The National Bank of Ukraine projects the consolidated deficit excluding grants will reach 37.3% of GDP in 2027, a sharp increase from the 25.6% forecast in July. This figure translates to UAH4.149 trillion, or $91.5 billion, for next year alone. The bank maintained its estimate for this year at 35.4% of GDP, equivalent to UAH3.546 trillion ($78.2 billion), while raising the 2028 outlook to 19.7% from the previous 14.6%. These revisions reflect higher security risks, the cost of moving arms production to Ukraine, and the need to modernize the defence industry alongside repairing critical infrastructure. The 2027 projection sits well above the 23.8% to 26.6% range recorded between 2023 and 2025, marking two years of unprecedented fiscal strain since the full-scale invasion began.
Financing gaps and economic drag
Foreign lenders must cover nearly all of this deficit, with official financing reaching a record $89.4 billion in 2027 against $82.5 billion expected this year. That total includes about $37 billion from the defence component of the EU’s Ukraine Support Loan, money earmarked mainly for weapons made in Ukraine. However, the European Commission still has about €20.9 billion of this year’s loan to pay and has tied it to reforms parliament has yet to pass. Non-EU donors have pledged only €4 billion for 2027, leaving a significant reliance on delayed payments. An International Monetary Fund mission began work on November 9 on the second and third reviews of Ukraine’s $8.1 billion programme, which could release about $1.67 billion according to the government.
Spending ran ahead of available funds in the third quarter, where the deficit reached UAH953 billion, more than twice the level of a year earlier. Total spending hit one and a half times its level in the same period last year despite tax receipts falling short of plan, with defence spending rising 84% year-on-year. The NBU expects GDP to shrink by 0.4% this year and has cut growth forecasts for 2027 and 2028 to 0.4% and 2.2%, down from 2.8% and 3.0%. Inflation is projected at 12.5% at the end of 2026, up from a 10% forecast, before slowing to 7.3% in 2027. New job vacancies fell 10.5% year-on-year in October, with retail openings dropping 27.7% as large chains cut staff after their warehouses were destroyed.
