Category: Russia

Source: IMF – News in Russian

May 22, 2025

SPEAKER:  Ms. Julie Kozack, Director of the Communications Department, IMF

MS. KOZACK: Good morning, everyone and welcome to this IMF Press Briefing.  It is wonderful to see you all today on this rainy Washington morning, especially those of you here in person and of course also those of you joining us online.  My name is Julie Kozak.  I’m the Director of Communications at the IMF.  As usual, this press briefing will be embargoed until 11:00 a.m. Eastern Time in the United States.  And as usual, I will start with a few announcements and then I’ll take your questions in person on WebEx and via the Press Center.  

So first, our Managing Director, Kristalina Georgieva, and our First Deputy Managing Director, Gita Gopinath, are currently attending the G7 Finance Ministers and Central Bank Governors meeting taking place in Canada right now.  Second, on May 29th through 30th, the Managing Director will travel to Dubrovnik, Croatia to attend a joint IMF Croatia National Bank Conference focused on promoting growth and resilience in Central, Eastern, and Southeastern Europe.  The Managing Director will participate in the opening panel and will hold meetings with regional counterparts.  

On June 2nd, the Managing Director will travel to Sofia, Bulgaria to attend the 30th Anniversary celebration of the National Trust Ecofund.  During her visit, she will also hold several bilateral meetings with the Bulgarian authorities.  

Our Deputy Managing Director, Nigel Clarke, will travel to Paraguay, Brazil, and the Netherlands next month.  On June 6th, he will launch the IMF’s new regional training program for South America and Mexico, which will be hosted in Asuncion by the Central Bank of Paraguay.  From there, he will travel to Brasilia to deliver a keynote speech on June 10th during the Annual Meeting of the Caribbean Development Bank.  He will also then travel to the Netherlands on June 12th to 13th to participate in the 2025 Consultative Group to Assist the Poor Symposium and to meet with the Dutch authorities.  

Our Deputy Managing Director, Kenji Okamura, will be in Japan from June 11th to 12th for the 10th Tokyo Fiscal Forum to discuss fiscal frameworks and GovTech in the Asia Pacific region.  

And finally, on a kind of housekeeping or scheduling issue, the Article IV Consultation for the United States will be undertaken on a later timetable this year, with discussions to be held in November.  

And with those rather extensive announcements, I will now open the floor to your questions.  For those connecting virtually, please turn on both your camera and microphone when speaking.  All right, let’s open up.  Daniel.

 

QUESTIONER: Thanks for taking my question.  I just wonder if the IMF has any reaction to the passage of last night in the House of Representatives of the One Big, Beautiful bill.  And a related question, how concerned are you by the increase in yields on long-dated U.S. treasuries?  What do you think it says about the market’s view of U.S. debt going into the future and sort of any possible spillovers for IMF borrowers as well?  MS. KOZACK: On the first question, what I can say is we take note of the passing of the legislation in the House of Representatives earlier this morning.  What we will do is we will look to assess a final bill once it has passed through the Senate and also once it’s been enacted.  And, of course, we will have opportunities to share our assessment over time in the various products where we normally would convey our fulsome views.  

On your second question, which was on the bond market.   What I can say there is that we know that the U.S. government bonds are a safe haven asset, and the U.S. dollar, of course, plays a key role as the world’s reserve currency.  The U.S. bond market plays a critical role, of course, in finance and in safe assets.  And this is underpinned by the liquidity and depth of the U.S. market and also the sound institutions in the U.S.  We don’t see any changes in those functions.  And, of course, what we can also say is that although there has been some volatility in markets, market functioning, including in the U.S. Treasury market, has so far been orderly.  

 

QUESTIONER: My question is about Ukraine.  Two topics particularly.  So, the first one, when is the next review of the Ukraine’s EFF is going to be completed, and what amount of money would be disbursed to Kyiv?  And could you please outline the total sum that is remaining within the current program?  And the second part, it’s about debt level.  What is the IMF assessment of current Ukraine’s government debt level?  Is it stable?  Do you see any vulnerabilities and any risks for Ukraine?  Thank you.  

MS. KOZACK: Any other questions on Ukraine?  Does anyone online want to come in on Ukraine?  Okay, I don’t see anyone.  

What I can say on Ukraine is that just two days ago, our Staff team started policy discussions with the Ukrainian authorities on the eighth review under the eff.  So, the team is on the ground now.  The discussions are taking place in Kiev and the team will provide an update on the progress at the end of the mission.

In terms of the potential disbursement, I’m just looking here; that’s the seventh disbursement.  We will come back to you on the size of the disbursement, but it should show in the Staff report for the Seventh Review what would be expected for the Eighth Review.  And it would also show the remaining size of the program.  But we’ll come back to you bilaterally with those exact answers.  

And what I can then say on the debt side is at the time of the Seventh Review under the program, we assessed debt, Ukraine’s debt to be sustainable on a forward-looking basis and as with every review that the team of course, will update its assessment as part of the eighth review discussion.  We’ll have more to say on the debt as the eighth review continues.  

 

QUESTIONER: Just one more thing on Ukraine.  Does it make sense for them to consider using the euro as a defense currency for their currency, given the shifting geopolitical sense and what we are seeing with the dollar? MS. KOZACK: So right now, under the program, Ukraine has an inflation targeting regime, and that is where what the program is focused on, our program with Ukraine. So, they have an inflation targeting regime.  They are very much focused on ensuring the stability of that monetary policy regime that Ukraine has.  And, of course, that involves a floating exchange rate.  And I don’t have anything beyond that to say on the currency market.

 

QUESTIONER: The agreement with the IMF established a target for the Central Bank Reserve to meet by June.  According to the technical projection, does the IMF believe Argentina will meet this target?  And if it’s not met, is it possible that we will grant a waiver in the future?

MS. KOZACK: anything else on Argentina?  

QUESTIONER: About Argentina, what is your assessment of the progress of the program agreed with Argentina more than a month after its announcement in last April?  

 

QUESTIONER: The government is about to announce a measure to gain access to voluntarily, of course, but to the dollars that are “under the mattress”, as we call them, undeclared funds to probably meet these targets that Roman was asking about.  I was wondering if this measure has been discussed with the IMF.  And also, you mentioned Georgieva visiting Paraguay and Brazil, if you there’s any plan to visit Argentina as well?  

QUESTIONER: President Milei is about to announce, you know, Minister Caputo, in a few minutes that there is a measure to use similar to attacks Amnesty.  Is the IMF concerned that this could violate its regulations against illicit financial flows? 

MS. KOZACK: So, with respect to Argentina, on April 11th, I think, as you know, our Executive Board approved a new four-year EFF arrangement for Argentina.  It was for $20 billion.  It contained an initial disbursement of $12 billion.  And that the aim of that program is to support Argentina’s transition to the next phase of its stabilization program and reforms.  

President Milei’s administration’s policies continued to deliver impressive results.  These include the rollout of the new FX regime, which has been smooth, a decline in monthly inflation to 2.8 percent in April, another fiscal surplus in April, and reaching a cumulative fiscal surplus of 0.6 percent of GDP for the year, and efforts to continue to open up the economy.  At the same time, the economy is now expanding, real wages are recovering, and poverty continues to fall in Argentina.  

The Fund continues to support the authorities in their efforts to create a more stable and prosperous Argentina.  Our close engagement continues, including in the context of the upcoming discussions for the First Review of the program.  This First Review will allow us to assess progress and to consider policies to build on the strong momentum and to secure lasting stability and growth in Argentina.  And in this regard, there is a shared recognition with the authorities about the importance of strengthening external buffers and securing a timely re-access to international capital markets.  

What I can say on the question about the announcements on that — the question on the undeclared assets.  All I can say right now is that we’re following developments very closely on this, and of course, the team will be ready to provide an assessment in due course.  

On the second part of that question, I do want to also note, and this is included in our Staff report, that the authorities have committed to strengthening financial transparency and also to aligning Argentina’s AML CFT, the Anti-Money Laundering framework, with international standards, as well as to deregulating the economy to encourage its formalization.  So, any new measures, including those that may be aimed at encouraging the use of undeclared assets, should be, of course, consistent with these important commitments.  

And on your question about Paraguay and Brazil, I just want to clarify that it is our Deputy Managing Director, Nigel Clarke, who will be traveling to Brazil and Paraguay, not the Managing Director.  

 

QUESTIONER: Two questions on Syria.  With the U.S. and EU announcing the lifting of sanctions recently, how does this affect any sort of timeline with providing economic assistance?  And secondly, the Managing Director has said that the Fund has to first define data.  Can you just walk through what that entails?  

MS. KOZACK: Can you just repeat what you said?  The Managing Director has said?

 

QUESTIONER: The need to define data.  Just sort of a similar question.  I’m just wondering, following the World Bank statement last week about, you know, Syria now being eligible to borrow from the bank, what sort of discussions the Fund has had with the Syrian authorities since the end of the Spring Meetings and, you know, any update you can give us around possible discussions around an Article IV.  

 

QUESTIONER: About the relationship and if there’s any missed planned virtual or on the ground? 

MS. KOZACK: Let me step back and give a little bit of an overview on Syria. So, first, you know, we’re, of course, monitoring developments in Syria very closely.  Our Staff are preparing to support the international community’s efforts to help with Syria’s economic rehabilitation as conditions allow.  We have had useful discussions with the new Economic Team who took office in late March, including during the Spring Meetings.  And, of course, you will perhaps have seen the press release regarding the roundtable that was held during the Spring Meetings.  IMF Staff have already started to work to rebuild its understanding of the Syrian economy.  We’ve been doing this through interactions with the authorities and also through coordination with other IFIs. And just to remind everyone, our last Article IV with Syria was in 2009.  So, it’s been quite some time since we have had a substantive engagement with Syria.  Syria will need significant assistance to rebuild its economic institutions.  We stand ready to provide advice and targeted and well-prioritized technical assistance in our areas of expertise. I think this goes a little bit to your question on, like, what do we mean by defining data.  I think what the Managing Director was really referring to there is since it has been such a long time since we have had a substantive engagement with Syria, the last Article IV, as I said, was in 2009.  I think there, what she’s really referring to is the need to really work with the Syrian authorities to rebuild basic economic institutions, including the ability to produce economic statistics, right, so that we — so that we and the authorities and the international community of course, can conduct the necessary economic analysis so that we can best support the reconstruction and recovery efforts.  

With respect to the lifting of sanctions, what I can say there is that, of course, the lifting of sanctions and the lifting of sanctions are a matter between member states of the IMF.  What we can say in serious cases that the lifting of sanctions could support Syria’s efforts to overcome its economic challenges and help advance its reconstruction and economic development.  Syria, of course, is an IMF member, and as we’ve just said, you know, we are, of course, engaged closely with the Syrians to explore how, within our mandate, we can best support them.  

 

QUESTIONER: My question is on Russia.  In what ways is the IMF monitoring Russia’s economy under the current sanctions and conflict conditions, and have regular Article IV Consultations or other surveillance activities with Russia resumed to track its economic developments?  

MS. KOZACK: What I can say with respect to Russia is that we are, our Staff, are analyzing data and economic indicators that are reported by the Russian authorities.  We are also looking at counterparty data that is provided to us by other countries, and this is particularly true for cross-border transactions, as well as data from third-party sources. So, this data collection using official and other sources does allow us to put together a picture of the Russian economy.  

We did provide an assessment in the 2025 April WEO, the one that we just released about a month ago.  In this WEO, we assess Russia’s growth at — we expect Russia to grow at 1.5 percent in 2025, 0.9 percent in 2026, and we expect inflation to come down to 8.2 percent in 2025 and 4.4 percent in 2026.  And I don’t have a timetable for the Article IV at this time.  

 

QUESTIONER: I’d like to ask about Deputy Management Director Okamura’s visits to Japan.  So, my question is, what economic topics will be on the agenda during his stay?  Could you tell me a bit more in detail?  

MS. KOZACK: Deputy Managing Director Okamura will travel to Japan, as I said, from June 11th to 12th, and he will be attending the Tokyo Fiscal Forum.  So, this will be the 10th Tokyo Fiscal Forum.  It’s an annual conference that we co-host in Japan every year and the focus is on issues of fiscal policy. In this particular one, Deputy Managing Director Okamura will be discussing fiscal frameworks. It’s very important for all countries to have sound fiscal frameworks so they can implement sound fiscal policy.  He will also be discussing GovTech not only in Japan but in the Asia Pacific region.  And of course, GovTech is very important for countries because it’s a way of modernizing and making government both provision of services in some cases but also potentially collection of revenue more effective and more efficient.  So, those will be the focus of his discussions in Tokyo.  

 

QUESTIONER: I have a question on the recent bailout package by IMF to Pakistan.  The Indian government has expressed a lot of displeasure with Pakistan planning to use this package to build — rebuild — areas that allegedly support cross-border terrorism.  Does the IMF have any assessment of this?  Secondly, I also have another question.  Could you please provide information on the majority vote that was received in approving this bailout package for Pakistan on May 9th?  If you can disclose the information.  

MS. KOZACK: Any other questions on Pakistan?  

 

QUESTIONER: Just adding to that, do you have an update on the implications of the escalation of facilities in that border between Pakistan and India on both economies.  

 

QUESTIONER: Thanks a lot.  I guess the only spin I would put on is generally what safeguards does the IMF have that its funds won’t be used for military or in support of military actions, not only there but as a general matter.  And I also, if you’re able to, there was some controversy about the termination of India’s Executive Director of the IMF, K.V. Subramanian.  Do you have any insight into–there are reports there–what it was about but what do you say it’s about?  Thanks a lot.  

MS. KOZACK: With respect to the Indian Executive Director who had been at the Fund, all I can say on this is that the appointment of Executive Directors is a member for the — is a matter for the member country.  It’s not a matter for the Fund, and it’s completely up to the country authorities to determine who represents them at the Fund.  

With respect to Pakistan and the conflict with India, I want to start here by first expressing our regrets and sympathies for the loss of life and for the human toll from the recent conflict.  We do hope for a peaceful resolution of the conflict.  

Now, turning to some of the specific questions about the Board approval of Pakistan’s program, I’m going to step back a minute and provide a little bit of the chronology and timeframe.  The IMF Executive Board approved Pakistan’s EFF program in September of 2024.  And the First review at that time was planned for the first quarter of 2025.  And consistent with that timeline, on March 25th of 2025, the IMF Staff and the Pakistani authorities reached a Staff-Level Agreement on the First Review for the EFF.  That agreement, that Staff-Level Agreement, was then presented to our Executive Board, and our Executive Board completed the review on May 9th.  As a result of the completion of that review, Pakistan received the disbursement at that time.  

What I want to emphasize here is that it is part of a standard procedure under programs that our Executive Board conducts periodic reviews of lending programs to assess their progress.  And they particularly look at whether the program is on track, whether the conditions under the program have been met, and whether any policy changes are needed to bring the program back on track.  And in the case of Pakistan, our Board found that Pakistan had indeed met all of the targets.  It had made progress on some of the reforms, and for that reason, the Board went ahead and approved the program.  

With respect to the voting or the decision-making at our Board, we do not disclose that publicly.  In general, Fund Board decisions are taken by consensus, and in this case, there was a sufficient consensus at the Board to allow us to move forward or for the Board to decide to move forward and complete Pakistan’s review.  

And with respect to the question on safeguards, I do want to make three points here.  The first is that IMF financing is provided to members for the purpose of resolving balance of payments problems.  

In the case of Pakistan, and this is my second point, the EFF disbursements, all of the disbursements received under the EFF, are allocated to the reserves of the central bank.  So, those disbursements are at the central bank, and under the program, those resources are not part of budget financing.  They are not transferred to the government to support the budget. 

And the third point is that the program provides additional safeguards through our conditionality.  And these include, for example, targets on the accumulation of international reserves.  It includes a zero target, meaning no lending from the central bank to the government.  And the program also includes substantial structural conditionality around improving fiscal management.  And these conditions are all available in the program documents if you wanted to do a deeper dive.  And, of course, any deviation from the established program conditions would impact future reviews under the Pakistan program.  

 

QUESTIONER: I have a question on Egypt.  There is a mission in Egypt for the First Review of the EFF loan program.  So, can you please update us on the ongoing discussions, especially since the Prime Minister of Egypt announced yesterday that the program could be concluded in 2027 rather than 2026?  

MS. KOZACK: Any other questions on Egypt?  I have a question from the Press Center on Egypt, which I will read aloud.  The question is when will the Fifth Review currently underway with the Egyptian government be concluded, and when will the Executive Board approve this review?  And how much money will Egypt receive once the review is approved?  

So, here’s what I can share on Egypt.  First, let me start here.  So first, I just want to say that the Fund remains committed to supporting Egypt in building its economic resilience and fostering higher private sector-led growth.  Egypt has made clear progress on its macroeconomic reform program, with notable improvements in inflation and foreign exchange reserves.  For the past few weeks, IMF Staff has had productive discussions with the Egyptian authorities on economic performance and policies under the EFF.  As Egypt’s macroeconomic stabilization is taking hold, efforts must now focus on accelerating and deepening reforms that will reduce the footprint of the state in the Egyptian economy, level the playing field, and improve the business environment.  Discussions will continue between the IMF and the Egyptian authorities on the remaining policies and reforms that could support the completion of the Fifth Review.  

 

QUESTIONER: My question is about Sri Lanka.  Sri Lanka’s program is subject to IMF Board approval.  The review is subject to IMF Board approval, but we still haven’t got any word on when that would be.  Is there any delay in this?  And is this delay attributed to the pending electricity adjustments, tariff adjustments, that the Sri Lankan government has committed to?  

MS. KOZACK: So just stepping back for a minute.  On April 25th, IMF Staff and the Sri Lankan authorities reached Staff-Level Agreement on the Fourth Review of Sri Lanka’s program under the EFF.  And once the review is approved by our Executive Board, Sri Lanka will have access to about $344 million in financing.  Completion of the review is subject to approval by the Executive Board, and we expect that Board meeting to take place in the coming weeks.  

The precise timing of the Board meeting is contingent on two things.  The first is implementation of prior actions, and the main prior actions are relating to restoring electricity, cost recovery pricing and ensuring proper function of the automatic electricity price adjustment mechanism.  And the second contingency is completion of the Financing Assurances Review, which will focus on confirming multilateral partners, committed financing contributions to Sri Lanka and whether adequate progress has been made in debt restructuring.  So, in a nutshell, completion of the review is subject to approval by the Executive Board.  We expect the Board meeting to take place in the coming weeks.  And it’s contingent on the two matters that I just mentioned.  

 

QUESTIONER: Thank you for having my questions on Ecuador.  Since the IMF is still completing the second review under the EFF program for Ecuador, do you think it’s going to be time to change the program, the goals, or maybe the amount of the program?  Because Ecuador is now facing different challenges compared to 2024.  The oil prices are falling, so that is going to affect the fiscal situation for Ecuador.  And also, I would like to know if Ecuador is still looking for a new program under the RSF.  And the last one, I would like to know if, do you think that Ecuador is going to need to make some important changes this year on oil subsidies and a tax reform?  I think, as I said, Ecuador now is facing some important challenges in the fiscal situation, so do you think it’s going to be possible because of, you know, all the social protests and all that kind of stuff?  Do you think it’s going to be possible to do that in Ecuador?  

 

QUESTIONER: Is there a request, an official request, in place to modify the program?  And if there is, of course, details of the new one, you can share.  

MS. KOZACK: And then I have one question online from the Press Center regarding Ecuador.  Is the sovereign negotiating new targets, given their fiscal position deteriorated compared to last year?  Our understanding is that $410 million was not dispersed under the First Review.?

So let me share what I can on Ecuador.  So, right now, representatives from the IMF, the World Bank, and the Inter-American Development Bank are in Quito this week to meet with the authorities and discuss the strengthening of financial and technical support to the country.  As part of this tripartite visit, we have a new IMF Mission Chief who is participating, and she is also using that opportunity to have courtesy meetings with the authorities and to continue discussions and advance toward a Second Review under Ecuador’s EFF.  

What else I can add, just as background, is that the Executive Board in December approved the First Review of Ecuador’s 48-month EFF.  About $500 million was disbursed after the approval of that Frist Review.  And at that time, the Executive Board also concluded the Article IV Consultation.

I can also say that the authorities have made excellent progress in the implementation of their economic program under the EFF.  And regarding the precise timing of the Second Review, we will provide an update on the next steps in due course and when we’re able to do so.  

 

QUESTIONER: Just a quick question on tariffs.  I’m just wondering if the IMF has a response to the U.S.-China deal that was struck in Geneva earlier this month.  You know, if the deal holds, I appreciate it’s a 90-day pause, but if the deal holds, how would you foresee that changing the Fund’s current economic forecast for the U.S. and China and for the global economy?  Thanks.  

MS. KOZACK: As you noted, earlier in May, China and the U.S. announced a 90-day rollback of most of the bilateral tariffs imposed since April 2nd, and they established a mechanism to discuss economic and trade relations.  The two sides reduced their tariff from peak levels, leaving in place 10 percent additional tariffs.  So, the additional tariffs before this agreement were 125 percent.  Now, the additional tariff has agreed to be 10 percent, you know, for the 90 days.  This is obviously a positive step for the world’s two largest economies.

What I can also add is that for the U.S., you may recall, during the Spring Meetings, we talked a lot about the overall effective tariff rate for the U.S.  At that time, we assessed it at 25.5 percent.  This announcement and the reduction in tariffs will bring the U.S. effective tariff rate down to a bit over 14 percent.  

Now, with respect to the impact, what I can say is that the reduction in tariffs and the easing of tensions does provide some upside risk to our global growth forecast.  We will be updating that global growth forecast as part of our July WEO.  And so that will give us an opportunity to provide a full assessment.  All of this said, of course, the outlook, the global outlook in general does remain one of high uncertainty.  And so that uncertainty is still with us.  

 

QUESTIONER: I have a broad question regarding the following – at the IMF World Bank Spring Meeting, the recent one,  the Treasury Secretary Bessent called for the IMF and the World Bank to refocus on their core mission on macroeconomic stability and development.  Did the IMF start any discussion on this topic with the U.S. administration?  And my second question, do you foresee any changes to your lending programs to take into account the views of the Trump Administration regarding issues like climate change and international development?  Thank you.  

MS. KOZACK: What I can say on this is the U.S. is our largest shareholder, and we greatly value the voice of the United States.  We have a constructive engagement with the U.S. authorities, and we very much appreciate Secretary Bessent’s reiteration of the United States’ commitment to the Fund and to our role.  The IMF has a clearly defined mandate to support economic and financial stability globally.  Our Management Team and our entire Staff are focused exactly on this mandate, helping our 191 members tackle their economic challenges and their balance of payments risks.  

What I can also add is that at the most recent Spring Meetings, the ones we just had in April, our membership identified two areas where they’ve asked the IMF to deepen our work.  And the first is on external imbalances, and the second is on our monitoring of the financial sector.  So they’re looking for us to really deepen our work in these two areas.  

As far as taking that work forward, we will continue working with our Executive Board on these areas, as well as to carry out some important policy reviews.  And I think the Managing Director referred to these during the Spring Meetings.  The first is the Comprehensive Surveillance Review, which will set out our surveillance priorities for the next five years.  And the second is the review of program design and conditionality.  And that will carefully consider how our lending can best help countries address low growth challenges and durably resolve their balance of payments weaknesses.  

I have a slight update for you on Ukraine, which says — so the eighth — so if we look at the documents that were published at the time of the Seventh Review program, the one that was approved by the Executive Board a little while ago, based on that, the Eighth Review disbursement would be about $520 million.  And, the discussions of the Eighth Review are ongoing, and any disbursement, as always, is subject to approval by our Executive Board. 

And with that, I will bring this press briefing to a close.  So first, let me thank you all for your participation today.  As a reminder, the briefing is embargoed until 11:00 a.m. Eastern Time in the United States.  As always, a transcript will be made available later on IMF.org.  In case of any clarifications or additional queries, please do not hesitate to reach out to my colleagues at media@imf.org.  This concludes our press briefing, and I wish everyone a wonderful day.  I look forward to seeing you next time.  Thanks very much.

 

  

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https://www.imf.org/en/News/Articles/2025/05/22/tr-05222025-com-regular-press-briefing-may-22-2025

MIL OSI

Source: IMF – News in Russian

https://www.imf.org/en/News/Articles/2025/05/22/CS-France-2025

MIL OSI

Source: IMF – News in Russian

May 20, 2025

An IMF team, led by Mr. Fabian Bornhorst, visited the Netherlands during May 7–20 to conduct the 2025 Article IV consultation. The following statement was issued at the end of the visit:

The Dutch economy is among the most developed countries globally and has drawn strength from integration in global value chains. In recent years, it has weathered shocks well, yet its resilience is being tested, again—this time by trade tensions and geoeconomic fragmentation. Fiscal buffers are ample, and the financial system is well-positioned to absorb shocks. At the same time, the economy is operating at capacity and inflation is elevated. And increasingly binding constraints—in the labor market, housing, emissions space, and the electricity grid—are limiting the ability to grow and adapt. Futureproofing the economy will therefore require policies that both tackle bottlenecks and expand supply capacity, and align with a long-term vision for sustainable growth. Reforms, complementary to EU initiatives, should aim to increase labor input and firm productivity, expand the availability of SME financing, and effectively manage the green and demographic transitions.

Outlook

1. After a weak start, domestic demand is projected to drive growth in 2025 even as trade tensions affect momentum. Real GDP growth is projected to reach 1.1 percent this year. Fundamentals remain strong: unemployment is low, wage growth is robust, and real household purchasing power is solid—supporting private consumption. However, tariffs, trade tensions, and lower trading partner growth are expected to dampen external demand. Combined with uncertainty over future trade policies and less favorable financial conditions, these factors hold back investment and weaken consumer confidence. With a cooling economy, the small positive output gap is expected to close next year; medium-term growth will converge to its estimated potential of 1.2 percent.
2. Elevated inflation is projected to decline gradually and reach the 2 percent target in late 2026. Inflation is projected at 3 percent in 2025. Wage growth has been robust, although real wages have not reached pre-pandemic levels. Going forward, wage growth is projected to moderate as indicated by recent collective wage agreements and early signs of easing labor market tightness. Fiscal measures, on net, will contribute positively to inflation in 2025 and 2026, as the roll-back of some reduced VAT rates and the increase in excise rates are partly offset by energy subsidies and the freeze on social housing rents. As the trade shock reverberates through the global economy, deflationary forces are expected to arise from lower global growth and energy prices, and appreciation of the euro.

Risks

3. Downside risks to growth dominate and arise mainly from trade tensions. Possible direct effects from new/higher U.S. tariffs on currently exempt items (e.g., pharmaceuticals) would lower exports. More generally, rising geoeconomic fragmentation and stronger-than-expected indirect effects from global trade disruptions pose downside risks to growth. The disruption to supply chains could be more severe than expected, leading to upward price pressures even in the context of subdued growth. Policy makers should stay vigilant and nimble. Barring more extreme scenarios, automatic stabilizers in the fiscal framework are sufficient to weather shocks. Domestically, uncertainties in economic policy and the extent to which growth bottlenecks are binding represent risks to the outlook. These can be addressed by implementing consistent, forward-looking, and confidence-building measures.

Fiscal Policy

4. Fiscal policy is geared to supporting households in the near term, while aiming to keep the deficit below 3 percent of GDP by 2030. In view of many, and competing, demands, it is welcome that revised plans in the Spring Memorandum adhere to the trend-based fiscal policy (the Dutch Medium-Term Fiscal Framework) and are in line with national fiscal rules. Key measures in 2025 to support household purchasing power include income tax relief, extending reduced fuel excise duties, energy subsidies, and rent support. To meet the deficit target by 2030, spending cuts in public administration, international cooperation, education, and asylum are proposed. The plans, however, are more backloaded than before, and, in many cases, specific measures have yet to be formulated.
5. Pivoting fiscal policy from stimulating demand to expanding supply would help the economy grow and adapt. Fiscal policy is set to provide an impulse of around 1 percent of GDP in 2025-26. As household real incomes now exceed pre-pandemic levels and the economy is operating at capacity with elevated inflation, broad fiscal support is no longer needed. Scaling back demand support is timely and advisable. While underspending and revenue overperformance could deliver a neutral fiscal stance—as in 2024—proactively identifying and implementing measures would allow for steering the adjustment. To boost the supply capacity of the economy, the government should invest in infrastructure, education, and R&D, foster investment to increase the housing supply and productivity, implement growth-enhancing tax reforms, and tackle bottlenecks from nitrogen and electricity grid congestion. Fostering private and increasing public investment will also contribute to reducing the high external current account surplus.
6. Better aligning policies with long-term goals would improve the effectiveness of fiscal policy. For example, while freezing social rents provides immediate support to some households, it weakens the financial health of housing associations and limits investment to expand and upgrade the housing stock—key to addressing shortages. Extending the reduction of fuel excises disincentivizes the clean energy transition, countering efforts to reduce implicit fuel subsidies and foster EV adoption through subsidies. Limited inflation adjustment of income tax brackets—including to finance reduced VAT rates—offsets previous income tax relief, disproportionately affects poorer households, and disincentivizes labor supply. Education and R&D spending cuts are at odds with fostering high levels of human capital and innovation. In this context, the announced tax and benefits system reform is welcome, offering an opportunity to simplify and align policies.
7. Tackling medium-term spending pressures through structural fiscal reforms will increase fiscal room to maneuver. With a low debt-to-GDP ratio of 43.4 percent, the fiscal position is strong. Moreover, deficits and debt are projected to remain structurally below 3 and 60 percent of GDP through 2030. However, projections also indicate that, by 2050, spending on health, ageing, and climate change will increase by about 4 percent of GDP. Ambitions to scale up defense spending beyond 2 percent of GDP adds to these pressures. Addressing cost drivers early would free fiscal room to maneuver, including: (i) reversing the reduction of health deductibles, increasing health care co-payments, and adjusting the basic policy package while supporting solidarity; (ii) linking the retirement age one-to-one to greater life expectancy for tax-funded old-age pensions; and (iii) moving away from fuel subsidies to revenue-generating carbon pricing and taxation.
8. Implementing the planned tax reforms would support growth. The Building Blocks Tax report rightly recommends streamlining inefficient and ineffective tax expenditures, including abolishing reduced VAT rates. This would lower compliance costs, broaden the tax base, and may open the door to a lower tax rate. Speedy implementation of the proposed capital income taxation reform (‘Box 3’) would align investment incentives by taxing capital income more consistently. and encouraging better resource allocation. Together, the reforms will foster higher investment, productivity, and growth.

Financial Sector Policies

9. Risks to financial stability are elevated and have risen, warranting continued close monitoring. Trade policy tensions and uncertainty have increased financial market volatility and weighed on investor confidence in recent months. More volatility in asset prices could trigger periodic margin calls, particularly on pension funds’ derivatives. Elevated inflation still poses non-negligible risks for insurers. While household and corporate indebtedness is declining, it remains well above the euro area average. In real estate, developments in the commercial sector signal reduced risks. However, the residential market shows renewed signs of overheating. Nominal and real house prices, as well as sales, have picked up again, and housing valuations remain among the highest in Europe.
10. Even so, the financial sector remains resilient to shocks as buffers are ample and commensurate to risks, and the macroprudential policy stance is broadly appropriate. Banking, insurance, and pension fund (PF) fundamentals remain sound. Banks are well capitalized and liquid. Bank profits remain robust and loan delinquencies low, despite a pick-up in corporate bankruptcies, which reflects normalization following phasing out of pandemic support. The countercyclical capital buffer has been maintained at the 2 percent positive neutral rate since May 2024. Other buffers for the largest banks remain in a 0.25‑2 percent CET1-to-risk-weighted-assets ratio range. The insurance sector is profitable and solvent. Funding ratios of occupational PFs have declined as interest rates fell but are rebounding ahead of the system’s transition to defined-contribution schemes and stood comfortably at 120 percent, on average, at end-2025Q1. PFs are resilient to liquidity risks in adverse stress scenarios and can raise cash at short notice if needed from repo or other money markets to meet margin calls on interest derivatives.
11. Addressing access to homeownership through policies that increase housing supply would allow recalibrating borrower-based macroprudential measures towards minimizing financial risks. Housing market risks continue to be mitigated by structural factors including rising real disposable incomes, the large share of fixed-rate mortgages, and full legal recourse in case of default. The maximum LTV limit was lowered to 100 percent in 2018. Eligibility for, and duration of the mortgage interest deductibility were tightened, and the maximum rate reduced. Mortgage risks are further mitigated by the recent extension of risk-weight floors until November 2026. Efforts to ensure a clear legal basis for supervisory authorities’ regular access to granular transaction and loan-level data for risk monitoring and analysis—to identify pockets of vulnerability as they emerge—should continue. Still, as recommended in the 2024 IMF Financial Stability Assessment Program (FSAP) report, to cool the housing market, maximum LTV limits should be progressively lowered even more, to 90 percent, mortgage interest deductibility gradually removed, and borrowers further incentivized to lower exposures to interest-only mortgages. A significant increase in housing supply is needed to boost housing affordability, facilitate broad access to the property ladder, and to reduce banking and insurance risks from residential mortgage exposures. This will require reconsideration of the roles of housing associations and private investors, revisiting rent controls, revising land-use policies and streamlining building regulations.
12. The pension reform will strengthen PFs financial sustainability, and offers an opportunity to improve intergenerational fairness, and rebalance portfolios. Most defined-benefit schemes (DBs) have faced financial pressure since 2008. Many have struggled to index benefits in the low-interest-rate environment, and some were forced to cut benefits. Also, DBs asset allocations do not reflect age-related risk preferences. This has raised concerns about intergenerational fairness. Together, these factors weakened confidence in the system. The transition to defined-contribution schemes will alleviate pressures from ageing on PFs sustainability. It will also allow for portfolio allocations that better align with risk preferences of age cohorts, including more investments in equity, while maintaining a high degree of solidarity and collective risk-sharing. Notably, about 80 percent of plans are expected to combine individual investment accounts with collective investments that bundle assets and distribute returns across individual accounts.

Addressing Growth Bottlenecks

13. A legally-robust and future-oriented nitrogen strategy is urgently needed. Developers now face permit uncertainty, investors lack confidence, and farmers remain in limbo, as environmental targets slip further out of reach. Recognizing the urgency, the government is developing a strategy that includes shifting from deposition to direct emission measurement and extending the timeline to halve emissions by 5 years. More details on possible measures are paramount. Economic considerations suggest that fees on emitters are the most cost-effective and efficient way to reduce emissions. To avoid tax increases for the average farmer, a system of feebates—where emissions-intensive farming pays fees that fund rebates for lower emission practices—offers a balanced approach. Socially-acceptable solutions and emission reductions have been achieved through a combination of taxation, regulation, subsidies, and science-based guidance.
14. Plans to relieve electricity grid bottlenecks and ready the grid for the green transition should be accelerated and paired with dynamic pricing. The government’s strategy focuses on expediting high-voltage grid extensions and streamlining permitting. There are plans to guarantee debt issuance by the grid operator of about 4.4 percent of GDP to facilitate grid expansion. However, in the meantime, connection wait-times remain too long. Efforts to manage grid pressures should also include increasing storage capacity and incentivizing energy efficiency of households and industry, while helping the energy-poor adapt. To better manage demand, energy savings could be further incentivized by promoting greater use of dynamic metering and pricing. These are effective in shifting consumption to off-peak periods, help consumers save money, and reduce the need for extra capacity to meet peak demand.

Strengthening Labor and Firm Productivity

15. Labor market reforms should continue to focus on enhancing human capital. Given the aging population and labor shortages, it is critical to fully utilize the potential of workers across all generations and smaller firms. Reforms should improve educational outcomes and vocational training to address skill shortages and enhance lifelong learning. Recent progress to address labor market duality, such as reducing false self-employment, are welcome. Introducing mandatory disability insurance and strengthening pension arrangements for the self-employed are important measures to be implemented.. Additionally, better integration of workers with a migratory background would be facilitated by stepped-up language training, job search support, and recognition of qualifications acquired abroad.
16. Policies to support firm productivity should address several key areas. First, business dynamism should be promoted by reducing entry/exit barriers to enhance firm-level allocative efficiency. Second, productivity-enhancing investment should be increased by improving the investment climate and addressing growth bottlenecks, advancing digitalization, and encouraging R&D. Third, productivity spillovers should be fostered by investments with large spillover effects (e.g., research parks and networks) to build connections among firms, research institutions, and regions. Fourth, efforts are needed to support firms to grow from start-ups to scale-ups and beyond. Plans to equalize tax treatment of stock options for small firms are welcome and should be expanded to include eliminating the reduced profit tax rate for SMEs as well as providing a menu of financing options along a firm’s development stages.  

Domestic Capital Market Reforms

17. Capital market reforms would help expand SME financing by improving valuations, stimulating investor demand for both equity and debt instruments, and simplifying debt issuances.  

• Improving valuations—thereby increasing the amount of capital firms can raise when they issue stocks or bonds—will require increasing the size and liquidity of secondary markets. This should be combined with measures to narrow information gaps, such as easing investor benchmarking, to help reduce investor risk, and with reforming the Bankruptcy Act and securities laws to help investors shorten the settlement cycle for transferable securities and reallocate capital from failed startups more quickly. The authorities should also continue to push forward EU-level reforms, as integration into a larger, EU-wide capital market would also improve liquidity, and hence valuations.
• Increasing PFs’ and insurers’ investments in domestic venture capital and other equity funds would also increase equity market size and raise valuations. The pension reform offers such an opportunity. Higher pension investment, including from abroad, in domestic equity may also be supported at the EU level by revised legal and supervisory requirements for pan-European private pension products that allow for more venture capital investment.
• Standardizing and simplifying procedures for smaller-denomination corporate debt securities issuance, lowering the minimum denomination, making pricing more transparent, and leveraging online platforms and other dealer markets would help increase retail investor participation and make more debt capital available to firms.

Managing the Green Transition

18. To meet national and European climate goals, stronger policies will be needed, including to reduce uncertainty and build public support.  The current policy settings are projected to fall short of the 2030 goals. Clear and consistent policies are required to provide investment certainty for the private sector. The EU climate agenda—including introduction of CBAM and phasing out of free ETS allowances and expansion of ETS coverage—will facilitate progress. These measures may impact purchasing power. Lower-income households may struggle to adapt even though the burdens of ETS reforms across different income groups are estimated to be uniform relative to consumption. To manage these challenges, implementing compensatory funds and other targeted fiscal tools can help balance policy trade-offs and enhance public support.
19. Recalibrating transport policies can prevent a decline in fiscal revenues and address congestion, while meeting climate targets and managing electricity demand. By 2035, revenue from transport is projected to decline by 0.5 percent of GDP, while electricity demand could rise by 20 percent with electrification of the vehicle fleet. These challenges would be best addressed with congestion pricing in urban areas and distance-based charges.

Supporting EU Reforms

20. The authorities should continue to push for rapid implementation of EU-wide reforms, including as the Netherlands stands to gain from these initiatives. With its mature markets, enhancing EU-wide competition by cutting intra-EU trade barriers would complement national efforts to boost business dynamism and productivity. EU-level actions to foster intra-EU labor mobility—recognition of professional qualifications, pension portability—are complementary to addressing labor and skill shortages at home. A European Savings and Investment Union (SIU) would broaden investment opportunities for Dutch savers and allow Dutch firms to more easily tap a wider pool of European savings. Finally, completing the EU energy market would ensure better connectivity and energy security, lower prices, and also lower investment needs to match increasing demand.

*   *   *   *   *

The IMF team thanks the authorities and other counterparts for the constructive policy dialogue and productive collaboration.

https://www.imf.org/en/News/Articles/2025/05/19/mcs-05192025-kingdom-of-the-netherlands-staff-concluding-statement-of-2025-art-iv-mission

MIL OSI

Source: IMF – News in Russian

May 20, 2025

• The Executive Board of the International Monetary Fund completed the Fourth and final review of Kosovo’s Stand-By and Resilience and Sustainability Facility Arrangements. The completion of the review makes available SDR 13.352 million (€16.08 million) under the SBA and SDR 7.744 million (€9.32 million) under the RSF.
• The objectives of both programs have been successfully achieved. The economy has maintained healthy growth, inflation has notably decelerated, fiscal buffers have been rebuilt, and reforms have accelerated.
• Building on the progress made under the programs, the authorities should continue with prudent fiscal policies, strengthen the fiscal framework, and advance structural reforms in the fiscal and financial sectors.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the Fourth and final review of Kosovo’s Stand-By and Resilience and Sustainability Facility Arrangements. The authorities have consented to the publication of the staff report and associated documents. The completion of the review makes available SDR 13.352 million (€16.08 million) under the SBA and SDR 7.744 million (€9.32 million) under the RSF. This will bring the total disbursements under the RSF to SDR 61.95 million (€74.61 million). The SBA, which so far has been treated as precautionary by the authorities, amounts to SDR 80.122 million (€96.50 million).

Kosovo’s economic performance continues to be strong. In 2024, growth was 4.4 percent, driven by household consumption, supported by strong private credit and rising wages. Inflation decelerated sharply, reaching an average of 1.6 percent in 2024 down from 4.9 percent in 2022. The external current account deficit widened to 9 percent of GDP, as increases in consumption and investment led to higher imports; growth of remittances slowed. In 2025, despite heightened external uncertainty from rising trade tensions, growth is expected to remain strong at 4 percent, with inflation stabilizing at 2¼ percent.

Program implementation under both arrangements has been strong. All quantitative performance criteria for end-December 2024 were met. All indicative targets for end-December 2024 and for end-March 2025 were also met. Two structural benchmarks for this review—implementation of a cash forecasting function within the Treasury and the development of a roadmap for adopting the Supervisory Review and Evaluation Process to assess bank risk profiles—were implemented. The remaining RSF reform measure to launch an auction for the construction and operation of the wind power plant has also been implemented.

Following the Executive Board’s discussion, Bo Li, IMF Deputy Managing Director and Acting Chair, issued the following statement:

“The Kosovo authorities have successfully implemented a Stand-By Arrangement and an Arrangement under the Resilience and Sustainability Facility. The SBA supported the authorities’ economic program to reduce inflation and sustain strong growth, while safeguarding the economy against adverse shocks. The RSF supported the authorities’ ambitious climate reform agenda.

“Prudent fiscal policies under the SBA, anchored in the authorities’ rules-based fiscal framework, helped deliver low deficits and debt. In 2025, fiscal policy will aim to sustain growth amid heightened uncertainty, strengthen buffers against future shocks and continue addressing large developmental needs. An ongoing review of the fiscal framework seeks to align it with EU norms while supporting Kosovo’s developmental objectives and maintaining fiscal discipline.

“The structural fiscal agenda has considerably advanced under the SBA. Revenue mobilization has improved through broadening the tax base, leading to higher tax collection. Public financial management reforms have enhanced capacity to assess fiscal risks, improved the quality of fiscal reporting, and increased fiscal transparency. Strengthening the public investment management system will help to further boost execution rates of public investment.

“The Central Bank of Kosovo (CBK) has been driving forward critical reforms to enhance governance and institutional quality, develop the financial sector and strengthen resilience. The banking sector continues to expand rapidly providing vital support to economic activity while maintaining strong capitalization, liquidity, and profitability. The CBK is strengthening its ability to monitor risks related to rapid private sector credit growth.

“Reform measures implemented under the RSF have been instrumental in advancing the authorities’ ambitious strategic energy goals, including expanding renewable generation capacity, reducing pollution, improving energy efficiency, and enhancing regional cooperation. The authorities remain committed to making continued and meaningful progress across all these areas.”

Kosovo: Selected Economic Indicators, 2022–25
Population: 1.6 million (2024)	Nominal GDP per capita (2024): € 6,497
Gini index: 0.29 (2017)	Poverty rate: 19.8% (2018)
Quota (current): SDR 82.6 million
Main products and exports: Minerals, base metals, agricultural products, tourism.
	2022		2023		2024		2025
	Act.		Act.		Prel.		Proj.
Output
Real GDP growth (percent)	4.3		4.1		4.4		4.0
Employment
Unemployment rate (percent)	12.6		10.9		…		…
Prices
Consumer prices (period average, percent)	11.6		4.9		1.6		2.3
GDP deflator	7.2		4.6		2.0		3.8
General government finances (percent of GDP)
Revenue and grants	28.1		29.5		30.0		29.8
Expenditure	28.8		29.8		30.3		31.9
Overall balance, excluding IFI- and privatization-financed capital projects (Fiscal rule definition)	-0.5		-0.1		-0.1		-1.6
Overall balance	-0.7		-0.2		-0.3		-2.1
Total public debt	20.0		17.5		16.9		18.3
Stock of government bank balance	3.9		2.8		3.1		3.4
Money and credit
Non-performing loans (percent of total loans)	1.9		1.9		1.8		…
Credit to the private sector (eop, percent change)	16.0		12.9		18.3		15.8
Effective bank lending rate (eop, percent)	6.3		6.3		5.9		…
Balance of payments (percent of GDP)
Current account balance	-10.3		-7.6		-9.0		-8.3
Remittance inflows	13.7		13.8		13.1		12.6
Net foreign direct investment	-6.8		-6.9		-6.1		-7.5
External debt	38.6		39.8		41.1		42.4
Sources: Kosovo authorities and IMF staff estimates.

https://www.imf.org/en/News/Articles/2025/05/19/pr25154-kosovo-imf-concludes-4th-review-of-kosovos-stand-by-and-rsf-arrangements

MIL OSI

Source: IMF – News in Russian

Opening Remarks by Alfred Kammer, IMF European Department Director, for the Annual EU Budget Conference

May 20, 2025

Thank you for the opportunity to join this important discussion today on the EU budget.

Europe stands at a transformative crossroads. The global environment is increasingly complex, and structural changes are reshaping the foundations of European economies. The challenges before us are significant: strengthening productivity and resilience amid demographic aging and rising geopolitical and trade tensions while increasing defense spending in a fiscally sustainable way, and enhancing energy security and accelerating the clean energy transition.

This is an extraordinary combination of challenges, and it will take an extraordinary effort to meet them. The key is to combine (i) a determined push to complete the single market with (ii) national reforms to allow Europe’s firms to grow to scale. The benefits of doing both promise to be much larger than EU-level and national efforts could achieve on their own. For example, dropping “red tape” that holds back firms at the national level will have a significant larger effect on investment when supported by a much deeper and fully integrated European capital market. And (iii) we will need the EU budget to amplify these efforts by enabling the joint provision of European public goods and incentivizing national reforms. Just think of the importance of energy security for the single market—this is just one example of a European public good where the EU budget has an important role to play.

The Multiannual Financial Framework, or MFF, has proven its strategic importance time and again. It has supported economic convergence through cohesion policy, and, more recently, the ambitious NextGenerationEU package launched in 2020 helped Europe recover from the pandemic with renewed resilience.

Yet, once again, the scale and nature of the challenges ahead require a fundamental rethink. To remain fit for purpose, the upcoming MFF must undergo a comprehensive overhaul. Our recommendations focus on three critical areas.

First, a more ambitious budget with a stronger focus on European public goods is needed.

Over time, the MFF has evolved to reflect emerging needs, but it has not kept pace with the expanding list of challenges that demand a joint EU-level response. Its current size and structure are insufficient to meet the scale of new investments required.

The budget must prioritize areas where EU action can deliver the greatest value—by generating positive spillovers, leveraging economies of scale, and also avoiding duplication between member states. These are the hallmarks of European public goods. Investments in energy security, defense capabilities, and research and innovation are clear examples where joint EU action is both necessary and efficient.

To meet these needs, we must consider a significant increase in expenditures targeted at European public goods, from 0.4 percent of GNI currently to at least 0.9 percent, based on various estimates from the Commission and others. Doing so without reducing allocations to existing programs would imply increasing the MFF budget by at least 50 percent for the 2028–2034 period, from 1.1 percent of GNI to 1.7 percent of GNI.

In the first instance, more EU spending on public goods would reduce the burden on national budgets for the provision of these public goods. But, importantly, this would not simply shift costs from the national to the EU level. With coordinated EU-level investment, greater efficiency will be achieved and, thus, net savings in the provision of these public goods will be generated. For instance, in the case of investments for the clean energy transition, we estimate that improved coordination at the EU level could reduce aggregate costs by approximately 7 percent. At a time when many countries face tight fiscal constraints, such efficiency gains are critical.

Second, we must ensure the MFF is more performance-based, streamlined, and adaptable.

At the core of this effort should be a stronger focus on performance. Linking financial support more systematically to outcomes—an approach implemented through the Recovery and Resilience Facility—can significantly improve the effectiveness of EU spending. The performance-based approach should be expanded across more areas of the EU budget, particularly where targeted financial incentives can catalyze national and regional reforms that complement EU objectives. But as we expand this approach, we must also ensure it remains as simple and transparent as possible—complexity can hinder both implementation and accountability. Programs under cohesion policy and the Common Agricultural Policy are clear candidates. Importantly, though, effective implementation will also require leveraging local and regional expertise to tailor solutions to specific contexts.

Beyond performance, the design of the MFF must be modernized to reduce complexity and increase strategic focus. Consolidating the more than 50 budgetary programs into a smaller number of thematic clusters, organized around key policy priorities, would help streamline the budget. Moreover, harmonizing requirements across programs would reduce the administrative burden for governments, organizations, and beneficiaries, while improving accessibility and implementation.

The budget also needs to become more adaptable. The events of the past five years have demonstrated the need for greater flexibility to respond to evolving circumstances. Thus, the MFF should be equipped with a greater margin for reallocation within the budget and stronger flexibility instruments—backed by sufficient resources—to address more frequent and intense shocks. A mid-term review process within the regular budget cycle could continue to help respond to changing realities.

Third, the financing framework of the budget must be strengthened.

A more ambitious EU budget will require an enhanced financial capacity. Currently, the MFF is predominantly funded through national contributions based on GNI. To support a step-up in European public goods investment, the financing model should be expanded to include borrowing and more robust own resources.

Borrowing capacity—particularly during the initial investment scale-up—can enable the EU to achieve shared objectives without delay, while smoothing the fiscal impact for member states over time. Moreover, bond-financing can support the further development of a European safe asset, thereby advancing capital market integration and contributing to macro-financial stability.

At the same time, the long-term sustainability of the EU budget requires solid and predictable revenue sources. Progress on new own resources is essential—not only to finance existing debt obligations under NextGenerationEU, but also to underpin future borrowing. The Commission’s proposals, including revenue based on the Emissions Trading System, the Carbon Border Adjustment Mechanism, and potentially a harmonized corporate tax base under the “Business in Europe” initiative, represent a meaningful step forward.

In the longer term, additional revenue sources linked to European public goods—such as user fees on jointly funded infrastructure—may also play a role as the budget evolves toward supporting more EU-wide investments, even if the scope remains limited for now.

In conclusion, meeting Europe’s complex challenges requires a more impactful EU budget. The next MFF presents a unique opportunity to scale up ambition, deliver on shared priorities, and transform the budget into a true engine for growth, resilience, and European sovereignty.

This will not be an easy path. Increasing the budget, improving its design, and broadening its financing base will all require political consensus across member states. But the potential rewards are significant: a more united, more competitive, and more secure Europe.

Thank you.

https://www.imf.org/en/News/Articles/2025/05/20/sp052025-ak-making-the-mff-fit-for-purpose

MIL OSI