The 2026 Budget: Balancing the Demands of War and the Need for Recovery
Oleg Getman, associate expert at CASE Ukraine and coordinator of the expert groups of the Economic Expert Platform for delo.ua, explains that in wartime, the rational allocation of financial resources and a balanced budgetary policy are not merely economic issues, but critical factors in ensuring the defence capability of the Armed Forces of Ukraine and the economic stability of the state.
War dictates priorities — but the budget does not take this sufficiently into account
Ukraine is in a protracted war, so the 2026 budget must become not merely a financial document, but an instrument of survival, support for the army and a foundation for economic recovery. Despite increased funding for healthcare and business lending programmes, the document reveals a significant gap between the stated priorities — defence, anti-corruption, and recovery — and the actual allocation of funds. Defence spending is planned at 1.92 trillion UAH, which is only 0.6% more than last year. Taking inflation into account, this effectively represents a reduction in security resources. At the same time, a number of important reforms — the relaunch of the Economic Security Bureau and customs reform — have been left without adequate funding.
Where the money is ‘leaking’
Some budget items are still calculated based on pre-war population figures, although many regions have been significantly depopulated due to the war and migration. This means that funds are being spent on programmes that serve no purpose. Spending on education has been increased by 53.8 billion UAH, but without systemic reform of the school network or optimisation of administrative costs, this has little effect. The ‘cashback for Ukrainian’ programme creates more imbalances than benefits — GDP growth is minimal, and small and medium-sized businesses remain excluded from state support.
The greatest weakness — external dependence
The 2026 budget envisages attracting over $45 billion in external funds. This is a huge share of funding, without which the state risks finding itself on the brink of a sequester or a deficit. Any delay or change in international aid could prove critical. Therefore, the key task is to identify domestic reserves: cutting inefficient expenditure, bringing the economy out of the shadows, and optimising tax revenues.
What needs to be changed
1. Align the budget with priorities. Defence, anti-corruption and human capital development must come first. 2. Cut inefficient programmes. Reduce spending on secondary initiatives with minimal economic impact.
3. Introduce KPIs for government bodies. Effectiveness should be measured not by the amount spent, but by the results achieved.
4. Implement the National Revenue Strategy 2030. This involves modernising the tax system, digitising financial processes and ensuring transparent exchange of customs data.
5. Remove risky provisions. In particular, do not grant tax authorities excessive powers such as freezing accounts without a court order.
Conclusion The 2026 Budget has the potential to become a budget of resilience and recovery, but for now it contains a number of dangerous contradictions:
- a real reduction in defence funding,
- support for inefficient spending,
- excessive dependence on external resources.
For Ukraine to not merely ‘survive’ on the budget, but to develop, we need a budget for victory that simultaneously protects, modernises and prepares the economy for the future.
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