To the Speaker of the Verkhovna Rada
To the Chair of the Verkhovna Rada Committee on Budget Policy
To the Chair of the Verkhovna Rada Committee on Economic Development
To the Chair of the Verkhovna Rada Committee on Anti-Corruption Policy
To the Chair of the Verkhovna Rada Committee on Finance, Tax and Customs Policy
Dear Chair of the Verkhovna Rada of Ukraine and Chairs of the Verkhovna Rada Committees!
Analytical centers specializing in economic policy express their respect to you and address the following issue.
Ukraine is in a state of protracted war. The rational allocation of available financial resources and budget policy determines not only the provision of the Armed Forces of Ukraine, but also the economic stability of the state, the ability of business and society to withstand the burden of martial law, ensure victory, and post-war recovery.
The published draft State Budget for 2026 contains several positive decisions, particularly regarding the development of human capital, the implementation of programs aimed at active longevity (checks), increased spending on healthcare, the implementation of veteran policies, the expansion of state programs for preferential business lending “5-7-9,” and other initiatives.
At the same time, the draft state budget for 2026 has several shortcomings that think tanks suggest should be reviewed and revised:
Discrepancy between priorities and systemic problems
The priorities announced by the Government (defense, anti-corruption, recovery, European integration) are not fully reflected in the budget structure. In particular, defense spending is planned at UAH 1,923.6 billion (+0.6% by 2025), which, taking into account inflation, means a decline in real funding. Such a reduction in wartime conditions will require additional funding, which will necessitate amendments to the state budget.
Reforms of the Economic Security Bureau and Customs have not received adequate funding, which raises questions about the fulfillment of international obligations and the projected revenues from de-shadowing (UAH 60 billion) outlined in the draft State Budget. The reboot of the Economic Security Bureau involves the re-certification of all personnel, the recruitment of new employees, and the establishment of decent salaries for employees — none of which is provided for in the draft State Budget.
At the same time, some of the funds may be spent inefficiently. In particular, some sections of the draft budget are calculated based on the pre-war population, which has undergone significant changes. It is necessary to reduce expenditures related to the population, in particular on public services.
Salary increases for educators (+53.8 billion UAH) should be coordinated with relevant strategic decisions on optimizing schools and verifying expenditures in the education sector, reducing paperwork for teachers, developing teachers’ competencies and their role in the educational process in line with challenges and best practices.
The draft state budget has been drawn up in a context where tax policy remains unbalanced and unfair, and does not contribute to recovery (CMKOR, including tax increases and administrative complications).
Increased dependence on external financing
The draft budget for 2026 proposes a significant increase in external financing to $45.5 billion. These funds are critical to ensuring macroeconomic stability. At the same time, problems with attracting the necessary funds may require a review of current economic policy. With this in mind, the Government must actively work with international donors to find mutually acceptable financing mechanisms and conditions, fulfill its obligations under loan agreements, and use the funds received as effectively as possible.
At the same time, it is essential to tap internal reserves to reduce the state budget deficit, primarily by eliminating inefficient and non-essential budget expenditures.
Based on the above, think tanks propose the following:
Align the state budget with the Government’s real priorities: defense, anti-corruption, human capital development, and economic stability.
Review the effectiveness of spending on secondary areas (in particular, excessive growth in funding for the State Bureau of Investigation, National Cashback, etc.) and transfer these funds to defense needs.
Require the Government to set clear (rather than formal) targets and criteria for evaluating the performance of the State Tax Service, State Migration Service, State Border Guard Service, and other state structures and systems (in particular, the SMKOR) that should stimulate their work to reduce artificial barriers to business and de-shadow the economy.
To this end, we propose holding an open expert discussion with the participation of representatives from CMU, the Verkhovna Rada, and specialists from analytical centers to adjust specific budget priorities.
We are convinced that only a budget based on realistic forecasts and genuine national priorities can serve as an effective instrument for Ukraine’s victory and recovery.
Sincerely,
Center for Social and Economic Research – CASE Ukraine
Institute for Social and Economic Transformation
Institute for Economic Leadership
Advanter Group Analytical Center
Technologies of Progress Analytical Center
Office of the Chief Economist of the Coalition of Business Communities for the Modernization of Ukraine
Institute of Finance and Law
Association of Tax Advisors
Expert Group on Budget Policy of the Economic Expert Platform