If situation with Russia does not change in coming weeks, 2026 budget for Defense Forces to be planned at 2025 level – Ministry of Finance

If there are no changes in the situation with Russia in the coming weeks, the Ministry of Finance of Ukraine will plan the draft state budget for 2026 with defense spending at or above the 2025 level, Deputy Minister of Finance Olha Zykova said.

"We see attacks on civilian objects - this is evidence that Russia has no desire to stop the war now. We see a complete destructiveness regarding Russia's joining any format of the negotiation rounds. If the situation does not change in the coming weeks, we are planning the budget for 2026, based on the scenario that we need to provide funding for the Defense Forces at a level no lower than in 2025," Zykova said during a budget discussion organized by the Centre for Economic Strategy.

According to her, the Ministry of Finance currently has confirmed commitments from international partners for 2026 and 2027, with commitments totaling $37.4 billion for this period, including funding under the ERA program.

Zykova emphasizes that a dialogue is currently underway with the European Union and the International Monetary Fund (IMF) regarding Ukraine's unmet needs, and in parallel, work is underway to confiscate frozen Russian assets, which should become a resource for reconstruction.

She noted that, first of all, it is now about covering the military needs of the defense and security sector, as well as the needs of the social part of the budget through external financing.

The Deputy Minister of Finance noted that, subject to the end of hostilities, Ukraine, in accordance with the IMF program, is targeting a budget deficit of 9.9% of GDP. At the same time, given the continued threat from Russia, the country will need guaranteed resources to support its defense potential and ensure an adequate level of protection against possible challenges in the future.

Zykova emphasized that in the case of the implementation of the second scenario, which assumes that the war will continue in 2026, defense spending should remain at the 2025 level.

"In other words, if we are currently facing a deficit of over 22% of GDP while considering all potential conditions for economic growth and maintaining sufficient defense spending, we can conclude that the deficit will exceed 17% of GDP in 2026 if active hostilities continue," she said.