Kiev must end electricity and heating subsidies for the population, Kristalina Georgieva has said
Kiev must phase out electricity and heating subsidies and distribute the tax burden more fairly in order to get additional funding from the IMF, its head Kristalina Georgieva has said.
Ukraine is ranked among Europe’s poorest countries, and subsidies for electricity, heating, and gas have long maintained households. International lenders say continuing aid will require painful reforms, and that ordinary Ukrainians must bear part of the cost.
“We still have electricity and heating subsidized; they’re subsidized for a reason, we know why the country is doing it, but that has to go,” Georgieva said on Monday on the sidelines of the World Economic Forum in Davos.
“We still have work to be done in terms of fiscal position, we are right now looking into how we can make the burden sharing of taxation fairer and it’s not an easy thing but it has to be done,” the IMF chief said, describing those issues as an obstacle to private sector dynamism.
Ukraine relies heavily on Western aid to cover everything from military costs to pensions. The country’s backers have maintained financial support despite a major corruption scandal involving state nuclear operator, Energoatom, and longtime associates of Ukraine’s Vladimir Zelensky.
READ MORE: IMF pushes Kiev to weaken currency – Bloomberg
Kiev secured a $15.5 billion loan from the Washington-based institution three years ago, but that program ends in 2027. Last year, Ukrainian authorities reached an agreement on a new $8.2 billion package. At the time, the government pledged to tackle corruption, tighten fiscal discipline and push ahead with politically sensitive reforms, including cutting energy subsidies.
In October, Bloomberg reported citing sources familiar with the situation that the IMF had been pressuring Ukraine to devalue its currency, the hryvnia, in order to secure a new loan. The measure was reportedly seen as a way to ease the country’s financial strain by boosting budget revenues in local-currency terms. The IMF warned that Kiev faces a widening funding gap of around $136.5 billion for the 2026-2029 period.
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