Ukraine’s 2026 Budget: New Borrowing Strategies and Fiscal Priorities
The draft state budget for 2026, approved by the Ukrainian Cabinet of Ministers, outlines a significant increase in borrowing from both domestic and external sources to finance a broad range of national programs and initiatives.
According to the document, Ukraine’s public debt is expected to grow substantially as the government actively seeks loans to cover budget deficits and fund infrastructure and defense projects.
The projected deficit for 2026 stands at 18.4% of GDP, which is a considerable figure highlighting the country’s financial challenges and the necessity for fiscal stabilization measures.Total planned borrowings exceed 2.4 trillion hryvnias, with nearly 2 trillion coming from external sources.
Domestic borrowing is expected to amount to approximately 420 billion hryvnias.
In terms of repayments, the government plans to allocate over 656 billion hryvnias, including about 132 billion to external creditors and nearly 524 billion to internal lenders.
The total servicing costs for the national debt in 2026 are projected at over 513 billion hryvnias, reflecting a substantial burden on the state budget.The forecasted national debt may reach around 10.5 trillion hryvnias, making up more than 101% of GDP.
The guaranteed debt by the state is expected to be about 4.4% of GDP.
Notably, the budget allocates significant funding for defense and infrastructure projects, primarily through international financial assistance.
A majority of the loans — over 70% — will be sourced from foreign governments and international financial institutions, including the European Union, development banks, and other global organizations.In addition, Ukraine plans to receive grant funding exceeding 18 billion hryvnias in 2026 for recovery and development projects.
The government also intends to raise around 2 billion hryvnias through privatization of state property, sold via auctions.
Given modern challenges, especially the ongoing war with Russia, Ukraine’s daily defense expenditures are estimated at $172 million, with a projected need of nearly $120 billion for military needs in 2024.