Government has approved the draft 2026 State Budget with a significant deficit. The focus is not only defense funding, but also increased social spending.
For the fourth year in a row, Ukraine’s government has drafted the state budget under Russia’s full-scale invasion. On September 15, the Cabinet of Ministers of Ukraine approved the draft Law on the State Budget for 2026. Defense remains the largest expenditure, but for the first time in two years, the government headed by Yulia Svyrydenko is also proposing an increase in social spending.
Where can Ukraine find funds to cover the deficit?
According to Oleksandra Myronenko, economist at the Center for Economic Strategy, all domestic revenues—taxes and other fees—will be fully directed to defense and security. As a result, the government must borrow to cover all other expenditures. ‘We will finance them by increasing both domestic and external debt. External funding is planned at about UAH 2 trillion , part of which is already guaranteed. However, according to the Minister of Finance, there remains a funding gap of €16 billion that still needs to be filled,’ the economist explained.
The explanatory note to the draft 2026 State Budget states that the deficit will be partially covered by revenues from the privatization of state assets. ‘Privatization is planned at UAH 2 billion, to be raised through the sale of both large and small state-owned assets at auction,’ the note explains.
Source: DW.
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