Ukraine plans to rely heavily on foreign financing for its 2027 budget

Friday 02 - 15:20

By: Azzat Manal

Ukraine plans to rely heavily on foreign financing for its 2027 budget

Ukraine is preparing a 2027 state budget that will continue to depend significantly on international financial support as the country faces the prolonged costs of the war with Russia. The draft budget approved by the government projects revenues of 5.648 trillion hryvnias, while total expenditure is expected to reach 7.272 trillion hryvnias.

The Ukrainian Finance Ministry says the country will need around $52.6 billion in external financing during 2027. Expected sources include the European Union, G7 countries through the Extraordinary Revenue Acceleration initiative, the International Monetary Fund, the World Bank, the United Kingdom and other international partners.

The scale of the external requirement highlights the continuing role of international assistance in Ukraine’s public finances. As of late September, Ukrainian officials said that around $20 billion of the projected external financing requirement already had expected sources, leaving approximately $32.6 billion still to be secured.

The 2027 draft budget places defence and security at the centre of government spending. Kyiv has allocated about 4.885 trillion hryvnias to the sector, while also planning additional funding for healthcare, education, veterans, internally displaced people and economic development.

The budget is being prepared as Ukraine enters another year of war and faces substantial financial pressures. Reuters reported in September that Kyiv expects war-related expenditure to remain exceptionally high and has identified a funding gap for defence needs extending into early 2027. The government has been seeking additional support from international partners to address the shortfall.

Part of the international financing framework involves mechanisms linked to the proceeds generated by frozen Russian sovereign assets. The European Union and G7 have developed arrangements intended to use extraordinary revenues from immobilised Russian assets to support Ukraine, while the underlying principal remains frozen.

The use of Russian sovereign assets has been strongly opposed by Moscow, which maintains that such measures are unlawful and has threatened to defend its interests through available legal and political channels. Western governments, meanwhile, have continued to develop mechanisms for supporting Ukraine without directly transferring the frozen principal to Kyiv.

Ukraine’s draft budget also illustrates the difference between planned domestic revenues and the broader financing needs of the state. With expenditure significantly exceeding projected revenues, the government will need substantial borrowing and external support to cover the deficit and maintain essential public services and defence spending.

The final shape of the 2027 budget will depend on parliamentary approval and on the implementation of financing arrangements with international partners. For Kyiv, securing predictable external funding remains a central element of its fiscal planning as the war continues to place extraordinary demands on the country’s economy and public finances.