Ukraine’s Long-term Budget Outlook for 2026: Key Indicators and Challenges
On September 15, the Ukrainian government approved and submitted to the Verkhovna Rada the draft state budget for 2026, marking a significant step in the country’s financial planning and strategic development.
The draft, numbered 14000 in parliament, outlines a comprehensive plan to finance critical sectors such as defense, social support, education, and healthcare.
According to Roxolana Pidlasа, head of the relevant parliamentary committee, the proposed budget allocates a total of 4.8 trillion hryvnias, which is more than three times higher than pre-war expenditures.
This substantial increase highlights the government’s focus on strengthening national security amid ongoing conflicts.
The largest portion—2.8 trillion hryvnias—is dedicated to national security and defense, demonstrating a 6.5% growth compared to 2025, factoring in the July defense budget.
A notable innovation is the establishment of a ‘defense reserve’ totaling 200 billion hryvnias, which the Ministry of Finance will allocate for swift responses to battlefield needs.
Additional allocations include nearly 45 billion hryvnias for weapons and munitions production and about 37.6 billion for drones, with these figures integrated into the overall military spending.
Non-military expenditures include servicing external debt—over 513 billion hryvnias, up by almost 18%; social protection—467 billion, an increase of approximately 11%; education—266 billion hryvnias, up nearly 30%; and healthcare—258 billion, with a 17% rise.
Local governments will receive an extra 84.6 billion hryvnias to support communities affected by ongoing hostilities.
The budget’s funding sources encompass domestic revenues (around 2.85 trillion hryvnias), government bonds (419.6 billion hryvnias), and international aid, including loans and grants totaling around $45.5 billion.
Revenue growth is projected to exceed 452 billion hryvnias compared to 2025, driven primarily by increases in VAT (+165.2 billion hryvnias), personal income tax (+93.6 billion), and profits from the National Bank of Ukraine (+61.8 billion).
For the first time, the budget incorporates revenue from economic de-shadowing initiatives, amounting to over 60 billion hryvnias, part of the ‘defense reserve’ and allocated within a special fund.
Experts and parliamentarians are closely monitoring the execution of this ambitious fiscal plan, given the current military expenditures of nearly $172 million daily, with forecasts predicting that Ukraine will require up to $120 billion next year solely for defense needs.