Ukraine's defense budget faces $27 billion deficit, PM says $20 billion to come from partners
Prime Minister Serhiy Koretsky said Ukraine's defense budget has a $27 billion shortfall — part of the $155 billion war financing figure declared at February's Ramstein-format meeting. Around $7 billion is to be covered through domestic austerity and internal reallocation, with roughly $20 billion being sought from international partners for drones, missiles and military equipment.
Key points
- Defense budget deficit stands at $27 billion, part of an overall $155 billion war financing need declared at the February Ramstein-format meeting.
- About $7 billion of the gap to be covered through austerity, optimization and internal reallocation; roughly $20 billion to be sought from international partners.
- The $20 billion in external funding is needed for procurement and production of drones, missiles, weapons and equipment for the Defense Forces.
- Austerity measures already implemented include suspending cultural program funding and payments for road repairs and new construction under 'Resilience Plans'.
- Cabinet plans a 1 percentage point VAT increase in the draft 2027 state budget.
- Government must complete 42 decisions (resolutions, orders, decrees) by October 15 to unlock about $29.5 billion in pledged partner financing; deadline was moved forward from November 1.
- Part of the required decisions depends on the Verkhovna Rada (Ukraine's parliament); Koretsky called on MPs to pass the necessary draft laws regardless of political affiliation.
- Possible additional sources include accelerating the Ukraine Support Loan program, using frozen Russian assets, extra partner loans, and further internal optimization; Ukraine has also requested support from the UK, Canada and Japan.
- President Zelensky warned Ukraine may be unable to pay for drone orders for January-February, which he said could cause 'serious challenges' for the army in winter.
Why it matters
The figures reveal the scale of external support still required to keep Ukraine's war effort funded through the rest of 2026 and into 2027. They also show Kyiv already imposing visible domestic pain — suspended cultural and infrastructure spending and a planned VAT rise — to close part of the gap itself. The October 15 deadline for 42 government decisions ties roughly $29.5 billion in pledged partner financing to Ukraine's own legislative and bureaucratic progress, putting the Verkhovna Rada squarely in the picture. With President Zelensky warning of potential gaps in drone procurement for early 2027, the shortfall carries direct operational consequences if not closed.
What happened
In an interview with TSN aired on September 27, Prime Minister Serhiy Koretsky said Ukraine's defense budget faces a $27 billion deficit, part of the $155 billion overall war financing need Ukraine declared at February's Ramstein-format meeting. The Prime Minister framed the $27 billion not as new additional requirements but as previously calculated funds for which no sources had yet been found.
Kyiv plans to cover about $7 billion of the gap through domestic austerity, optimization of expenditures and internal reallocation of budget resources. Measures already taken include suspending funding for a number of cultural programs and suspending payments for road repairs and new construction projects under the 'Resilience Plans'. The Cabinet also plans to raise the value-added tax by 1 percentage point in the draft state budget for 2027.
The remaining roughly $20 billion is being sought from international partners and is earmarked for procurement and production of drones, missiles, weapons and other equipment for the Defense Forces. Among the funding mechanisms under discussion are accelerating the Ukraine Support Loan program, using frozen Russian assets, additional partner loans and further internal optimization. Beyond EU partners, Ukraine has also requested defense budget support from the United Kingdom, Canada and Japan.
Koretsky said the government must complete 42 decisions — resolutions, orders and decrees — to unlock pledged partner financing, and publicly committed to finishing them by October 15, a deadline moved forward from the originally planned November 1. Part of those decisions depends on the Verkhovna Rada (Ukraine's parliament), and Koretsky called on MPs, regardless of party, to adopt the necessary draft laws. He pledged that military salaries and support for the families of fallen servicemembers would be paid in full, and that pensions and the salaries of doctors and teachers would be financed on time and in full despite the deficit; all other non-priority expenditures would be suspended until partner funds arrive.
President Volodymyr Zelensky separately warned that Ukraine may be unable to pay for drone orders for January and February, which he said could cause 'serious challenges' for the army in winter.
How international sources describe it
According to the synthesis, some European officials did not expect a deficit of this size, and partner interlocutors have questioned the efficiency of Ukrainian spending or whether needs were inflated. The Ukrainian government has framed the $27 billion gap as part of the $155 billion figure it presented to partners at the February Ramstein-format meeting and is now working with the Ministry of Defense, the Ministry of Finance and international partners on mechanisms to close it. Possible levers include accelerating the Ukraine Support Loan program, deploying frozen Russian assets, taking on additional partner loans, deferring payments to Ukrainian defense manufacturers with possible advance payments and European guarantees, and further internal optimization.
Background
The $155 billion overall war financing figure was presented at February's Ramstein-format meeting and covers both direct Ukrainian state budget expenditures and partner military aid, including Patriot missiles, launchers and aircraft. Koretsky cited several reasons for the current deficit: the rising technological cost of the war, the Ministry of Defense having financed first-half 2026 expenditures using second-half funds, and the fact that not all obligations to partners have yet been fulfilled. Defense Minister Yevheniy Khmara had previously publicly referenced the $27 billion defense budget shortfall.