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IMF: the war in Ukraine may drag on until 2026


The International Monetary Fund (IMF) has revised its forecast for the duration of the Russian-Ukrainian conflict. Now the base case scenario assumes that fighting could continue until the end of 2025, and in a negative scenario - until mid-2026. Although most analysts assumed that the conflict could end as early as next year, amid a change of administration in the White House. The IMF also warns of risks associated with Ukraine's energy security and reduced support from Western states. According to the fund's forecasts, the ongoing conflict is forcing Ukrainian authorities to increase defense spending - this makes it difficult to restore the economy. Previously, Ukrainian authorities reported that more than 70% of all power plants in the country were damaged or disabled due to Russian airstrikes. The Times suggested that the energy crisis could force the Ukrainian authorities to make a deal with Moscow. The IMF also notes that serious consequences for the Ukrainian economy include labor shortages - which arose due to the mobilization and mass movement of people from east to west, as well as their departure abroad. According to the fund, more than 10.3 million people (out of 31 million inhabitants of Ukraine) remain displaced, and a fifth of the population faces food shortages. Ukrainian debts are also growing: the ratio of public debt to Ukraine’s GDP, according to the institution’s forecasts, may exceed 100% in 2024, and could reach almost 300% by 2029. The IMF called on Kyiv to support the tax measures proposed as part of the aid, and recommended that the G7 countries provide multi-year financing of $50 billion to Ukrainians through extraordinary loans. The Ukrainian government has already submitted a budget to the Verkhovna Rada for 2025, which includes a deficit of 1.6 trillion hryvnia ($38.68 billion), as well as a weakening of the national currency to 45 hryvnia per dollar. A law was also passed to increase the military tax from 1.5% to 5%.

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