Several billion is not enough: how to finance the Armed Forces and pensions in 2026 Ukraine

According to the Ministry of Finance, all internal financial resources, which are its own income (taxes, customs payments, excise duties, fees) and borrowing, aim to ensure defense. In total, more than UAH 2. 8 trillion is provided for defense and security, and compared to last year, safety expenditures increased by UAH 168. 6 billion. Meanwhile, UAH 467. 1 billion (more than UAH 45 billion than last year), including UAH 251.

3 billion, was laid on social purposes, and 133 billion benefits and benefits for vulnerable categories of people were transferred to the Pension Fund, and 133 billion. The focus talked with economists to find out more about where the country would take money to finance important expenditures and what will be with the debt load next year. “The need for external financing will be 2 trillion UAH 79 billion.

This is approximately 42 billion euros, given the average annual rate laid in the budget at the level of 49. 4 hryvnia per euro. Of these, some are already secured, but there is still a large proportion of lack of funding for next year. Namely, according to the Minister of Finance, this shortage is 16 billion euros that still need to be found, ”Alexander Mironenko, an economist of the Center for Economic Strategy, explained in a comment to the focus of Alexander Mironenko.

Next year, the main revenues of finances to the state budget, if you analyze external sources, will be held under the programs of Ukraine Facility and ERA. That is, in fact, most expenditures will finance two sources: the EU program of Ukraine Facility and the ERA mechanism, which provides for the direction of Ukraine's loans that will be repaid and serviced at the expense of future profits received from immobilized Russian assets.

However, there may be new sources, as Alexander Mironenko recalled, recently the President of the European Commission Ursula von Der Lien has announced the possibility of creating a new mechanism of lending on the example of the ERA program to provide funding for the budget of Ukraine for the following years. "The Ministry of Finance is also actively working on closing this shortage for next year, so maybe we will see new support programs in the near future," says Specialist.

Regarding the loans, the draft State Budget-2026 states that the financing of the General Fund of the State Budget in 2026 is planned by making state borrowings in the amount of UAH 2. 429 trillion, including external external in the amount of UAH 2. 009 trillion, internal-419. 5 billion hryvnias. According to the calculations, the estimated marginal volume of public debt next year will be 10. 47 trillion UAH and will be 101. 6% of GDP.

Among the main creditors are the IMF, governments of foreign countries, the European Investment Bank, the Bank of Development of the Council of Europe, the European Bank for Reconstruction and Development. Banking financing is likely to be renewed, infrastructure and energy. The state budget also refers to grant assistance in the amount of UAH 18. 2 billion. “With regard to grant financing, it is laid in the budget project at UAH 43 billion.

The budget law always sets the conservative amount of grants, which then change during the budget year depending on the revenues of this assistance. For example, in 2024, UAH 68. 6 billion was set in a clarified plan, and in fact UAH 473. 9 billion was received, ”says Alexander Mironenko. The IMF next year will continue to be one of the main creditors and the reforms in Ukraine.

“Ukraine wants a new IMF program, the new program is always the new risks and requirements of the Foundation, what the new IMF program will be, the success of attracting the remaining 90% of external funding depends. Increasing the tax burden in a country that fights and feels the outflow of labor is a bad idea, so you need to look for a compromise between external funding and internal resources.

I think that the new program with the Fund should be aimed at the economic revival of Ukraine during the war, ”-said the economist, ex-member of the NBU Council Vitaliy Shapran. In his opinion, the IMF next year will be the role of the organizer and the controller, who will be viewed by all our official creditors, including the EU and the USA.

"Therefore, I would advise our authorities to pay maximum attention to the negotiations with the IMF and not to merge the fund by failure to perform small beacons from a memorandum, which there are many," says Shapran. Next year, the debt of Ukraine, that is, the postponement of the term "after the war" may also be required. “In the project of the State Budget for 2026 there are signs that Ukraine will continue to work on revision of the conditions of GDP-wars.

During 2025, agreements with creditors have not yet been reached. This tool was created in 2015 in completely different macroeconomic conditions, which did not take into account the consequences of a full -scale war and the need for long post -war recovery. Further use of primitive formulas could significantly restrain economic growth. That is why GDP-GDP restructuring and revision of their conditions look logical and justified.

The direct confirmation of this is Article 18 of the Project of the State Budget for 2026, which is entitled to the Ministry of Finance with state derivatives, including their exchange for new foreign government bonds. This testifies to the government's intention to continue negotiations with investors in 2026, ”says Alexander Mironenko. According to Vitaliy Shapran, creditors are unlikely to go for restructuring.

“The most optimal option is to seek confiscation of assets of the Russian Federation, here most of the path has already been traveled. It is also necessary to expand the pool of Russian assets, which Ukraine should apply, first of all, assets that have found themselves outside the Russian Federation through laundering funds by Russians in Ukraine, Moldova, Baltic countries, ”the expert said.

In the draft state budget for the next year, the highest expenses are for defense and security, they will exceed UAH 2. 8 trillion. Of these, 1. 14 trillion UAH were laid on the payment of cash and other payments to the servicemen, and UAH 0. 68 trillion is purchased and repaired. Obviously, many equipment is planned to be received from partners, which has already been reached at a variety of meetings at the highest level and within the framework of the Ramstein Defense Group on Defense of Ukraine.

However, all hopes are still for European partners. In the US, the US Congress has recently adopted a bill that defines the budget for the state's defense needs in 2026 in the amount of $ 892. 6 billion, but the document provides for the allocation of only $ 400 million on the "USAI)" initiative). It is clear that Ukraine's expenditures for the war of this amount are not critical.

Experts say that all possible sources will be used to cover military expenditures-from the direct assistance of partner countries by supplying weapons to attracting funding within the country through government bonds. “There is still a borrowing through government bonds. Banks' liquidity resource now reaches UAH 300-500 billion, so it is to some extent a safety. Plus part of the military budget is formed at the expense of physical arms from the partners of Ukraine, ”says Vitaliy Shapran.

Uncertainty remains in the part of the collection of tax revenues, which experts see too optimistic, as for the country where business works in the face of shelling and scarcity. Experts say that the deterioration of the situation with logistics and electricity can significantly affect the budget, which can not be not received by planned taxes and will require new expenditures due to the consequences of the continuation of the war.

“We live in considerable uncertainty due to the continuation of active fighting, and strokes about energy, gas, port infrastructure, logistics can change the situation dramatically. We understand that the withdrawal of port infrastructure restricts us again, for example, in export and export. Which will affect the revenue part of the state budget. Similarly, gas and energy infrastructure, which will affect the business and, accordingly, will require additional government expenditures.

Very high uncertainty, because the war continues, security risks and total dependence on external financing, plus lack of unity in the European Union, the risk of deterioration of the rhythm of international assistance income, ”the financial analyst, a member of the Ukrainian Society of Financial Analytics, said in a conversation with focus. Currently, the state budget financing plan does not look complete, as there is a gap of the budget, which has not yet been decided to close.

And here are quite possible decisions such as increasing the tax burden on business and citizens (because it is unlikely to cut social expenditures), if the authorities are not able to negotiate with key partners about new funding programs at the end of this year. “In 2026, the government provides for taxes and other revenues of UAH 2. 8 trillion. This is UAH 452 billion more than income for this year, which is possible in particular by increasing VAT, PIT and part of the NBU.