The budget financing deficit may exceed $27 billionThe postponement of the expected end date of the full-scale war to the second half of 2027 will lead to an increase in defense spending and create an additional state budget financing deficit for Ukraine of $67.4 billion during 2027–2029.This is stated in the macroeconomic review of KSE Institute for the III quarter of 2026.
Defense expenditures will increase
“A longer full-scale war will significantly increase defense and security expenditures, restrain budget revenues, and delay access to market financing,” the review states.Total defense and security expenditures over this period will increase by $68 billion compared to previous estimates, amounting to $101.5 billion in 2026 and $112.9 billion in 2027. To maintain debt sustainability, additional funds should be raised in the form of grants or concessional loans.
What is the projected budget deficit
According to analysts’ forecasts, the state budget deficit, excluding grants, will be:
- 19.1% of GDP in 2026;
- 18.8% of GDP in 2027;
- 17.8% of GDP in 2028;
- 12.6% of GDP in 2029.
Meanwhile, no budget financing deficit is expected in 2026. On the contrary, a surplus financing of $4 billion is projected.In the following years, the following financing gap is projected:
- $19.5 billion in 2027;
- $27.1 billion in 2028;
- $20.7 billion in 2029.
Forecast for external financing and reserves
According to KSE Institute estimates, the external financing gap will be:
- $16.2 billion in 2026;
- $2 billion in 2027.
In 2028, an external financing surplus of $10.6 billion is expected, while in 2029, a gap of $4 billion is projected.Ukraine’s gross international reserves, according to analysts’ forecasts, will be:
- $73.5 billion at the end of 2026;
- $75.5 billion at the end of 2027;
- $65 billion at the end of 2028;
- $68.9 billion at the end of 2029.
According to: Interfax-Ukraine# Budget# Financial aidSpace for your advertisement