Think tank: Ukraine's 2027 budget faces $32.6bn gap, with defence cut in real terms

Ukraine's draft state budget for 2027 is short of at least $32.6 billion in financing, according to the Centre for Economic Strategy (CES), a Kyiv-based think tank. It also says the plan cuts defence spending in real terms even as the army's needs may exceed what is budgeted.

CES economist Oleksandra Myronenko analysed the government's draft ahead of its first reading in parliament. The findings were published on the think tank's Telegram channel on 14 October. They are CES estimates, not official government figures.

Own revenues cover 43% of spending

CES says Ukraine's own revenues would cover only 43% of planned expenditure in 2027. The total financing need is $103.3 billion.

About $53 billion of that is expected from grants, namely the EU's Ukraine Facility and the Ukraine Support Loan. A further $38.7 billion is to come from external loans, but only $6.1 billion of those loans is confirmed, CES says.

The $32.6 billion headline gap equals the difference between the planned loans and the confirmed portion. The post does not spell out how the figure is built, so that link is an observation from the numbers rather than CES's explanation.

If real front-line needs and revenue risks are included, CES says the additional financing need could range from $58.6 billion to $110.4 billion. The top figure counts the unconfirmed external loans.

Defence down 6.5% in real terms

War-related spending is set at UAH 4.6 trillion. That is 2% below the revised 2026 plan, or a 6.5% cut once inflation is taken into account, CES says.

The think tank estimates the front's additional need at no less than $25–31 billion (UAH 1.2–1.5 trillion). It cites the Defence Ministry's own needs assessment as up to $75 billion (UAH 3.5 trillion).

Revenue plan relies on unadopted taxes

CES says budget revenues may be overestimated. The post gives 2027 revenues as "5.6 bn UAH", which appears to be a typo for UAH 5.6 trillion. By CES's account, that is 8% below the expected 2026 outturn, mainly because of lower international aid.

Own revenues grow by only 4%, which is a real-terms decline. CES also flags two weaknesses in the revenue plan:

• It rests on a macroeconomic forecast made in June, before the massive strikes, port blockades and loss of much of the metallurgy sector that CES cites.
• It includes UAH 131.3 billion from tax changes that have not yet been adopted. These are a 1 percentage point VAT increase, a 4 percentage point rise in fuel excise, a tax on income from digital platforms, and taxation of international parcels worth up to €150.

Civil spending outpaces defence

Civil spending grows faster than defence in the draft. Social protection rises 15%, education 14%, healthcare 13% and economic activity 21%.

CES proposes shifting some money:

• School meals: make the UAH 19.4 billion programme means-tested and put the savings into school shelters. Their funding is being cut from UAH 6 billion to UAH 3.7 billion.
• "Check-up 40+": move the UAH 10 billion health-screening programme into general healthcare spending. CES doubts its effectiveness.
• Road fund: hold it at the 2026 level of about UAH 35.8 billion instead of the planned UAH 52.8 billion, and send the difference to defence.

CES's full analysis is titled "State Budget 2027: First Reading". The study was supported by the International Renaissance Foundation, a Ukrainian philanthropic foundation.

The think tank's figures have not been independently verified, and the government has not yet responded in the material reviewed. Earlier RealUA reports covered a Cabinet decision to direct an extra UAH 60 billion to defence, mostly for military pay, and the finance minister's statement that UAH 46 billion of spending was left unfunded.