Ukraine has proposed a record defence budget of 4.89 trillion hryvnias for 2027, roughly two-thirds of a draft 7.27 trillion hryvnia budget, as war-related costs climb. Kyiv says daily war costs have risen to $190 million and will need more than $52 billion in international aid next year, while partners have currently pledged about $20 billion. Parliament has advanced tax and customs reforms that could unlock roughly €4 billion in EU support, and officials have flagged frozen Russian assets as a potential source to help cover the gap.
Ukraine Proposes Record 2027 Defence Budget of 4.89 Trillion Hryvnias as War Costs Surge
Ukraine Finance Minister Sergii Marchenko attends a bilateral meeting with U.S. Treasury Secretary Janet Yellen on the sidelines of the IMF and WB annual meetings, at the Treasury Department in Washington, U.S., October 23, 2024. REUTERS/Kaylee Greenlee Beal
KYIV, Sept 16 (Reuters) - Ukraine has submitted a draft budget for 2027 that includes a record defence allocation as the financial burden of the war with Russia — now entering its fifth year — continues to rise and Kyiv seeks greater support from international partners.
Budget Overview
The draft proposes defence spending of 4.89 trillion hryvnias (about $110 billion) for 2027, roughly 12% higher than this year and accounting for about two-thirds of a total proposed budget of 7.27 trillion hryvnias. Budget revenues are forecast at 5.6 trillion hryvnias.
Cost of War and Financing Needs
Officials say the daily cost of the conflict has climbed to $190 million in 2024, up from $116 million in 2022. Finance Minister Sergii Marchenko told parliament that Ukraine will need more than $52 billion in international financial aid next year; the government has secured commitments of about $20 billion so far and is negotiating how to cover the remainder.
"This is the sixth budget of the full-scale war, and it's again bigger than the previous one. During these years, the war has become more expensive," said Roksolana Pidlasa, head of the parliamentary budget committee.
Lawmakers have until Oct. 1 to review the draft and submit amendments, and the spending plan must be passed in three readings by Dec. 1.
Fiscal Strain and Budget Gaps
Ukraine faces a worsening fiscal picture as intensified Russian strikes damage businesses and infrastructure, reducing tax revenues while defence needs grow. Marchenko said there is an unfunded additional defence gap of $27 billion this year as Kyiv seeks to raise army wages and scale up weapons production.
Since the invasion began, Ukraine has received approximately $198 billion in fiscal aid from foreign partners, with the European Union supplying the largest share. To secure steady future financing, Kyiv must press ahead with tax and governance reforms and meet the financial and budgetary conditions set by partners.
Reforms and Potential Funding Sources
On Wednesday, parliament advanced a bill in its first reading to impose taxes on foreign parcels and moved forward on a package of tax and customs reforms. Marchenko said these measures bring Ukraine's e-commerce framework closer to EU standards and help unlock external support.
"Parliament advanced two essential tax and customs reforms that bring Ukraine's e-commerce framework closer to EU standards, strengthen fiscal resilience and support fairer competition for Ukrainian businesses," Marchenko said. "This progress also paves the way for around 4 billion euros in EU macro-financial support."
Marchenko also suggested that Russian assets frozen by Ukraine's European allies could become an important source to help cover the 2027 budget shortfall, a proposal that remains subject to international and legal processes.
Reporting: Additional reporting by Yuliia Dysa; Editing by Daniel Flynn and Hugh Lawson.
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