Future of Ukraine’s Social Programs at Risk Due to External Dependency in Budget 2026
In 2026, Ukraine faces a significant challenge — ensuring the financial stability of its social sector amid growing budget deficits and high dependence on foreign aid.
Official data indicates that domestic revenues cover only slightly over half of the necessary expenditures, with the remaining funds to be sourced externally.
This includes loans and grants approximately totaling $47.5 billion.
The main international donors are the European Union, the United States, Japan, Canada, as well as organizations like the International Monetary Fund and the World Bank, which play critical roles in supporting Ukraine financially.
Economic expert Andriy Pavlovskyi warns that such dependence makes the Ukrainian budget extremely vulnerable to political and economic risks.
Changes in international priorities or delays in aid payments could trigger crises in social services.
Currently, nearly all internal revenue is funneled into defense spending due to wartime conditions, leaving social expenses — pensions, subsidies, assistance to low-income groups — heavily reliant on external aid.
Minister of Finance Serhiy Marchenko warns that external funding shortfalls in 2026 could reach around €16 billion.
If promised investments and aid are not disbursed, the social sector will be the first to suffer.
Under the circumstances of war, Ukraine’s budget is increasingly fragile, as the state cannot adequately support both defense and social programs without international support.
Additionally, war-damaged infrastructure requires at least 100 billion hryvnias to restore, yet such reserves are absent from the proposed budget.
Experts criticize the government for not tapping into potential internal sources of income, such as the shadow economy, customs revenue, and cryptocurrency operations.
Ideas to formalize the economy, implement fair taxation of large businesses, and cut unnecessary expenses like funding for televised marathons or costly infrastructure projects remain unaddressed.
Pavlovskyi emphasizes that for Ukraine’s stable post-war development, it is crucial to revise financial priorities now and focus on protecting vulnerable populations.
The escalating debt burden, with payments set to increase sharply from 2027, further complicates the situation, requiring budget reallocation toward defense, social support, and recovery efforts.