Ukraine's budget revenue shortfall tops 49.5 billion hryvnias through September, with year-end gap seen above 70 billion
Ukraine's state budget underperformed revenue targets by 49.5 billion hryvnias in the first nine months of the year, two-thirds of it concentrated in August and September. Roksolana Pidlasа, head of the Verkhovna Rada budget committee, warned the full-year shortfall could exceed 70 billion hryvnias and that a sequester of all non-protected spending remained possible. The Cabinet of Ministers introduced a regime of prioritizing expenditures at the end of September.
Key points
- State budget underperformed revenue by 49.5 billion hryvnias in the first nine months of 2026.
- 32 billion hryvnias of that shortfall fell in August and September alone.
- Budget committee head Roksolana Pidlasа projected the full-year revenue gap at over 70 billion hryvnias.
- VAT revenue plan underperformance has already exceeded $1.5 billion.
- A sequester would cut all expenditure programs except protected items.
- The Cabinet of Ministers introduced expenditure-prioritization rules at the end of September.
- Ukraine still needs a second EU macrofinancial assistance tranche worth $4.26 billion, tied to specific reform conditions.
Why it matters
The shortfall is not just large but accelerating — roughly two-thirds of the nine-month revenue gap appeared in the last two months, leaving little time for fiscal recovery before year-end. VAT, traditionally the budget's most reliable revenue stream, has missed plan by more than $1.5 billion, and the Cabinet's late-September move to prioritize expenditures signals that across-the-board sequester cuts, affecting every non-protected program, are now a realistic possibility. The fiscal squeeze comes at the same time Ukraine is waiting on a $4.26 billion EU macrofinancial assistance tranche whose disbursement is conditional on passing specific anti-corruption and governance reforms.
What happened
The Verkhovna Rada's budget committee head Roksolana Pidlasа reported at the beginning of October that Ukraine's state budget general fund had underperformed revenue by 49.5 billion hryvnias over the first nine months of 2026, and projected the full-year gap at over 70 billion hryvnias. Of the nine-month shortfall, 32 billion hryvnias accumulated in August and September alone. VAT revenue plan underperformance has passed $1.5 billion; personal income tax and corporate profit tax have partially offset the losses. At the end of September, the Cabinet of Ministers introduced a regime of prioritizing expenditures, meaning non-protected programs can be scaled back to stay within available resources. A sequester, Pidlasа noted, would mean cuts to all expenditure programs except protected items.
Background
VAT revenue has been the main driver of the shortfall, while personal income tax and corporate profit tax have partially offset it. A sequester under Ukrainian budget rules would mean across-the-board cuts to all expenditure programs except protected items. President Volodymyr Zelensky described Ukraine's budget deficit on September 18 as 'cosmic.' Brussels transferred 3.3 billion euros for missiles and drones in September, but Ukraine risks losing 4.48 billion euros in European aid because of delays with reforms. Receiving the second EU macrofinancial assistance tranche of $4.26 billion requires second-reading and full adoption of property-valuation bills, the creation of a selection commission for Accounting Chamber members, and amendments regarding politically exposed persons that meet European Commission requirements. Prime Minister Serhiy Koretsky stated on September 12 at the YES conference that the budget could miss 70 billion hryvnias in taxes by year-end; a pessimistic forecast from another senior official, speaking anonymously, projects the gap at 100 billion hryvnias.