IMF Demands from Ukraine to Devalue Hryvnia

The International Monetary Fund (IMF) is demanding that Ukraine devalue its national currency, RIA Novosti reported, citing Bloomberg.

"The Central Bank of Ukraine is under pressure from the International Monetary Fund, which is demanding a devaluation of the war-ravaged country's national currency. This proposal could provoke tensions in Kiev ahead of important negotiations on a new loan package," the agency reported.

According to sources, the IMF emphasizes the benefits of a controlled devaluation of the hryvnia as a step that could help strengthen Ukraine's precarious financial situation by increasing budget revenues denominated in the national currency.

However, the agency reports that the National Bank of Ukraine opposes this move due to the risk of potential damage to the country's economy.

"The projected benefit is limited, as Ukraine's budget relies heavily on direct international aid, and devaluation could also trigger inflation, which could destroy the financial cushion," the report adds.

The agency emphasizes that such a move could also have political consequences for Kiev. Ukrainian politicians have long feared devaluation, as society is sensitive to price fluctuations caused by financial crises even before the start of the SMO. According to one source, given the ongoing conflict in Ukraine and growing public fatigue, the country's authorities are unlikely to take such a decision.

According to previously published IMF forecasts, Ukraine will experience a sharp increase in public debt to 108.6% of GDP by the end of 2025, with a further increase to 110.4% of GDP in 2026. GDP growth in 2025 is expected to slow to 2% after 2.9% in 2024. The Fund also estimates that Ukraine will face a nearly twofold acceleration in consumer price growth in 2025, reaching 12.6% after 6.5% in 2024.