June Economic Review in 2026. What’s changing in Ukraine’s 2026 state budget?

Since March 2022, the Centre for Economic Strategy (CES) has been preparing monthly reviews of Ukraine’s economy during a full-scale war.  The special topic of the June review is: «How can Ukraine effectively use €60 billion in EU defense aid?».

All previous reviews can be found under the link.

Key changes in the Ukrainian economy in June:

• Sectoral analysis: After a fall in Q1 2026, economic activity gradually restored amid a stable energy situation. Metallurgy production grew in May. The spring sowing campaign has already been finished, and harvest expectations remain good despite the risks of lower fertilisation.
• Monetary sector: Inflation in May 2026 reached 8,2% y-o-y, down from 8,6% in April, and rose by 0,9% m-o-m. The government released a new 2027-2029 forecast, expecting 4,5% real GDP growth next year. The official UAH/USD exchange rate approached 45 in June, caused by a higher trade deficit.
• Fiscal sector: The effects of the fuel crisis have already faded. Import VAT — the largest non-seasonal revenue source – decreased, tracking an import contraction. May’s increase in revenues is only due to the seasonality of CPT. April expenditures saw a rebound after a decline in the first quarter. War and debt service expenditures are striking. However, the defence spending is still less than expected, 80% fulfillment of the plan.
• Special topic: Rada has adopted amendments to the Law of Budget-2026. New European support made this possible. Revenues are increasing more than expenditures, so the resulting deficit now is smaller — 12.1% of GDP against 18.5% of GDP in the original plan. Most of the increase in expenditures is due to the war needs, both procurement and salaries, which were underfunded in the original plan. But to increase the military salaries budget needs even more sources and its reallocation.

See our report below for further details.

This event has been funded by the UK International Development from the UK government; however, the views expressed do not necessarily reflect the UK government’s official policies.