the latest conditions also add pressure on Kyiv to progress with the IMF objectives to de-shadow the economy and improve its ability to raise revenue domestically.But the country has struggled to implement four new taxes required as part of the IMF's $8 billion loan to the country, as parliamentarians shy away from being associated with the politically toxic changes. It remains unclear whether linking the reforms to the new EU aid will provide Kyiv with enough incentive to move them forward.Kyiv's progress on a lengthy list of reforms required by the EU since 2024 slowed down significantly last year, with Ukraine missing around 20 deadlines on required changes.The EU withheld billions of euros tied to the reforms as a result. While a few measures were passed, and some funding was unlocked, there is still a long backlog of further reforms. Kyiv also missed deadlines on reforms tied to an $8.1 billion lending agreement with the IMF.While each reform has its own reasons for delay, a communication crisis between the government and parliament, a lack of political will to push through the changes, and the generally challenging nature of doing reforms in wartime have all been cited as reasons behind the slowdown.On one particularly contentious reform, Ukraine even managed to convince the IMF to postpone a new tax on self-employed contractors, arguing that the measure was not politically feasible during the IMF Spring meetings in Washington, D.C. last month.It was the second time the IMF had weakened its demands on its loan program after a request from Kyiv.Chris Powers contributed reporting.
