By Rostyslav Averchuk
Lviv (EFE).- Ukraine faces a challenge in securing funds for its basic defense and social expenses in 2026 as reliance on international aid remains critical and the government looks for ways to increase soldiers’ salaries and expand domestic military production.
The draft budget, considered currently by Ukraine’s parliament, allocates 52% of state spending, equivalent to 64.3 billion dollars or 24.7% of GDP, to defense.
A “budget of survival”
The Kyiv School of Economics describes the draft as a “budget of survival,” prioritizing defense to sustain Ukraine’s resistance against Russia’s invasion, even at the expense of investments into infrastructure and development.
For the first time in two years, the minimum monthly wage (currently at 192 dollars) and basic social guarantees will rise by 8%, which only partly offsets inflation’s impact on Ukrainians’ eroding earnings.
Funding these basic expenses, along with other state-level expenditures on education and medicine, will amount to some 46.8 billion dollars and will hinge on the timeliness and size of international support.
Ukraine will need to procure 44.7 billion dollars from external sources like the European Union’s Ukraine Facility, the G7’s initiative, and IMF funding. According to Roksolana Pidlasa, head of the parliament’s budget committee, 17.4 billion dollars of this sum remains unsourced.
Much of the financial support will come in the form of loans, rather than grants, which will push Ukraine’s state debt to 106% of GDP by 2026, per estimates by the Center for Economic Strategy (CES), raising concerns about long-term economic stability.
Military salaries under pressure
Despite the focus on defense spending, experts warned that it remains insufficient to counter Russia’s war effort, which is estimated at over 140 billion dollars annually.
Yurii Gaidai, an economist at CES, calls the decision to keep soldiers’ pay unchanged “a large mistake.” Many non-frontline troops earn approximately 469 dollars monthly, 25% below the national average of 587 dollars.
Reflecting a widespread sentiment, Gaidai, in a recent social media post, warned that low salaries in the military erode social justice, as soldiers feel increasingly undervalued. This could also hinder recruitment efforts, a critical issue as Ukraine seeks to bolster its forces.
“Even if funds are scarce, Ukraine should take a lesson from Russia and offer more financial incentives to attract recruits,” Oleksandr Kovalenko, a military analyst from the Information Resistance Group, told EFE.
Constraints on defense spending
Deputy Roksolana Pidlasa told Ekonomichna Pravda that limited tax revenues restrict military spending. “None of our partners allow their funds to be used for defense, so we rely solely on domestic revenue and internal borrowing,” she said.
Following the latest increase in 2025, the government is reluctant to raise taxes due to the potential impact on the fragile economic recovery.
Addressing parliament last week, Finance Minister Sergiy Marchenko confirmed that Kyiv is negotiating with allies to allow the use of their funds for defense purposes. “Frankly, we’ve reached the limit of our own capabilities,” Pidlasa added.
Scaling up military production
In an effort to reduce its dependence on military aid from partners, Ukraine plans to allocate 23 billion dollars, over a third of its defense budget, to purchasing and producing weapons domestically.
However, this falls short of the needs. Kyiv estimated an additional 51 billion dollars is required to purchase weapons and sustain its 2026 war effort, a gap that domestic revenues cannot bridge.
President Volodymyr Zelenskyy announced last week that Ukraine is planning to start exporting some weapons to generate profits to increase the production of critical weapons.
Frozen Russian assets as a solution
Ilona Sologoub, from the VoxUkraine think tank, told EFE that confiscating Russia’s frozen assets, valued at over 200 billion dollars, is the obvious and just way to address Ukraine’s funding shortfall. Currently, Ukraine receives only the interest accrued on some of these assets.
However, Belgium, where most of the assets are administered, and countries like France oppose confiscation, citing potential breaches of international law and risks to Europe’s financial reputation. EFE
ra/dgp
