Key facts
- Ukraine is proposing record defense spending of 4.89 trillion hryvnias ($110 billion) for 2027.
- This represents a 12% increase compared to this year's defense spending.
- Defense spending is expected to account for about two-thirds of the total draft 2027 budget of 7.27 trillion hryvnias.
- The daily cost of the war has risen to $190 million this year, up from $116 million in 2022.
- Ukraine requires more than $52 billion in international financial aid for 2027.
- Ukraine faces an unfunded additional gap of $27 billion for defense spending this year.
Ukraine is proposing a record 4.89 trillion hryvnias ($110 billion) in defense spending for 2027, a 12% increase from this year, as the costs of its war with Russia continue to escalate. The proposed budget, which accounts for about two-thirds of the total planned state expenditures of 7.27 trillion hryvnias, highlights the country's increasing reliance on international financial aid to cover its defense needs.
Roksolana Pidlasa, head of the parliamentary budget committee, told lawmakers that the war has become more expensive each year, with daily costs rising to $190 million this year compared to $116 million in 2022. She noted that state revenues are not growing at the same pace as spending increases.
Finance Minister Sergii Marchenko stated that Ukraine would require more than $52 billion in international financial aid next year. The government has secured commitments for around $20 billion and is in talks to cover the remaining amount. Marchenko suggested that frozen Russian assets held by Ukraine's European allies could be a key source to bridge the budget gap in 2027.
Marchenko also indicated that Ukraine's financial situation is becoming more complicated due to intensified Russian strikes on businesses and infrastructure. This has led to falling budget revenues while the armed forces require more funds, creating an unfunded additional gap of $27 billion for defense spending this year, as the country seeks to increase army wages and weapons production.
Historically, Ukraine covered its defense needs with its own revenues and relied on foreign aid for social and humanitarian spending. Since the invasion, it has received approximately $198 billion in fiscal aid from foreign partners, with the EU providing the largest share.
To ensure continued financing from partners, Kyiv must implement tax and governance reforms and meet financial and budget requirements. On Wednesday, parliament passed a bill to impose taxes on foreign parcels in its first reading, a step towards unlocking funds from the International Monetary Fund and the European Union. Marchenko stated that these reforms would also pave the way for around 4 billion euros in EU macro-financial support.