On Tuesday, the Ukrainian parliament failed to pass legislation on the taxation of international shipments, the adoption of which is a condition for the release of funds from the International Monetary Fund (IMF) and the European Union (EU). One of the bills received 194 votes, while 226 were needed.

Prime Minister Serhiy Koretsky warned that the country is $27bn short of funding for defense and that financial risks are growing. Kyiv could receive $30bn from its partners this year if it fulfills its agreed commitments. However, it has not yet fulfilled all of them. An IMF mission is in Ukraine this week to review the loan program.

Currently, no taxes are levied on shipments of goods valued at up to €150 ($175). According to the Ministry of Finance, introducing such taxes would generate approximately 10bn hryvnias ($228m) annually.

Some lawmakers fear a further rise in the cost of living for residents already affected by the war. Supporters of the measure argue that reducing consumer imports will help domestic producers.

Danylo Hetmantsev, head of the parliamentary finance committee, estimated that failing to pass the legislation could cost the country approximately €4bn ($4.7bn) in funding from the EU and the IMF. However, it was unclear on what basis this calculation was made. Decisions on further tranches of funding are to be made as part of the current assessment.

Financial pressure on Ukraine is mounting alongside the costs of the war and the damage caused by intensified Russian attacks.

(Reuters, bak)