EU's Ukraine Support Loan to reduce 2026 budget deficit from 18.5% to 12.1% of GDP – Finance Ministry
Taking into account half of the European Union's EUR 90 billion Ukraine Support Loan (USL) in Ukraine's 2026 state budget will reduce the budget deficit to 12.1% of GDP, the Finance Ministry said, commenting on amendments to the main financial document that the Cabinet of Ministers approved on Friday for further submission to the Verkhovna Rada.
"Thanks to the significant amount of external support in the form of grants, the state budget deficit will decrease by UAH 651.5 billion – from 18.5% to 12.1% of GDP, a reduction of 6.4%," the Finance Ministry said.
The ministry said that, of the EUR 45 billion in USL funds this year, EUR 13.2 billion will be budget support for social and humanitarian needs, while EUR 31.8 billion will support the state's defense capability and security.
According to the approved amendments, 2026 state budget revenues will increase by UAH 2.2913 trillion, to UAH 5.1959 trillion. In addition to UAH 2.221 trillion in USL funds, EUR 45 billion at the average annual exchange rate, the amendments also provide for UAH 47.7 billion in additional revenues as part of the implementation of the Ukraine Plan under the Ukraine Facility program, and another UAH 22.6 billion in personal income tax due to an increase in military personnel's monetary allowances.
"In addition, the chief administrators of state budget funds submitted proposals to reduce expenditures by UAH 276.3 million in accordance with the Cabinet of Ministers' protocol instruction," the statement reads, without providing further details.
As for expenditures, the largest increase will be for the security and defense sector – by UAH 1.5601 trillion, to UAH 4.3672 trillion.
Of this amount, monetary allowances for military personnel will increase by UAH 174.3 billion, to UAH 1.4542 trillion, while spending on the purchase and repair of military equipment, weapons and ammunition will rise by UAH 1.3712 trillion, to UAH 2.2971 trillion.
The reserve for the security and defense sector will also increase by UAH 14.6 billion, reaching UAH 213.6 billion.
The Finance Ministry noted that, from July 1 this year, the military levy is expected to be credited to the special fund of the state budget and used exclusively for monetary allowances for servicemen of the Armed Forces of Ukraine.
In addition, at the proposal of the Defense Ministry, revenues from export duties on military and dual-use goods, once introduced, will be directed toward the purchase and modernization of weapons, the development of the defense-industrial complex, the introduction of new technologies, and monetary allowances for military personnel.
Regarding other expenditures, a new budget program worth UAH 40 billion is proposed for the implementation of Comprehensive Resilience Plans for regions and individual cities, as well as an additional UAH 40 billion for the state budget Reserve Fund, which currently amounts to UAH 49.42 billion and, as of the end of the first quarter, had already been used by 96.1%.
The Finance Ministry specified that the first of the above-mentioned UAH 40 billion would be directed toward engineering and technical protection of critical infrastructure facilities, distributed heat generation, including modular boiler houses, and electricity generation, including cogeneration units, as well as backup power sources for heat and water supply facilities.
As Roksolana Pidlasa, head of the parliamentary budget committee, said on Facebook, the Verkhovna Rada is expected to vote on these amendments on May 25.
Ukraine's 2026 state budget was adopted with revenues, excluding grants, of UAH 2.90 trillion and expenditures of UAH 4.77 trillion, including UAH 2.61 trillion and UAH 4.38 trillion, respectively, under the general fund.
According to the Finance Ministry, in January-April this year, the general fund received UAH 1.04 trillion, while its expenditures amounted to UAH 1.35 trillion. This is 21.5% and 13.9% more, respectively, than in the same period of 2025.
