Ukraine’s Social Payments in 2026: Illusions and Real Challenges in the New Budget
As Ukraine approaches 2026, its national budget presents an ambitious picture: significant allocations are directed toward defense, social programs, education, and healthcare.
However, a deeper analysis reveals that the country’s actual capacity for social support falls far short of the government’s promises and declarations.
Underestimated standards, unaccounted real inflation, and heavy reliance on external funding sources shape a picture that resembles wishful thinking rather than a practical strategy for vulnerable populations.
Since the full-scale invasion began in 2022, Ukraine’s budgets have become tools of survival: defense remains the top priority, while social expenditures are kept at minimal levels.
In 2023, the deficit was 20% of GDP, decreasing slightly to 18% in 2024, and projected at 16% for 2025.
Although nominal social spending increased, their real purchasing power declined sharply due to inflation and currency devaluation.
For example, in 2024, the subsistence minimum increased by 6%, whereas inflation reached 12%, deepening poverty among millions of pensioners and low-income families.
The 2026 budget foresees revenues of about 2.8 trillion hryvnias and expenditures of roughly 4.8 trillion, resulting in a deficit of 2 trillion hryvnias—almost 18.4% of GDP.
Nearly 27% of this budget goes toward defense, a 9% increase over the previous year.
When accounting for inflation, real social expenses effectively shrink, meaning promises of improved living standards are illusory.
Pensions, subsidies, and other social benefits remain insufficient to meet actual needs, especially in regions where prices for utilities are rising sharply.
Due to currency devaluation and actual inflation being higher than official forecasts, the numbers on paper do not reflect the economic reality, threatening social stability.
The data indicates that the real minimum subsistence level in the country is significantly higher—experts estimate it at around 12,000 hryvnias for working-age adults and 8,000 hryvnias for pensioners—thereby increasing poverty risks, which could reach 35% of the population by 2026.
Government initiatives to raise pensions and salaries are still insufficient to cover the rising costs of essentials like food, housing, and transportation, highlighting systemic issues in Ukraine’s social security system.
The reliance on external assistance for funding social programs exposes the country to significant risks, given that nearly half of the financial resources depend on international donors—including grants and loans from the EU, US, Japan, the World Bank, and others.
With internal revenues covering only about 58% of social expenses, Ukraine remains vulnerable if aid delays or reductions occur.
As stated by the Minister of Finance, deficits of external financing could reach 16 billion euros in 2026, jeopardizing pension increases and social subsidies.
The war’s ongoing devastation—requiring an additional 100 billion hryvnias for reconstruction—further complicates financial planning.
Moreover, budget allocations often overlook substantial corruption schemes linked to gaming, customs, and cryptocurrencies, while dismissing proposals for increased social spending through tax reforms, oligarch taxations, and cutting unnecessary expenses.
To build a sustainable future, Ukraine must prioritize honest dialogue with society about social support and realistically assess the budget’s capacity, focusing on internal reserves, fostering domestic industries, tackling corruption, and eliminating populist spending initiatives.