Ukraine is seeking fresh funding for 2027 and says it is ready to deliver the reforms. Prime Minister Serhii Koretskyi says Ukraine’s external budget financing need for 2027 exceeds $52 billion, with more than $32.6 billion still to be raised.

That money underwrites the basics of a country at war: the army, pensions, hospitals, and support for business, he notes. Defense and security alone will take almost 44 percent of GDP in the 2027 budget, and the gap comes as Russia keeps hammering the infrastructure that generates Ukraine’s own revenue.

“The defense capability of the country, the payment of pensions, the support of hospitals and business depend on these funds,” Koretskyi says.

The hole Russia keeps digging faster than Kyiv can fill it

Russia’s strikes widen the gap even as Kyiv tries to close it. Russia systematically attacks critical infrastructure, business, production and civilian sites, and the destruction and halted enterprises will leave tax revenues about $1.5 billion below forecast by the end of the year, he warns.

For instance, output of Ukraine's steel industry, one of the pillars of its wartime economy, fell 57.3% in August due to Russian strikes. This sector is Ukraine's second-largest foreign-currency earner, employing more than 70,000 people directly and another 250,000 in related industries, and paying close to $1 billion a year in taxes.

Beyond the budget itself, the off-budget needs of Ukraine’s Defense Forces for 2027 are estimated at $45 billion, or about 40 billion euros, a figure that sits on top of the $52 billion budget requirement, he says.

The reforms Kyiv must deliver to unlock the money

The money hinges on reforms Ukraine still has to deliver. In the next few days, the government is to approve all the decisions needed to continue financing.

“Ukraine continues to work on fulfilling its part of the commitments. This week, the government is expected to approve all the necessary decisions to ensure continued funding,” the Ukrainian prime minister says.

Meanwhile, the Parliament plans to consider the bills required under the support programs of the IMF, the World Bank and the EU.

Russia is spending more on the war than at any point since it began. Russia's military funding is on track to hit a record this year after President Vladimir Putin added almost $60 billion to the outlays set in the budget, Bloomberg reports, citing people close to the government.

Defense spending is expected to approach about $199 billion by the end of 2026, roughly 40% above the plan Moscow announced in late 2025. That reverses the course of a year ago, when the Kremlin meant to slow military growth, narrow its deficit, and rebuild reserves drained by the war.

Alaska was the turning point

Putin ordered the shift late last year, after concluding that talks with the US in Alaska would not produce an acceptable deal to end the fighting, the report says.

By January, the Kremlin judged an agreement with Ukraine to be out of reach, and the government began accelerating advance payments to defense firms and raising other war-related spending.

"The government is finally budgeting for a prolonged war in Ukraine, but still understates its cost," Bloomberg Economics economist Ekaterina Vlasova said.

The deficit nearly doubles

Paying for the war has blown out the budget. The projected 2026 deficit has climbed to more than $81 billion, up from about $44 billion as first planned, and the government covered the extra spending through increased domestic borrowing and gold sales.

The budget plans years of war

The spending is not set to fall soon. Under the budget plans, Russia's military outlays reach about $200 billion in 2027, then ease to $194 billion in 2028 and about $191 billion in 2029, a signal that Moscow is planning for a long war.

Earlier, Euromaidan Press reported that Russia was raising 2027 defense spending by 27% to a record, even as its deficit widens and oil and gas revenues fall.

Ukraine has stopped paying veterans to go to the gym because of the economic crisis looming in the country, the war, Russian strikes, and the lack of reforms needed to receive extra funds from the EU. The Veteran Sports program, which provided veterans and combat participants with about $33 per quarter toward a nearly monthly gym membership, was suspended on 1 October after the state found no funds for it, the Ministry of Veterans Affairs said.

The suspension is a telling sign of Ukraine's budget squeeze, and the ministry puts it plainly: defense comes first, so the money for everything else runs short. It fits a wider government decision to freeze non-essential spending and fund only the army, pensions, and public wages.

The program proved far more popular than planned, drawing more than 800,000 users and costing over double its budget.

Defense takes the money

"The main priority of state spending remains the country's defense. Under these conditions, the state budget's ability to finance other areas is limited," the ministry said.

Launched in 2026 with about $13 million for an expected 100,000 recipients per quarter, and roughly 300,000 applications over three, the program instead saw more than 800,000 uses. Payments passed $27 million, more than twice what was set aside.

The crisis runs deeper

The squeeze has two main drivers. Russia's intensifying strikes on Ukraine's energy and infrastructure are pushing the war's cost higher and battering the economy.

And billions in Western money sit on hold: Kyiv has struggled to complete the reforms the EU set out before releasing roughly $20 billion in aid, and the prime minister has admitted that part of it is late because Ukraine missed commitments to its partners.

The ministry plans a 2027 restart

Ukraine intends to bring the program back in 2027, this time for good, said Deputy Veterans Minister Ruslan Prykhodko.

"We have to account for real demand, fix the shortcomings we saw this year, and make the use of funds more targeted," he said.

In next year's budget, Ukraine would provide significantly more funds, he added. In the meantime, the ministry says it is talking to the sports community and businesses about covering the gap for veterans, with concrete proposals to come.

The Russian government has submitted a draft federal budget for 2027–2029 to the State Duma, Meduza reported on 30 September, citing TASS. In all three years, Russia's expenditures will exceed its revenues, the outlet noted.

Russia's finances have been eroding since it launched its full-scale invasion of Ukraine. To keep paying for the war, the Kremlin has drained its reserves, borrowed more, and pushed tax burdens onto residents and businesses, while the wider economy stalls.

The government listed social obligations, including aid to those who fought in its war against Ukraine and their families, along with defense needs among the budget's priorities, while its press release left out the planned cuts to social spending and the rise in military spending, Meduza noted, citing The Bell.

Spending will exceed revenue by about 2% of GDP a year

Russia's federal budget for 2027 sets spending at 48.8 trillion rubles ($585 billion) and revenue at 43.3 trillion ($519 billion), the Russian government stated, leaving a deficit of 5.5 trillion rubles ($66 billion). It claimed the draft is "balanced" and that healthcare spending will rise compared with 2026.

Deficits of 5.1 trillion rubles ($61 billion) in 2028 and 5.3 trillion ($64 billion) in 2029 are also planned, about 2% of GDP a year, Meduza noted.

This year's deficit is now set to reach a record 7.345 trillion rubles ($88 billion), nearly double the previous forecast of 3.785 trillion ($45 billion), The Moscow Times reported on 1 October. To help close the gap, Moscow plans an array of tax hikes for 2027–2029 to fund military spending. Already by May, its four-month deficit had run 50% above what it had planned for the whole year.

Even as the deficit widens, Russia plans its highest defense spending since the full-scale invasion began: 17.1 trillion rubles ($202.58 billion) in 2027, 27% more than the 13.5 trillion originally planned.

Only 2.3 trillion rubles ($28 billion) of that sum is itemized in public documents, and 34.9% of all 2027 spending will be classified, the highest share in at least 12 years, exiled outlet Vyorstka reported. The Duma is expected to hold the first of three readings on 29 October, the date proposed by Budget Committee chairman Andrei Makarov, Interfax reported.

Ukraine's government plans to pay for its army, pensions, and public-sector wages first, and freeze the parks, fountains, and repaving. Prime Minister Serhii Koretskyi says his Cabinet reordered its spending priorities because part of the international aid it counted on has not arrived.

The war is costing the country at least $155 billion this year, Koretskyi stated earlier.

Defense and people come first

"We continue to take tough anti-crisis measures to ensure the most important thing, the needs of defense and our people," Koretskyi says.

The state will continue to pay for the army, pensions, social benefits, and the salaries of teachers, doctors, and other public-sector workers. Everything deemed non-critical is on hold: new construction, reconstruction, capital repairs, and tidying-up projects, among them parks, squares, fountains, and repaving.

"It is worth finally ceasing to spend money on non-priority things," he continues, promising the state will return to them later.

The aid runs late

On 27 September, Ukraine's prime minister stated that the shortfall in the defense budget's needs stands at $27 billion.

"The president, the government, and all branches of authority are working with partners to find mechanisms and sources to cover the remaining $20 billion," he stressed.

These funds are critically needed to supply the Defense Forces with drones, missiles, equipment, and other resources ahead of winter.

"The government, for its part, guarantees that by 15 October, all government decisions required to receive the international financial assistance promised by partners will be implemented," he stated.

Local budgets get the same call

Koretskyi extended the order downward, urging local councils to review their own budgets and cut spending that is not a priority now. The message across government is the same: pool what is available for the army and citizens, and leave the fountains and the rest for after the war.

The European Commission is discussing with EU member states various options to cover Ukraine's budget deficit for next year, which could range from $8 billion to $19 billion, the Financial Times reported on July 8.

International partners have provided Ukraine with over $39 billion for its wartime economy so far this year, Prime Minister Denys Shmyhal announced.

The financial hole in Ukraine's budget is linked to reduced U.S. support and the lack of prospects for a swift ceasefire with Russia that Europe had hoped for, the Financial Times reported.

A senior EU official told the publication that many of Ukraine's partners had previously counted on a peace deal in 2025, but are now forced to revise their funding plans.

This includes the European Commission, which has already adjusted spending from Ukraine-related funding streams.

Without support from Western partners, Kyiv would face a budget deficit of $19 billion in 2026, according to the Financial Times. However, even if additional international financing for the wartime economy can be secured, a gap of at least $8 billion would remain.

To support Ukraine's budget, Europe is considering providing military aid in the form of off-budget grants that would be recorded separately as external transfers but would count toward NATO member countries' national defense spending targets.

One EU diplomat told the Financial Times that military support for Ukraine is viewed as a contribution to the defense of all of Europe.

In a document for G7 countries reviewed by Financial Times, Kyiv proposed that European allies co-finance Ukrainian forces, framing this as a service to strengthen continental security.

Other support options under discussion include potentially accelerating payments from the existing $50 billion G7 loan program and reinvesting frozen Russian assets in higher-yield financial instruments that the EU allocated to help service the debt.

According to the Financial Times, two sources confirmed that the commission planned to discuss these options with EU finance ministers on July 8.

The funding issue will also be raised at the Ukraine Recovery Conference in Rome on July 10-11, dedicated to Ukraine's reconstruction needs. European Commission President Ursula von der Leyen will attend the event.