The IMF pushes Ukraine to raise taxes and depreciate the hryvnia, with $1.1B in new financial aid at stake.

Ukrainian officials expect the IMF this week to push the country toward faster currency devaluation, lower interest rates, and to increase tax collection efforts to close the country’s budget deficit. These steps are intended to boost Ukraine’s budget revenue in local currency and make borrowing cheaper for the Ministry of Finance.

The result of the mission in Kyiv’s work, which started on September 4, could be the allocation of $1.1B to Ukraine if the IMF’s employees determine that Ukraine is achieving the program’s target indicators and has sufficient funds and ability to meet its financial needs.

However, as Bloomberg notes, the National Bank of Ukraine does not want the hryvnia to weaken. The currency has already lost more than 10% since October. The move will put the central bank’s ability to maintain price stability into question. A rising exchange rate and increased taxes will also take a political toll as the population grapples with the effects of the war.