Ukraine faces $27 billion defense funding gap as winter approaches

Ukrainian Prime Minister Sergii Koretskyi warned journalists this week that the country faces a $27 billion defense funding gap in 2026. Kyiv hopes to cover about $7 billion domestically, while looking to partners for the rest. Some EU financing remains tied to reforms Ukraine's parliament must pass, and other allies have yet to commit to closing the remaining gap.

The shortfall comes as Russia escalates its bombardment. Overnight, Russia launched more than 190 missiles and drones in an assault that heavily targeted energy infrastructure, causing blackouts in Kyiv. Koretskyi said attacks on energy infrastructure have occurred almost daily since summer, but an assault of this scale hasn't happened since the end of the last heating season. President Volodymyr Zelenskyy renewed calls for allies to send more air defense systems.

The government is also considering tax increases to help close part of the gap domestically. Without sufficient funds, Ukraine's ability to keep fighting would be undermined, as Kyiv needs cash now to place advance orders for weapons and ammunition for next year, particularly long-range drones.

Pressure on Europe

The EU is currently disbursing installments of a €90 billion loan, but Kyiv wants the money released faster. Brussels, however, wants Ukraine's parliament to complete reforms tied to its EU membership path first. European Commission President Ursula von der Leyen said €37 billion remains available this calendar year. Ukraine is also pushing the EU to tap more than €200 billion in frozen Russian central bank assets.

Ukraine's Finance Minister Serhii Marchenko said the country will need $52.6 billion in aid in 2027, with about $32.6 billion still unfunded. Economist Oleksandra Myronenko warned that without international aid, Ukraine would face severe spending cuts, potentially threatening military salaries and pension payments.