IMF urges Ukraine to reduce shadow economy, which makes over 30% of GDP – Bloomberg

The International Monetary Fund (IMF) is urging Ukraine to decisively combat the shadow economy, which the Cabinet of Ministers estimates to exceed 30% of GDP.

It was discussed during the IMF mission's negotiations with Ukrainian government officials on financing for 2026-2027 during its visit to Kyiv, Bloomberg reports.

The head of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, Danylo Hetmantsev, confirmed that during his meeting with the IMF mission, the issue of reducing the shadow economy was discussed as a condition for continuing financing.

"I welcome any efforts to de-shadow, which I have been engaged in since 2019. Indeed, we can find at least UAH 900 billion a year in the shadows. And I am sure that we do not need to be forced to de-shadow. It has become, through the efforts of a few, the business of everyone. Everyone, except for a handful of fraudsters-evaders and their corrupt accomplices, whose number is decreasing every day," says Hetmantsev.

Earlier, the European Business Association appealed to the G7 countries with a request to strengthen support for Ukrainian law enforcement agencies in the fight against illegal trade in excisable goods.

First of all, the business community emphasized the need to expose and block illegal networks for the sale of tobacco products and introduce stricter sanctions for those involved in the illegal production and circulation of cigarettes, electronic cigarettes and e-cigarette liquids.

The Ukrainian National Committee of the International Chamber of Commerce (ICC Ukraine) also previously appealed to the IMF Regional Representative in Ukraine with an appeal to strengthen the fight against the illegal circulation of tobacco products.

"The IMF's participation in resolving this issue can significantly strengthen efforts to combat the shadow economy and increase tax revenues to the state budget," the ICC Ukraine appeal states.

How much does the state budget lose from the illegal cigarette market?

As reported, according to the latest Kantar Ukraine study, in April this year the share of the shadow tobacco market increased to 16.2% of the total volume, and the state budget losses as a result are projected at more than UAH 25 billion per year. At the same time, Ukraine loses another UAH 5 billion annually due to the illegal circulation of e-cigarette liquids, according to the Growford Institute.

Previously, journalist Yevhen Plinskyi, who monitors the fight against the shadow cigarette market, exposed a network of illegal cigarette sales points in Kryvyi Rih, calling on the National Police and the Bureau of Economic Security (BES) to pay attention to this.