“What’s Up With the Economy?” is a podcast by the Centre for Economic Strategy in cooperation with Hromadske Radio, supported by PrivatBank.
Every week, hosts Anhelina Zavadetska and Maksym Samoiliuk talk with experts, entrepreneurs, analysts, and government officials about what is happening with Ukraine’s economy.
While the podcast is held in Ukrainian, we decided to summarise each issue with the most important insights.
In the new episode, we talk with CES economists Oleksandra myronenko and Bohdan Slutskyi about Ukraine’s 2026 draft state budget. We discuss why the government is not allocating as much money as is actually needed, how foreign financing is changing, and whether the “national cashback” program and the telethon are truly just a waste of money.
Why Ukraine isn’t allocating as much for defense as it really needs
According to Oleksandra Myronenko, there are two main reasons:
- Huge uncertainty due to the war. We don’t know when, where, and how much the military will need. The needs of the army are essentially limitless — they can only grow.
- International aid in the form of weapons and ammunition. The challenge lies in how this is accounted for in the budget:
«The question is, at what price is this aid recorded — at real value or some conditional one? This is a highly closed-off process we currently have no access to. So a full assessment of the real value of international aid will only be possible after the war ends».
The aid also depends on the political situation in partner countries and on foreign production, so there’s no guarantee that Ukraine will receive what’s been promised:
«In 2025, we were promised a certain amount of international aid in the first half of the year, but there were major delays, so weapons had to be purchased from the national budget. Some of the funds originally allocated for military salaries had to be redirected to weapons purchases. As a result, a 400 billion UAH budget gap emerged that had to be closed».
Is foreign financing sufficient for 2026?
Ukraine used to receive grants, but they are becoming rarer. Now, most financing comes as loans. One crucial mechanism is the use of income from frozen Russian assets, which helps fund defense spending:
«In 2025, three-quarters of financing came from loans: out of $30 billion received, $22 billion was the ERA loan — funds generated from frozen russian assets in Europe. We received them in advance for 50 years, which allowed us to increase defense spending this year».
However, not all of this funding is guaranteed:
«The decision on frozen assets is reviewed every six months. If some EU countries decide not to extend the freeze, there’s a risk that part of the assets will become unavailable», Slutskyi explains.
Ukraine’s total budget financing need for next year is about 2.5 trillion UAH. Of this, 2.1 trillion UAH (about $46.5 billion) is expected to come from external sources, but $18.1 billion is still unsecured.
The portion of the deficit not covered by external financing must be closed through domestic government bonds (OVDP). However, the capacity for domestic borrowing is nearly exhausted — banks already hold over a quarter of their assets in government bonds, which are the most expensive form of borrowing for the state.
Are the telethon and national cashback just a waste of money?
There is no separate budget line for the national cashback program:
«There are leftover funds in the unemployment fund — about 3.5 billion UAH as of January 1, 2026. But this money will go not only to cashback but also to support certain types of businesses and other needs, including humanitarian demining for farmers», Slutskyi explains.
Spending on the telethon, though often criticized, is insignificant in the scale of the state budget:
«As for the telethon — it’s about 1.5 billion UAH. Considering that total expenditures are nearly 5 trillion UAH, 1.5–2 billion is just a rounding error — roughly 0.000001%».
However, the issue is not only about numbers. Public attitudes toward the telethon vary, especially since the opposition claims they are not given airtime — and they are partly right. If public funds are allocated, everyone should receive equal quotas. According to Slutskyi, if the process were more transparent, there would be fewer questions.
Public debt will exceed 100% of GDP in 2026
In 2026, public debt will exceed 106% of GDP, but this is normal during wartime, says Slutskyi:
«We are forced to attract external resources — otherwise, we won’t be able to fund the social sector. Tax revenues cover defense needs, but not pensions, healthcare, or social support».
Most of the debt consists of long-term concessional loans for 10–30 years with low interest rates. If the economy grows, the debt-to-GDP ratio will gradually decline. Before the war, it was below 50% — and returning to that level is entirely realistic.
Should funds from occupied communities be redirected?
For the first time, the government plans to redirect unused local budget funds from temporarily occupied territories to support internally displaced persons (IDPs).
«As of September 16, 2025, municipal budgets in these territories hold 12.3 billion UAH. If you include village and settlement budgets, the amount is even larger».
The money will be used to provide housing for IDPs, and the government will define the distribution mechanism in a separate resolution.
«These funds are just sitting idle and losing value. They should be directed to those who are living here now, working, having children, and supporting the economy», Slutskyi emphasizes.
Investment deal with the U.S.: how much does the 2026 budget allocate for the joint investment fund?
Prime Minister Yulia Svyrydenko said in September that U.S. partners have contributed $75 million to this fund — and Ukraine plans to match that amount:
«This means we also have to contribute $75 million. We haven’t done so yet. That’s why 1.9 billion UAH is allocated in the 2026 budget for this purpose».
It’s also important to note that under this agreement, total planned contributions to the fund by 2028 amount to about $200 million. How and when this will be financed will become clearer over time.
“What’s Up With the Economy?” is a podcast by the Centre for Economic Strategy in cooperation with Hromadske Radio, supported by PrivatBank.
The podcast is available in Ukrainian on different platforms by the link.
