State Budget 2026: What will it be for Ukraine?

The Cabinet of Ministers has approved the draft 2026 State Budget with a significant deficit. The focus is not only on financing defense needs but also on increasing social spending.

For the fourth consecutive year, Ukraine’s government is shaping its main national budget under the conditions of Russia’s full-scale invasion. On September 15, the Cabinet approved the Draft Law on the State Budget for 2026. As expected in wartime, the largest share of funds is earmarked for defense. However, the government headed by Yulia Svyrydenko is also proposing to revise and increase social expenditures — for the first time in two years.

Where will Ukraine find funds to cover the deficit?

According to Oleksandra Myronenko, economist at the Centre for Economic Strategy, all domestic revenues — taxes and other collections — will be fully allocated to defense and security needs. As a result, the government will need to borrow or find alternative sources to finance all other expenditures. “We plan to cover these through an increase in both domestic and external debt. External financing is projected at roughly UAH 2 trillion, and part of these funds are already guaranteed. However, according to the Minister of Finance, there remains a funding gap of €16 billion that still needs to be secured”, she explains.

The explanatory note accompanying the draft 2026 State Budget also indicates that part of the deficit will be financed through proceeds from the privatization of state assets. “Privatization revenues are projected at UAH 2 billion, which will be generated through the sale of large and small state-owned assets at auction”, the note states.

Source: DW.

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