UA-D-10: Ukraine 2026 Budget and Fiscal Architecture — The November 2025 Draft Budget, the Defence-Spending Floor, the EU Ukraine Facility, the IMF EFF Extension, and the Post-Trump-2 Domestic-Revenue Question

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Document Outline

Key Takeaways — Ten paragraph-bullets covering: (a) the 2026 budget as the first post-Oval-Office-breakdown fiscal architecture; (b) the defence-spending floor at approximately 26–27 per cent of GDP and roughly 57–65 per cent of state budget expenditure; (c) the EU Ukraine Facility as principal external anchor; (d) the IMF EFF Eighth and Ninth Review continuation under reform conditionality; (e) the post-Trump-2 collapse of US grant-and-aid flows and the consequent European fiscal-burden shift; (f) the domestic-revenue mobilisation question; (g) the wartime tax architecture; (h) the structural-deficit question and the public-debt trajectory; (i) the post-ceasefire fiscal-trajectory question; (j) the three-account interpretive frame.
The Record in Brief — Why the 2026 Budget Is a Fiscal-Architecture Inflection — The rupture from the 2022–2024 emergency-financing phase and the 2025 transition phase to the 2026 post-US-disengagement, European-anchored, defence-spending-floor-disciplined fiscal architecture.
Inheritance: From the 2022 Emergency Budget to the 2025 Transition (2022–2025) — The 2022 emergency-budget operations under monetary financing; the 2023 fiscal stabilisation and the IMF EFF approval (March 2023); the 2024 budget under continued US grant flows; the 2025 budget under post-Oval-Office stress.
The November 2025 Draft Budget Process — The Ministry of Finance's mid-September 2025 first reading submission; the Budget Committee deliberation under Roksolana Pidlasa; the second-reading amendments in November 2025; the final adoption sequence; the political dynamics of the Sluha Narodu faction and the opposition amendments.
The Defence-Spending Architecture: The 26–27 per cent of GDP and the 57–65 per cent of Budget Share — The defence-spending headline assumptions; the security-and-defence aggregate; the breakdown across personnel, procurement, ammunition, and defence-industrial mobilisation; the Made in Ukraine procurement substitution; the comparison with peers (Israel ~5 per cent of GDP; Russia 7–8 per cent of GDP).
The External Anchor: The EU Ukraine Facility, the ERA Mechanism, and the IMF EFF — The Ukraine Facility's 2026 disbursement schedule; the Macro-Financial Assistance Plus residual operations; the G7 ERA mechanism's continued operation; the IMF EFF Eighth and Ninth Reviews; the Article IV parallel consultation.
The Post-Trump-2 US-Aid Question and the European Fiscal-Burden Shift — The collapse of direct US grant-and-aid flows from 2025; the minerals-deal substitution; the European response (ReArm Europe, Sondervermögen, Polish 4.7 per cent of GDP defence floor); the financing-gap arithmetic.
The Domestic-Revenue Mobilisation Question — The wartime tax architecture; VAT, PIT, military levy, and the corporate-tax base; the customs-revenue recovery; the Diia-platform tax administration; the shadow-economy estimate; the question of tax-base expansion under conditions of population displacement and active-duty conscription.
The Wartime Tax Architecture — The October 2024 tax-package legislation; the proposed 2025–2026 measures; the Verkhovna Rada debate on progressive taxation; the corporate-tax compliance question; the financial-monitoring architecture under the State Tax Service.
The Structural Deficit, Public-Debt Trajectory, and Monetary-Financing Discipline — The headline-deficit-to-GDP figures; the debt-to-GDP trajectory; the NBU's commitment to non-monetisation; the foreign-currency-reserves position; the IMF-required medium-term-fiscal-framework reform.
The Post-Ceasefire Fiscal Trajectory Question — The hypothetical post-armistice budget design; the defence-spending floor question; the reconstruction-spending shift; the demobilisation-and-veteran-integration cost; the demographic-and-labour-market constraint; the public-debt-sustainability question.
The Forward View — Three Accounts, the Forward Calendar, and the Open Questions — The three accounts (government-on-track, opposition-stress, structural-vulnerability); the forward calendar through 2027; the open questions as of June 2026.

1. Key Takeaways

The 2026 State Budget of Ukraine — submitted in draft to the Verkhovna Rada in mid-September 2025, advanced through the Budget Committee under Roksolana Pidlasa, amended at the second reading in November 2025, and adopted in final form in the closing weeks of 2025 — is the first Ukrainian fiscal architecture designed in the explicit absence of direct US grant-and-aid flows and is therefore the first fiscal architecture of the post-28 February 2025 Oval Office breakdown order. The 2022, 2023, 2024, and 2025 budgets all operated within an architecture in which direct US grant-and-aid flows (USAID Direct Budget Support, the Department of State's Foreign Military Financing line, the Department of Defense's Ukraine Security Assistance Initiative, and the Treasury's Economic Support Fund disbursements via the World Bank's PEACE trust fund) supplied a structural component — peaking at approximately $25 billion in calendar year 2023 [TBD-VERIFY: figures range across Office of Management and Budget, Department of State, and Council on Foreign Relations Aid Tracker compilations]. The 2026 budget assumes the continuation of this drawdown to a residual level and the corresponding substitution by European-financing-anchored flows — the EU Ukraine Facility, the G7 ERA mechanism, IMF EFF disbursements, and the World Bank PEACE umbrella — alongside the operational implementation of the 30 April 2025 US–Ukraine Reconstruction Investment Fund (the "minerals deal") in its transactional-resource frame. The architectural shift is not a marginal adjustment to an existing framework; it is a category change in the composition of external financing and consequently a category change in the political-economy of the budget. The Verkhovna Rada 2026-budget debate registered this shift across every Budget Committee session.
The defence-and-security spending headline in the 2026 budget — at approximately 26–27 per cent of GDP and at approximately 57–65 per cent of total state-budget expenditure — establishes a wartime fiscal floor without precedent in any European economy of the post-1945 era except wartime Israel at peak mobilisation. The headline figure breaks down across three principal categories: (i) the Ministry of Defence and Armed Forces of Ukraine operational and personnel budget — including monthly servicemember pay, combat-zone supplements, mobilisation expenses, and front-line operational costs — at approximately 30–35 per cent of state-budget expenditure [TBD-VERIFY: the precise breakdown across Ministry of Defence, Ministry of Internal Affairs, SBU, GUR, and State Border Guard Service lines varies across Ministry of Finance reporting and the Verkhovna Rada Budget Committee summaries]; (ii) the procurement and defence-industrial-mobilisation budget — including direct purchases of weapons, ammunition, drones, and equipment — at approximately 15–20 per cent; (iii) the broader security-services and law-enforcement budget at approximately 6–10 per cent. The defence-spending floor is politically uncontestable in the Verkhovna Rada — every faction including the opposition Batkivshchyna and European Solidarity affirms the floor — but the composition of the floor (the allocation between personnel and procurement; the Made in Ukraine substitution; the procurement-architecture transparency under DPA and the State Logistics Operator) is intensely contested at the committee-level. The comparison with peer cases is instructive but limited: Israel's defence spending peaked at approximately 5–6 per cent of GDP at the height of the post-7 October 2023 mobilisation; Russia's 2024–2025 defence spending reached approximately 6–8 per cent of GDP on Western open-source estimates; only wartime mobilisation economies of the Second World War or the early Cold War approach the Ukrainian 26–27 per cent share, indicating the absolute exceptionality of the Ukrainian fiscal posture.
The European Union's Ukraine Facility — the €50 billion 2024–2027 instrument established under Regulation (EU) 2024/792 of 29 February 2024 — is the principal external fiscal anchor of the 2026 budget and is, by financial scale, by reform-conditionality reach, and by institutional embedding, the most consequential single instrument of Ukrainian external financing in the post-1991 period. The Facility's three-pillar structure — Pillar I (financial support to the Ukrainian state, approximately €38.27 billion); Pillar II (Ukraine Investment Framework guarantee architecture, approximately €6.97 billion); Pillar III (technical assistance and pre-accession support, approximately €4.76 billion) — produced approximately €16.1 billion in 2024 disbursements [TBD-VERIFY against the European Commission's quarterly reports] and approximately €12–14 billion in 2025 disbursements with periodic withholdings linked to reform-condition fulfilment around the 21 July 2025 SBU-NABU confrontation period [TBD-VERIFY]. The 2026 budget assumes approximately €12.5–13.5 billion in Pillar I disbursements [TBD-VERIFY precise Ministry of Finance assumption from the November 2025 second-reading explanatory memorandum]; the disbursement is conditional on the Ukraine Plan's quarterly reform-condition catalogue, which includes commitments on anti-corruption institution-building, public-financial-management reform, EU-acquis approximation, judicial reform, and decentralisation continuation. The Ukraine Facility's conditionality reach into the 2026 budget is direct and operational: the Ministry of Finance's Public Investment Management Framework, the State Tax Service's Anti-Avoidance Strategy, and the State Audit Service's independence-strengthening programme are all conditioned on Ukraine Facility milestones; the operational embedding of the Facility in the Ministry of Finance's budget-cycle planning is the deepest integration of any EU instrument with a non-member-state national budget in EU institutional history.
The International Monetary Fund's $15.6 billion Extended Fund Facility (EFF) for Ukraine — approved by the Executive Board on 31 March 2023 as a four-year programme with quarterly review architecture — has now reached its Eighth Review (Q4 2025) and Ninth Review (Q2 2026) and is the second-most-consequential external-financing anchor after the EU Ukraine Facility. The programme's review architecture combines: (i) quarterly Quantitative Performance Criteria (QPCs) on the headline fiscal deficit, net international reserves, monetary base, and budget arrears; (ii) Structural Benchmarks (SBs) on tax policy, public financial management, governance and anti-corruption, financial-sector restructuring, and trade policy; (iii) Indicative Targets (ITs) on social-spending floors and tax-administration performance. The Eighth Review (completed in Q4 2025 [TBD-VERIFY exact Executive Board date]) and the Ninth Review (Q2 2026 [TBD-VERIFY]) both produced staff-report approvals enabling continued tranche disbursement; cumulative IMF disbursements through Q1 2026 reached approximately $11–12 billion of the $15.6 billion programme [TBD-VERIFY precise figure]. The parallel Article IV Consultation — the standard IMF surveillance-mission process — has occurred annually in 2024 and 2025 [TBD-VERIFY: the precise 2025 Article IV timing varies in published IMF documentation]. The IMF–Ukraine relationship has been characterised across the EFF period by an unusually high degree of staff-Ukrainian-government alignment on the macroeconomic framework: monetary financing of the deficit has been zero since the 2022 transitional period; the NBU's commitment to non-monetisation has been honoured; exchange-rate-regime evolution has proceeded under the agreed managed-flexibility framework. The unresolved EFF questions concern: the medium-term-fiscal-framework reform that the Eighth Review requires; the post-ceasefire fiscal-trajectory parameters under which a successor programme would operate; the financing-gap arithmetic for FY2027.
The post–28 February 2025 collapse of direct US grant-and-aid flows is the single most material change to the Ukrainian fiscal architecture between the 2025 budget and the 2026 budget, and the political-economy consequences extend across every component of the 2026 fiscal design. The Trump-2 administration, taking office on 20 January 2025, signalled across January–February 2025 a fundamental reorientation of US support to Ukraine: from a values-and-strategic-partnership grant-aid frame to a transactional-resource exchange frame anchored on the 30 April 2025 Reconstruction Investment Fund agreement (UA-D-05 §3, UA-G-03 §7). The 4 March 2025 USAID and Department of State aid-pause announcement (suspending Direct Budget Support and the State Department's Foreign Military Financing flows) and the 5 March 2025 intelligence-sharing pause were partially walked back at the 11 March 2025 Jeddah reset, but the post-resumption architecture has been characterised by: (i) the cessation of new Direct Budget Support tranches; (ii) the continued operation of legacy obligations (drawdown authorities, Presidential Drawdown Authority and the Ukraine Security Assistance Initiative residual disbursements); (iii) the new minerals-deal architecture as the bilateral framework. The 2026 budget therefore assumes approximately zero new US grant-and-aid inflows from the federal-government budget [TBD-VERIFY against Ministry of Finance assumption tables]; the legacy disbursements continue but are projected to taper to a residual level; the Verkhovna Rada budget debate registered the fiscal-architecture significance of this shift in extensive Budget Committee discussions in October–November 2025.
The domestic-revenue mobilisation question — how Ukraine raises sufficient revenue to fund a state budget at approximately 30–35 per cent of GDP under conditions of an estimated 25–30 per cent contraction of pre-war GDP, a population fall of approximately 25 per cent from 41 million in 2022 to approximately 28–30 million by 2025, and an active-duty mobilisation of approximately 800,000–1,000,000 servicemembers — is the central political-economy challenge of the 2026 budget and the most contested element of the fiscal architecture. The 2026 budget's revenue side combines: (i) Value Added Tax (VAT) at approximately 35–40 per cent of total tax revenue [TBD-VERIFY against State Tax Service published shares]; (ii) Personal Income Tax (PIT) and the unified social contribution at approximately 25–30 per cent (with the wartime Military Levy — raised from 1.5 per cent to 5 per cent of personal income under the October 2024 tax-package legislation — providing a substantial increment); (iii) Corporate Profit Tax (CPT) at approximately 10–13 per cent (with the wartime Bank Excess-Profits Tax providing a one-time-style increment in 2023–2024 that has tapered); (iv) Excises at approximately 8–10 per cent; (v) Customs revenue at approximately 7–10 per cent (recovering from the 2022 collapse but still well below the pre-war share given the loss of Black Sea trade); (vi) other revenue at approximately 5–8 per cent. The October 2024 tax-package legislation — passed under significant Verkhovna Rada contestation and IMF–EFF conditionality pressure — raised the Military Levy to 5 per cent, raised excise duties on fuel and tobacco, introduced a Minimum Tax Liability for individual entrepreneurs, and increased the Bank Excess-Profits Tax. The expected 2026 revenue yield from the package is approximately UAH 110–140 billion [TBD-VERIFY against Ministry of Finance and KSE Institute estimates], but the structural-revenue base remains constrained by the shadow-economy estimate (approximately 25–30 per cent of GDP on KSE-IER methodology), the population-displacement effect on PIT base, and the destroyed-and-occupied territories' lost revenue base.
The wartime tax architecture — built incrementally across 2022–2025 under the conjoint pressures of fiscal emergency, IMF–EFF conditionality, EU Ukraine Facility reform conditions, and the political-economy of wartime fairness — has produced one of the most progressive nominal wartime tax structures of any contemporary European state, while remaining structurally constrained by the shadow-economy and population-displacement effects. The architecture's principal elements include: (i) the Military Levy raised from 1.5 per cent to 5 per cent of personal income (October 2024 legislation, Law No. 4015-IX); (ii) the Bank Excess-Profits Tax — initially set at 50 per cent on the 2023 bank-sector windfall profits, extended through 2024 — that produced a one-time-style yield supporting the 2023–2024 deficit and was extended at lower rates into 2025; (iii) the Minimum Tax Liability for individual entrepreneurs in the single-tax regime, addressing the long-standing tax-base erosion in the simplified-taxation system; (iv) the excise-duty increases on fuel, tobacco, and electronic-cigarette products; (v) the Diia-platform-administered tax administration through the State Tax Service that has improved compliance through digitalisation; (vi) the financial-monitoring architecture under the State Tax Service and the State Service for Financial Monitoring of Ukraine (SFMSU) that has expanded anti-evasion enforcement under EU-FATF conditionality. The architecture has been criticised by the opposition Batkivshchyna (Tymoshenko) for insufficient progressivity at the top of the income distribution; by sectoral lobbies (notably the construction, retail, and IT-services sectors) for the burden on the formal economy; and by structural-reform commentators (CES, KSE, IER) for insufficient corporate-tax-base reform.
The structural-deficit question — the size of the headline deficit relative to GDP, the share financed by external grants and concessional loans versus market-rate debt issuance, and the consequent public-debt-to-GDP trajectory — establishes the core sustainability constraint on the 2026 budget and the post-ceasefire fiscal trajectory. The 2026 budget assumes a headline general-government deficit of approximately 16–20 per cent of GDP [TBD-VERIFY: Ministry of Finance, IMF EFF Eighth/Ninth Review staff reports, and Razumkov Centre estimates vary within this range depending on whether the deficit includes grant-financed expenditure or treats it on a below-the-line basis], compared with approximately 17–22 per cent in 2025, approximately 19 per cent in 2024, and approximately 23–26 per cent in 2023. The deficit financing combines: (i) external grants from the EU Ukraine Facility Pillar I, ERA disbursements, and bilateral grants (the dominant source); (ii) concessional loans from the IMF, World Bank, EBRD, and bilateral partners; (iii) domestic-market debt issuance through War Bonds (the Voennyi Bond / Military Bond programme administered by the Ministry of Finance and the NBU); (iv) the residual ERA-mechanism inflows. The public-debt-to-GDP ratio has risen from approximately 49 per cent in 2021 (pre-war) to approximately 90 per cent in 2023 to approximately 96–98 per cent in 2025 [TBD-VERIFY against Ministry of Finance and IMF figures], approaching the conventional emerging-market debt-sustainability threshold of 100 per cent of GDP but cushioned by the concessional structure of the external debt (approximately 75–80 per cent of public debt is external, with a substantial share at concessional rates or on grant-equivalent terms). The NBU's commitment to non-monetisation of the deficit — maintained continuously since the 2022 transitional period under Governor Andriy Pyshnyy — preserves the macroeconomic-stability anchor that distinguishes the Ukrainian wartime fiscal-monetary architecture from the inflationary-collapse case of comparable wartime episodes elsewhere.
The post-ceasefire fiscal-trajectory question — what the Ukrainian budget would look like in the first, second, and third years after any eventual cessation of active hostilities — is the central forward-looking question of the 2026 budget process and the central uncertainty in the medium-term fiscal-framework reform required under the IMF EFF Eighth Review. The hypothetical post-ceasefire budget design must resolve: (i) the defence-spending floor question — whether defence spending tapers from the wartime 26–27 per cent of GDP to a peacetime sustained-deterrent level of approximately 5–8 per cent of GDP (the Israeli–South Korean range for sustained-deterrent postures), and over what trajectory; (ii) the reconstruction-spending shift question — how the budget reallocates from wartime operational spending to reconstruction capital spending, and what the absorption-capacity ceiling is; (iii) the demobilisation-and-veteran-integration question — the cost of demobilising approximately one million servicemembers, the veteran-pension and healthcare commitments, the disability-benefit obligations, and the labour-market reintegration architecture (UA-O-03 reference); (iv) the demographic-and-labour-market constraint — how the budget functions under a working-age population reduced by perhaps 30–40 per cent from the pre-war baseline, with the consequent contraction of the tax base; (v) the public-debt-sustainability question — whether the post-war debt-to-GDP trajectory permits a return to market borrowing on standard terms or requires extended concessional support. None of these questions is resolved in the 2026 budget; the budget operates under a continuing-war assumption and the post-ceasefire architecture is left to subsequent fiscal-architecture documents and to the IMF EFF successor programme that would be required in 2027.
The three-account interpretive frame structures the analytical engagement with the 2026 budget across three lenses that should be read in combination rather than as alternatives. The government-on-track account — represented by the Ministry of Finance under Sergii Marchenko, the Office of the President's economic-team coordination under Prime Minister Yulia Svyrydenko, and the Sluha Narodu Budget Committee majority — emphasises the institutional achievement of having designed and adopted a fiscal architecture under conditions of severe external-financing-environment volatility, the continued IMF–EFF performance, the EU Ukraine Facility integration depth, and the resilience of the macroeconomic-stability anchor. The opposition-stress account — represented by Batkivshchyna (Tymoshenko), European Solidarity (Poroshenko), and Holos — emphasises the structural fragility of the financing assumptions (the over-reliance on EU Ukraine Facility timeliness, the risk of further conditionality contestation, the absence of a credible US-replacement strategy), the regressivity questions in the tax architecture, the defence-procurement transparency residual concerns, and the post-ceasefire fiscal-trajectory under-design. The structural-vulnerability account — represented by economic-policy think-tanks (KSE, CES, IER, Razumkov) and by independent-academic commentary — emphasises the deeper questions of tax-base erosion, demographic-and-labour-market constraint, public-debt-sustainability over the 2027–2030 horizon, and the political-economy of demobilisation. The three accounts are not symmetric in evidentiary weight or in political-stake but together they constitute the analytical frame within which the 2026 budget should be read; the document below structures its main sections around the empirical record and engages the three accounts in the forward-view section.

2. The Record in Brief — Why the 2026 Budget Is a Fiscal-Architecture Inflection

The 2026 State Budget of Ukraine constitutes the first fiscal architecture of the post-Oval-Office order: the first Ukrainian budget designed and adopted in the explicit absence of direct US grant-and-aid flows, the first to embed the EU Ukraine Facility as the dominant single source of external financing, the first to operate under the institutional implications of the 30 April 2025 US–Ukraine Reconstruction Investment Fund agreement, and the first to confront — even if it does not resolve — the post-ceasefire fiscal-trajectory question.

The 2022, 2023, 2024, and 2025 budgets each represented a phase in the wartime fiscal arc traced in UA-G-01 (wartime macroeconomic stabilisation 2022–2024) and extended through the 2025 transitional year. The 2022 emergency budget — improvised in the opening weeks of the full-scale invasion and reconstructed by mid-year under the Verkhovna Rada's wartime-procedure architecture — relied on a combination of NBU monetary financing (the only sustained monetary-financing episode of the war), bilateral grants (especially from the United States and the European Union), and the War Bond domestic-debt programme. The 2023 stabilisation budget — designed under the IMF EFF approval (31 March 2023) — established the no-monetary-financing rule, the IMF–EFF Quantitative Performance Criteria framework, and the structural-conditionality architecture. The 2024 maturation budget — operating under the EU Ukraine Facility's first operational year and the G7 ERA mechanism's design phase — combined continued US grant flows with deepening European integration. The 2025 transitional budget — designed in late 2024 under Biden-administration continuity assumptions but executed under Trump-2 disruption from 20 January 2025 — bridged the architectural transition with stretched financing assumptions and intra-year amendments.

The 2026 budget breaks with this incremental phasing. Its design — initiated in the Ministry of Finance's budget-cycle preparation in May–August 2025, finalised for first reading in mid-September 2025, advanced through Budget Committee deliberation in October–November 2025, and adopted in final form in the closing weeks of 2025 — explicitly assumes the new architecture: zero new US Direct Budget Support, dominant EU Ukraine Facility anchor, continued IMF EFF performance, residual ERA inflows, expanded domestic-revenue mobilisation, the Made in Ukraine defence-procurement substitution, and a public-debt trajectory approaching but not breaching the 100 per cent of GDP threshold. The architecture is brittle in several places — the EU Ukraine Facility disbursement timeliness, the post-ceasefire fiscal-trajectory under-specification, the structural-revenue base erosion — but it is the architecture that emerged from the political-economic constraints of the moment and that the Verkhovna Rada adopted as the framework within which the FY2026 fiscal year would be conducted.

The comparators that matter for the 2026 budget are not other contemporary European budgets. They are wartime mobilisation budgets — the United Kingdom in 1942–1944, the United States in 1942–1945, the Soviet Union across the same period, Israel in 1973 and at later peak-mobilisation moments, South Korea across the 1950–1953 war — and post-armistice fiscal-transition budgets — the post-1945 European reconstruction-financing record, the South Korean post-1953 fiscal architecture, the Israeli post-1973 budgetary readjustment. The Ukrainian budget shares with these comparators the structural fact that wartime-fiscal exceptionality cannot be sustained indefinitely without either (a) ending the war, (b) inflating the deficit toward macroeconomic-stability breakdown, or (c) securing a sustained external-financing architecture of unprecedented scale and duration. The 2026 budget bets on the third path: the EU Ukraine Facility's continued operation through 2027 and the design of a successor instrument; the IMF EFF's successor-programme architecture; the continued G7 ERA mechanism; the deepening of the Made in Ukraine procurement substitution. The bet is plausible — the EU institutional commitment to Ukrainian financing remains durable — but the architecture must be re-validated each quarter through the Ukraine Plan conditionality reviews and each year through the IMF–EFF review cycle.

This document records the 2026 budget as adopted and as in early-FY2026 execution as of the May–June 2026 corpus update horizon. It does not anticipate the FY2027 budget design (which would be the subject of a successor fiscal-architecture document) nor the post-ceasefire fiscal-architecture design (which would be the subject of a post-armistice fiscal-architecture document, currently a forward-stub UA-D-11 or successor designation). It engages the three-account interpretive frame in §12 and identifies the forward-calendar open questions through 2027.

3. Inheritance: From the 2022 Emergency Budget to the 2025 Transition

The 2022 budget was the most-improvised fiscal year in independent Ukrainian history. The pre-invasion 2022 budget — adopted on 2 December 2021 with a headline general-government deficit of approximately 3.5 per cent of GDP and a continuation of the pre-pandemic fiscal-consolidation trajectory — was rendered obsolete by the 24 February 2022 invasion within days. The Ministry of Finance under Sergii Marchenko (in office continuously since 30 March 2020) [TBD-VERIFY: Marchenko appointment date 30 March 2020 per Cabinet of Ministers records, not 4 March 2020] executed an emergency-budget re-design in the opening weeks of the war: the 16 March 2022 amendments to the budget under expedited Verkhovna Rada procedure; the subsequent rolling amendments through 2022; and the operational implementation under conditions of acute revenue collapse (customs revenue fell by approximately 60 per cent in March 2022 against the previous-year baseline; VAT collection fell by approximately 30–40 per cent through Q2 2022 [TBD-VERIFY against State Tax Service quarterly reports]).

The 2022 emergency financing combined three principal sources: (i) NBU monetary financing of approximately UAH 400 billion (approximately $13 billion at then-current rates) across 2022, the only sustained monetary-financing episode of the war and a deviation from the no-monetisation rule that was halted at the end of 2022 under IMF pressure; (ii) bilateral grant-and-loan flows principally from the United States (approximately $13 billion in Direct Budget Support and ESF flows in 2022) and the European Union (approximately €7.2 billion in MFA exceptional macro-financial assistance in 2022); (iii) the domestic War Bond programme (the Voennyi Bond) raising approximately UAH 280 billion in 2022 [TBD-VERIFY against Ministry of Finance auction reports]. The 2022 inflation peak reached approximately 26.6 per cent year-on-year in December 2022 (NBU CPI data), reflecting the supply-shock disruption, the energy-infrastructure strikes, and the monetary-financing residual; the NBU's response — raising the policy rate from 10 per cent to 25 per cent in June 2022 — anchored the inflation expectations and prevented currency collapse despite the exchange-rate adjustment from UAH 27/USD (pre-war) to UAH 36.6/USD (the July 2022 fixed-rate setting) and subsequent depreciations.

The 2023 budget — adopted in November 2022 in the Verkhovna Rada with a headline general-government deficit of approximately 23–26 per cent of GDP — was the first post-emergency budget. The 31 March 2023 IMF Executive Board approval of the four-year $15.6 billion EFF was the architectural anchor: the EFF Quantitative Performance Criteria (QPC) framework required zero new monetary financing, defined a path for net international reserves recovery, and established budget-arrears ceilings; the Structural Benchmarks (SB) framework set out the reform-conditionality on tax policy, public financial management, financial-sector restructuring, and anti-corruption. The EU's continued MFA disbursements (approximately €18 billion in 2023 under the new MFA+ instrument) and the US Direct Budget Support flows (approximately $11 billion in 2023) supplied the dominant external financing; bilateral contributions from the UK, Canada, Japan, Norway, and the Nordic-Baltic states provided substantial supplementary inflows. The 2023 inflation moderated to approximately 5.1 per cent year-on-year by December 2023, well below the 2022 peak and within the NBU's 5±1 per cent target band — a macroeconomic-stabilisation outcome that exceeded most pre-war forecaster expectations and that established the credibility of the Marchenko–Pyshnyy fiscal-monetary architecture.

The 2024 budget — adopted in November 2023 with a headline deficit of approximately 19 per cent of GDP — operated under the new architecture of the EU Ukraine Facility (operational from March 2024 under Regulation 2024/792), the G7 ERA mechanism (operationalised from October–November 2024), and continued US flows (approximately $9–10 billion in Direct Budget Support across 2024 [TBD-VERIFY against US Office of Management and Budget reporting and the Council on Foreign Relations Aid Tracker]). The 2024 fiscal year was the maturation year of the wartime fiscal architecture: the Ukraine Facility's Pillar I disbursements reached approximately €16.1 billion across the calendar year [TBD-VERIFY against European Commission quarterly reports]; the ERA mechanism's October–November 2024 first disbursements supplied approximately $4–6 billion; the IMF EFF Fourth, Fifth, and Sixth Reviews supplied continued tranche disbursements; the domestic War Bond programme raised approximately UAH 480 billion across the year. The October 2024 tax-package legislation — raising the Military Levy from 1.5 per cent to 5 per cent, raising excise duties, and introducing the Minimum Tax Liability — was the most-consequential domestic-revenue mobilisation measure of the wartime arc and established the revenue-side foundation for the 2025 and 2026 budgets.

The 2025 budget — adopted in November 2024 under Biden-administration-continuity assumptions and executed under Trump-2 disruption from 20 January 2025 — was the transitional year. The headline deficit assumption was approximately 17–22 per cent of GDP [TBD-VERIFY against Ministry of Finance and IMF figures]; the financing assumption included continued US flows in the $8–10 billion range. The Trump-2 disruption — the 28 February 2025 Oval Office breakdown, the 4 March 2025 aid-pause announcement, the 11 March 2025 Jeddah partial reset, the 30 April 2025 Reconstruction Investment Fund agreement — invalidated the US-grant-flow assumption from the second quarter of 2025 onward and forced intra-year budget amendments. The European response — the 6 March 2025 Special European Council ReArm Europe announcement, the German Sondervermögen extension under Merz, the Polish defence-spending floor at 4.7 per cent of GDP — accelerated the European fiscal-burden shift documented in UA-G-03 §6. The 2025 budget was executed under continuous mid-year amendment; the final 2025 fiscal-year outcomes (to be reported in early 2026 Ministry of Finance and IMF documentation) reflected the financing-architecture transition mid-stream.

The inheritance from this 2022–2025 arc establishes the parameters within which the 2026 budget was designed: a defence-spending floor at approximately 26–27 per cent of GDP that no faction in the Verkhovna Rada contests; a tax architecture incrementally raised through 2024; a public-debt trajectory approaching 100 per cent of GDP; an external-financing architecture transitioning from a US-Europe-symmetric pattern to a European-anchored pattern; an IMF–EFF programme entering its final year with a successor-programme question; and an EU Ukraine Facility approaching its 2027 instrument-expiry date with a successor-instrument design question. The 2026 budget had to answer these inheritance questions in concrete legislative form.

4. The November 2025 Draft Budget Process

The 2026 budget cycle followed the standard Ukrainian budget-process architecture as established under the Budget Code of Ukraine (Law of Ukraine No. 2456-VI of 8 July 2010, as amended through 2024) and the Verkhovna Rada's Standing Orders. The Ministry of Finance under Sergii Marchenko initiated the budget-preparation cycle in May–June 2025 with the Main Directions of Budget and Tax Policy paper presented to the Cabinet of Ministers and subsequently to the Verkhovna Rada; the Cabinet of Ministers approved the Budget Declaration for 2026–2028 in July 2025 [TBD-VERIFY exact Cabinet date]; the Ministry of Finance submitted the Draft Law on the State Budget of Ukraine for 2026 to the Verkhovna Rada by the legal deadline of 15 September 2025.

The first-reading consideration by the Verkhovna Rada — held in mid-October 2025 [TBD-VERIFY exact date against Verkhovna Rada session protocols] — accepted the budget for further work without major contestation of the headline parameters but with extensive Budget Committee debate on the defence-spending composition, the revenue-side assumptions, and the EU Ukraine Facility disbursement schedule. The Budget Committee under Chair Roksolana Pidlasa (Sluha Narodu) — herself the principal Verkhovna Rada interlocutor for the Ministry of Finance on the budget process across 2024–2026 — coordinated the technical work; the Committee's secretariat under [TBD-VERIFY: specific staff designations] managed the amendment intake and the second-reading preparation.

The second-reading deliberation in November 2025 was the substantive contestation phase. The Budget Committee received over 2,000 amendments [TBD-VERIFY: the precise count of registered amendments varies in published Committee reporting] across the Sluha Narodu faction, the opposition factions (Batkivshchyna, European Solidarity, Holos), and the smaller groupings (Restoration of Ukraine, For the Future, Platform for Life and Peace). The substantive amendment categories included: (i) defence-spending composition amendments — principally re-allocating between the Ministry of Defence operational budget, the procurement budget, and the defence-industrial-mobilisation budget; (ii) revenue-side amendments — principally proposing further tax-base expansion or progressive tax adjustments; (iii) social-spending floor amendments — principally proposing higher floors on pension indexation, veteran benefits, and IDP support; (iv) regional-distribution amendments — principally on the State Fund for Regional Development allocations and the de-occupied territories recovery line; (v) anti-corruption-conditionality amendments — principally on the funding architecture for NABU, SAPO, HACC, and NACP.

The Budget Committee's second-reading work included the IMF and European Commission technical consultations: IMF EFF Eighth Review staff visits in October–November 2025 produced a staff-level agreement on the 2026 budget headline parameters that conditioned the IMF Executive Board approval of the Eighth Review tranche disbursement [TBD-VERIFY exact Executive Board date]; the European Commission's DG ECFIN and DG NEAR technical missions consulted on the Ukraine Facility conditionality embedding in the budget framework and on the FY2026 Ukraine Plan reform-condition catalogue.

The second-reading vote in the Verkhovna Rada — held in [TBD-VERIFY: precise date, second half of November 2025 or first week of December 2025] — adopted the budget in its second-reading form with the Budget Committee's amendment package incorporated. The political dynamics of the vote registered the Verkhovna Rada's consensus-architecture under wartime conditions: the Sluha Narodu faction (with approximately 230+ members through the period) supplied the core majority; the European Solidarity (Poroshenko) and Batkivshchyna (Tymoshenko) factions provided the principal opposition voice but did not vote against the budget in totality; the Holos faction provided technocratic engagement with specific amendment proposals. The opposition factions' principal contestation was on revenue-side composition (progressive-taxation amendments) and on the defence-procurement transparency line; the structural composition of the budget was not contested.

The final-reading and adoption — completed in the closing weeks of December 2025 [TBD-VERIFY exact date] — produced the Law of Ukraine on the State Budget of Ukraine for 2026 (Law No. [TBD-VERIFY registration number]) signed by President Zelensky and entering into force on 1 January 2026. The budget law's implementation began on the standard schedule; the Ministry of Finance's January 2026 monthly budget-execution report (published in February 2026) provided the first operational-execution data for the FY2026 architecture.

The political dynamics of the 2026 budget process revealed three features of the post-2022 Verkhovna Rada fiscal architecture worth noting. First, the consensus on the defence-spending floor was structural: no faction proposed cutting the headline defence allocation, and the opposition contestation was about composition rather than scale. Second, the opposition engagement was technical rather than rejectionist: the Batkivshchyna and European Solidarity amendments engaged with the budget's structural assumptions rather than challenging its legitimacy, reflecting the wartime Verkhovna Rada's broad consensus on fiscal-architecture continuity. Third, the external-conditionality embedding was deep: the IMF EFF and EU Ukraine Facility conditionality were treated as effectively-binding constraints by the Budget Committee, with the major policy debates occurring within the conditionality framework rather than against it. This third feature is the deepest institutional shift produced by the post-2014 reform architecture and intensified under the wartime fiscal emergency.

The 2026 budget's defence-and-security spending headline is the single most-distinctive feature of the fiscal architecture and the feature that places the budget in a category outside contemporary European fiscal experience. The headline aggregates the spending on: (i) the Ministry of Defence of Ukraine and the Armed Forces of Ukraine (ZSU); (ii) the Ministry of Internal Affairs and the National Guard of Ukraine (NGU); (iii) the Security Service of Ukraine (SBU); (iv) the Defence Intelligence (HUR/GUR); (v) the State Border Guard Service (SBGS); (vi) the State Special Communications and Information Protection Service (SSSCIP); (vii) the Pension Fund military-pension component; (viii) the defence-industrial-mobilisation spending coordinated through the Ministry of Strategic Industries.

The headline assumption in the 2026 budget — approximately UAH 2.7–3.0 trillion in security-and-defence aggregate spending [TBD-VERIFY against Ministry of Finance budget tables and Verkhovna Rada Budget Committee summaries], approximately 26–27 per cent of projected 2026 GDP, and approximately 57–65 per cent of total state-budget expenditure — establishes the wartime fiscal floor. The variation in the budget-share figure (57–65 per cent) depends on whether reconstruction spending financed through grants is treated above or below the line, and on whether the Pension Fund and military-pension components are aggregated; the lower end of the range (57 per cent) is the typical Ministry of Finance presentation in which grant-financed spending is treated above the line, and the higher end (65 per cent) is the typical economic-analyst presentation in which the defence-and-security share is computed against own-revenue-financed expenditure only.

The breakdown by category within the defence-and-security aggregate proceeds approximately as follows [TBD-VERIFY precise sub-category percentages across Ministry of Finance, IMF EFF, and Razumkov Centre published figures]:

Ministry of Defence operational and personnel budget at approximately 30–35 per cent of state-budget expenditure (approximately UAH 1.4–1.6 trillion). The largest single component covers monthly servicemember pay (including the combat-zone supplements of approximately UAH 70,000–100,000 per month for front-line personnel), the mobilisation expenses, the medical and logistical support, the operational expenditure on fuel, food, ammunition consumption, and battlefield-rotation. The approximately 800,000–1,000,000 active-duty servicemembers (UA-D-04 reference) drive the personnel-cost floor at unprecedented scale for any European-state defence budget.
Procurement and defence-industrial-mobilisation budget at approximately 15–20 per cent of state-budget expenditure (approximately UAH 700–950 billion). This category covers direct purchases of weapons systems, ammunition, drones, vehicles, electronic-warfare equipment, communications systems, and protective equipment. The 2026 budget embeds the Made in Ukraine procurement-substitution policy — under which approximately 60–70 per cent of procurement is directed to domestic defence-industrial-base suppliers (UA-E-08 reference) — and the Defence Procurement Agency (DPA) and State Logistics Operator (DOT) architecture for procurement execution.
Security services and law-enforcement budget at approximately 6–10 per cent of state-budget expenditure (approximately UAH 280–470 billion). This category covers the Ministry of Internal Affairs and the National Guard (the principal land-force complement to the ZSU), the SBU, the HUR/GUR, the SBGS, and the SSSCIP.

The financing structure of the defence-and-security aggregate is — under the wartime fiscal architecture — predominantly domestic-revenue-financed, reflecting the legal-policy norm that grant-and-concessional-loan flows from external partners finance non-defence categories (social spending, public-sector wages outside the defence sector, pensions, education, healthcare). This division of labour — domestic revenue funds defence; external financing funds non-defence — has been the operational principle of the wartime fiscal architecture since 2022 and is preserved in the 2026 budget. The implication is that the structural-deficit-financing question is essentially a question about non-defence spending levels; the defence spending is fixed and the question is what level of non-defence spending the available external financing supports.

The Made in Ukraine procurement-substitution policy — formally introduced in 2024 and operationally deepened across 2025–2026 — is the most-consequential industrial-policy element of the 2026 budget. Under the policy, the Defence Procurement Agency is directed to source procurement from domestic suppliers wherever the domestic defence-industrial base can supply at acceptable quality, price, and delivery terms; foreign procurement is reserved for items where domestic capacity is insufficient. The 2026 budget's procurement breakdown reflects this prioritisation: drone procurement is approximately 90 per cent domestic-sourced [TBD-VERIFY against Ministry of Strategic Industries and DPA figures]; ammunition is approximately 50–60 per cent domestic-sourced (with the balance from European and US suppliers); armoured-vehicle procurement is principally domestic for the lower-cost categories (MRAP, infantry-fighting vehicles produced under the KrAZ and other Ukrainian manufacturers) and foreign for the higher-cost categories (Leopard 2 / KNDS supply); long-range strike systems are predominantly domestic (Liutyi, Bober, BARS, Palianytsia, Trembita — UA-E-08 reference). The Brave1 platform's grant-disbursement architecture continues to operate alongside the procurement budget, channelling approximately $50–100 million in defence-tech start-up support [TBD-VERIFY against Ministry of Digital Transformation reporting].

The comparison with peer cases is instructive but limited. Israel at the height of post-7 October 2023 mobilisation reached approximately 5–6 per cent of GDP in defence spending [TBD-VERIFY against Israeli Ministry of Defense and IMF figures]; the 2026 Israeli budget has moderated this share as the operational tempo has reduced. Russia in 2024–2025 has spent approximately 6–8 per cent of GDP on defence on Western open-source estimates [TBD-VERIFY against Russian Federal Treasury, IISS, and SIPRI figures, which diverge significantly given Russian opacity]; the Russian National Wealth Fund drawdown and the structural-revenue contraction from the post-2022 sanctions regime constrain the trajectory. South Korea has sustained approximately 2.5–2.8 per cent of GDP defence spending as a peacetime-sustained-deterrent posture. NATO partners have moved toward the 2 per cent of GDP floor and (for the Baltics, Poland, Greece) toward 3–5 per cent under the post-2022 threat assessment. Only wartime mobilisation economies — the United Kingdom 1942–1944 at approximately 50 per cent of GDP, the United States 1942–1945 at approximately 35 per cent of GDP, the Soviet Union 1942–1944 at approximately 60 per cent of GDP, Israel 1967–1973 at approximately 25–30 per cent of GDP [TBD-VERIFY against standard sources including Harrison The Economics of World War II (1998)] — approach the Ukrainian 26–27 per cent share. The Ukrainian wartime fiscal posture is therefore in a category that requires comparison with full-mobilisation wartime economies rather than with contemporary European or NATO peers.

The political-economic sustainability of the 26–27 per cent floor is the central question of the post-ceasefire fiscal-trajectory addressed in §11. Under continued active hostilities, the floor is politically uncontestable: no Verkhovna Rada faction proposes reduction, and no public-opinion measurement (KIIS, Razumkov, Rating sociological group) registers majority support for reduction. Under any post-ceasefire scenario, the floor would have to be re-designed; the question is the trajectory of reduction and the institutional sequencing of demobilisation, procurement-cycle moderation, and the establishment of a sustained-deterrent peacetime defence posture (the Israeli or South Korean reference cases).

6. The External Anchor: The EU Ukraine Facility, the ERA Mechanism, and the IMF EFF

The 2026 budget's external-financing assumption is anchored on three pillars: the EU Ukraine Facility (the dominant single source); the G7 Extraordinary Revenue Acceleration (ERA) mechanism (the second-largest source); and the International Monetary Fund Extended Fund Facility (the macroeconomic-conditionality anchor). The three instruments together supply approximately 75–85 per cent of the 2026 non-defence-financing requirement; bilateral instruments (UK, Canada, Japan, Norway, Sweden, Denmark, Netherlands, Switzerland) supply approximately 10–15 per cent; the residual is covered by domestic War Bond issuance and other minor sources.

The EU Ukraine Facility — established under Regulation (EU) 2024/792 of 29 February 2024 with a four-year envelope of €50 billion covering 2024–2027 — is documented in detail in UA-G-03 §4 and in UA-F-02 §[TBD-VERIFY section]. Its operational architecture in the 2026 budget context comprises:

Pillar I — Financial Support to the Ukrainian State (approximately €38.27 billion across 2024–2027): this is the principal direct-budget-support flow. The 2026 disbursement assumption is approximately €12.5–13.5 billion across the calendar year [TBD-VERIFY against Ministry of Finance budget tables], divided into quarterly tranches that are conditional on the Ukraine Plan's reform-condition fulfilment. The reform-condition catalogue for FY2026 includes approximately 60–80 individual conditions [TBD-VERIFY precise count against the Ukraine Plan annex and the European Commission's quarterly Ukraine Facility implementation reports] across the categories of: macroeconomic stability and public financial management; anti-corruption and rule-of-law; business environment; energy and decarbonisation; agriculture; transport; digital transformation; education and labour market; social policy; environment; and decentralisation. The condition-by-condition tracking is performed by the Commission's Ukraine Service under DG NEAR with technical input from DG ECFIN; the Ukrainian-side coordination is led by the Cabinet of Ministers' Coordination Centre for the Implementation of the Ukraine Plan and the Office of the Deputy Prime Minister for European and Euro-Atlantic Integration.
Pillar II — Ukraine Investment Framework (approximately €6.97 billion across 2024–2027): the guarantee-architecture instrument supporting private and public investment in Ukrainian reconstruction. Operating principally through the EIB and the EBRD with European Fund for Sustainable Development Plus (EFSD+) governance, Pillar II is targeted at infrastructure, energy, transport, agriculture, and SME-finance investment. The 2026 budget integration of Pillar II flows is principally indirect — through the public-investment-management pipeline of the Ministry of Economy, the Ministry of Infrastructure, and the State Agency for Restoration and Infrastructure Development of Ukraine — rather than through direct fiscal disbursement.
Pillar III — Pre-Accession Support and Technical Assistance (approximately €4.76 billion across 2024–2027): supports the EU-acquis approximation work, judicial and administrative capacity-building, and pre-accession institution-strengthening. The 2026 budget integration is through Ministry-level technical-assistance programmes and the Ukraine Accession coordination architecture.

The 2026 disbursement timeliness is a central architectural risk. The 2024 disbursement record reached approximately €16.1 billion against the planned schedule [TBD-VERIFY]; the 2025 disbursement record was approximately €12–14 billion with two quarterly tranches withheld around the 21 July 2025 SBU-NABU confrontation period and released following the September 2025 institutional resolution [TBD-VERIFY against European Commission quarterly reports]. The 2026 disbursement assumption depends on the Ukraine Plan's quarterly reform-condition fulfilment; any sustained withholding of tranches would force intra-year budget amendments and would test the resilience of the fiscal architecture. The principal risk vectors are: (i) anti-corruption-architecture stress (a recurrence of the July 2025 SBU-NABU pattern); (ii) judicial-reform progress contestation (the High Council of Justice reform, the Supreme Court reform, the Constitutional Court reform pathway); (iii) public-financial-management benchmark fulfilment (the Medium-Term Budget Framework operational maturation, the State Treasury reform); (iv) governance-stress events that could trigger conditionality pause.

The G7 Extraordinary Revenue Acceleration (ERA) mechanism — announced at the 13–15 June 2024 Apulia G7 Summit and operationalised through October–November 2024 — provides approximately $50 billion in loan financing backed by the windfall proceeds (extraordinary revenues) generated by the approximately €210 billion in immobilised Russian sovereign assets principally held at Euroclear in Brussels (UA-G-03 §5 reference). The tranche allocation across G7 contributors comprises approximately:

United States approximately $20 billion (disbursed through 2025 in two main tranches via the US Treasury) — the principal continuity question under Trump-2;
European Union approximately €18 billion (Council Regulation 2024/2773 of 24 October 2024) — the principal residual ERA flow;
United Kingdom approximately £2.26 billion;
Canada approximately C$5 billion;
Japan approximately ¥471 billion / $3 billion [TBD-VERIFY precise figures and disbursement schedules].

The 2026 budget assumption is that the ERA mechanism continues to disburse on the planned schedule. The principal architectural question is whether the immobilised Russian assets themselves are confiscated (the full-confiscation position advocated by the Baltic, Polish, and Ukrainian governments) or remain on the profits-only / windfall-proceeds basis (the EU position under Council Decision (CFSP) 2024/1470 of 21 May 2024). The full-confiscation debate has continued across 2025–2026 with intensifying European-Parliament and Polish-Baltic advocacy and continuing European Central Bank, Bundesbank, and Belgian-government caution; the resolution is not assumed in the 2026 budget but would be material to the post-2027 financing architecture.

The IMF Extended Fund Facility — approved on 31 March 2023 with a $15.6 billion four-year envelope — has progressed through eight reviews to Q1 2026 [TBD-VERIFY exact review-numbering against IMF Country Report sequence]. The Eighth Review staff-level agreement was reached in late 2025 [TBD-VERIFY exact date]; the Executive Board approval enabled the corresponding tranche disbursement. The Ninth Review is on a Q2 2026 timeline. Cumulative IMF disbursements through Q1 2026 reached approximately $11–12 billion of the $15.6 billion programme; the residual $3.5–4.6 billion is scheduled for the programme's final year through Q1 2027 [TBD-VERIFY precise figures].

The IMF EFF Eighth Review staff report (published in late 2025 [TBD-VERIFY exact date]) provides the most-detailed external assessment of the 2026 fiscal framework. The Quantitative Performance Criteria (QPCs) for the 2026 budget include: (i) a ceiling on the general-government primary deficit (excluding grant-financed expenditure on a below-the-line basis) consistent with the headline deficit-to-GDP path; (ii) a floor on net international reserves; (iii) a continued zero-monetary-financing constraint; (iv) ceilings on the issuance of guarantees and on the accumulation of arrears. The Structural Benchmarks for FY2026 include: (i) public financial management reforms (the Medium-Term Budget Framework operationalisation, the State Treasury Single Account integration completion, the public-investment-management framework reform); (ii) tax-policy and tax-administration reforms (the State Tax Service institutional reform, the customs-administration restructuring); (iii) governance and anti-corruption reforms (continued NABU/SAPO/HACC institutional independence, financial-monitoring strengthening); (iv) financial-sector reforms (the state-owned banks' resolution and privatisation pathway, the banking-supervision strengthening); (v) state-owned-enterprise governance reforms (the UDI corporatisation deepening, the Naftogaz and Ukrenergo governance maturation, the Ukrhydroenergo restructuring).

The IMF–Ukraine relationship under the EFF has been characterised by an unusually high degree of staff-Ukrainian-government alignment. The Ministry of Finance under Marchenko, the NBU under Pyshnyy, and the IMF mission chief (under the IMF European Department) have coordinated the programme through quarterly review cycles without significant programme breakdowns, despite the operational difficulty of running a four-year IMF programme through an active wartime period. The 2025–2026 review cycle has continued the pattern: the Eighth Review staff-level agreement was reached on schedule; the conditionality was implemented or appropriately modified to reflect the wartime constraint. The successor-programme question — what arrangement replaces the EFF at its expiry in March 2027 — is the principal forward-looking IMF-relationship question and is implicit in the 2026 budget's medium-term-framework parameters.

The Article IV Consultation — the standard IMF surveillance-mission process — has occurred annually in 2024 and 2025, with the 2025 Article IV concluded in [TBD-VERIFY: exact date, typically October–November 2025] and the published staff report providing the most-detailed external macroeconomic-stability assessment of the Ukrainian economy. The Article IV's growth-forecast assumption — approximately 2.5–4.0 per cent real GDP growth in 2026 [TBD-VERIFY against IMF October 2025 World Economic Outlook and the parallel staff projections] — conditions the budget's revenue assumptions. The Article IV's medium-term-fiscal-trajectory assumption is the principal external benchmark against which the 2026 budget can be assessed.

7. The Post-Trump-2 US-Aid Question and the European Fiscal-Burden Shift

The collapse of direct US grant-and-aid flows from the second quarter of 2025 onward is the architectural feature that most distinguishes the 2026 budget from its predecessors. The pre-2025 architecture — under which the United States supplied approximately $25 billion in calendar 2023, approximately $9–10 billion in 2024, and approximately $5–7 billion in early 2025 [TBD-VERIFY against US Office of Management and Budget reporting, the Council on Foreign Relations Aid Tracker, and the USAfacts aggregations] — terminated in operational effect with the 4 March 2025 USAID and Department of State aid-pause announcement.

The chronology of the US-aid collapse runs as follows:

20 January 2025: Trump-2 inauguration; immediate executive-order signals on foreign-aid review.
24 January 2025: USAID pause-and-review executive order; the USAID 90-day review signalled across the foreign-aid apparatus.
28 February 2025: Oval Office breakdown between President Trump, Vice President Vance, and President Zelensky — the political moment that precipitated the operational changes that followed.
4 March 2025: USAID and Department of State aid-pause announcement formally suspending Direct Budget Support flows to Ukraine.
5 March 2025: Intelligence-sharing-pause announcement, with documented battlefield-cost consequences for Ukrainian targeting capability across approximately 7 days.
11 March 2025: Jeddah negotiation reset; partial resumption of intelligence-sharing; preparation of the minerals-deal framework.
18 March 2025: Partial resumption of legacy obligation disbursements (Presidential Drawdown Authority residual; Ukraine Security Assistance Initiative residual).
30 April 2025: US–Ukraine Reconstruction Investment Fund agreement signed; ratified by the Verkhovna Rada on 8 May 2025; the minerals-deal architecture established as the new bilateral framework.
Mid-2025 onward: continued operation of legacy disbursements (drawdown authorities executing pre-existing commitments) but no new Direct Budget Support tranches; the minerals-deal architecture operationalisation under Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Special Envoy Steve Witkoff.

The 2026 budget assumption registers this terminal collapse: the budget assumes approximately zero new US grant-and-aid inflows from the federal-government budget [TBD-VERIFY against Ministry of Finance assumption tables]. Some residual disbursements continue under legacy commitments (the USAI residual, the World Bank PEACE trust fund US contribution, the State Department's Migration and Refugee Assistance lines for IDP support); the minerals-deal architecture operates as a separate channel that may generate revenue for the Ukrainian government over the medium term but not in the FY2026 fiscal year.

The European fiscal-burden shift is the compensating architectural response. The 6 March 2025 Special European Council ReArm Europe / Readiness 2030 announcement (notional headline up to €800 billion across the SAFE loan instrument, national-fiscal-flexibility activations, EIB mobilisations, and complementary EU-budget instruments) and the subsequent national-level responses have produced a partial compensation for the US disengagement:

Germany under Chancellor Friedrich Merz (taking office 6 May 2025) passed a constitutional-amendment exemption from the Schuldenbremse (debt brake) for defence and Ukraine-aid spending, enabling a multi-hundred-billion-euro Sondervermögen expansion. The German 2025–2026 bilateral commitments to Ukraine have grown to approximately €15–25 billion in annual support [TBD-VERIFY against German Federal Ministry of Defence and Federal Foreign Office reporting].
Poland under Prime Minister Donald Tusk has sustained defence spending exceeding 4.7 per cent of GDP; Polish bilateral support to Ukraine has continued through 2025–2026 across the security-assistance, humanitarian, and reconstruction-financing tracks.
The Nordic and Baltic states — Sweden, Finland, Norway, Denmark, the Netherlands, Estonia, Latvia, Lithuania — have collectively stepped up commitments to per-capita-leader levels.
The United Kingdom under Prime Minister Keir Starmer (in office since 5 July 2024) has continued the UK's distinctive bilateral support architecture, with the £2.26 billion ERA tranche and continued bilateral grant and loan flows.
The European Commission and the European Investment Bank have expanded direct Ukraine-financing capacity through the Ukraine Facility's continued operation, the EIB's EU for Ukraine programme expansion, and the SAFE loan instrument's operationalisation.

The financing-gap arithmetic for 2026 — the residual financing requirement after the EU Ukraine Facility, the ERA mechanism, the IMF EFF, and the bilateral inflows are aggregated — is approximately $5–15 billion depending on the assumption of mid-year amendments [TBD-VERIFY against Ministry of Finance, IMF EFF Eighth Review staff report, and KSE Centre for Economic Strategy financing-gap estimates that vary across the range]. The gap is principally addressed through: (i) the domestic War Bond programme (assumed at approximately UAH 500–600 billion across 2026, equivalent to approximately $12–15 billion at projected exchange rates [TBD-VERIFY against Ministry of Finance auction-programme assumptions]); (ii) potential intra-year supplementary external financing if circumstances require; (iii) potential expenditure adjustments if external financing falls short.

The European fiscal-burden shift is partial rather than complete. The aggregate European commitment to Ukraine in 2026 — approximately €40–60 billion in fiscal-flow terms when EU Ukraine Facility, ERA, bilateral, and EIB instruments are aggregated [TBD-VERIFY against ECFR and Carnegie Europe financing-tracker estimates] — has substantially compensated for the US-grant-flow loss but at a magnitude that is approximately 60–70 per cent of the prior US-plus-European-combined inflow level. The residual gap is what produces the fiscal-architecture brittleness flagged in the 2026 budget process and what motivates the IMF EFF Eighth Review's emphasis on medium-term-fiscal-framework reform.

8. The Domestic-Revenue Mobilisation Question

The domestic-revenue side of the 2026 budget is the politically-contested element where the architecture's design choices most directly engage the Verkhovna Rada factions, the economic-policy think-tank community, and the household-and-business public. The headline domestic-revenue assumption — approximately UAH 1.7–2.0 trillion in 2026 [TBD-VERIFY against Ministry of Finance budget tables] — represents approximately 17–19 per cent of projected 2026 GDP and approximately 40–45 per cent of total budget expenditure. The remaining expenditure (approximately 55–60 per cent of total expenditure) is financed through the external-grant-and-loan architecture documented in §6–§7 and through domestic-debt issuance documented in §10.

The principal revenue categories in the 2026 budget are as follows [TBD-VERIFY precise sub-category shares against State Tax Service published quarterly reports and Ministry of Finance budget tables]:

Value Added Tax (VAT) at approximately 35–40 per cent of total tax revenue (approximately UAH 600–800 billion). VAT is administered by the State Tax Service of Ukraine (STSU) and the State Customs Service of Ukraine (SCSU) on imports. The wartime VAT collection has been resilient — better than initially feared in 2022 — reflecting the post-2014 institutional modernisation, the Diia-platform integration, and the consumer-spending resilience supported by the social transfers and military-personnel pay flows. The 2026 assumption envisages continued VAT-base recovery as economic activity stabilises and as the displaced population partially returns or stabilises in their displacement locations.
Personal Income Tax (PIT) and Military Levy at approximately 25–30 per cent of total tax revenue (approximately UAH 425–600 billion). The PIT is at 18 per cent flat rate; the Military Levy was raised from 1.5 per cent to 5 per cent under the October 2024 tax-package legislation. The combined PIT-plus-Military-Levy effective rate is therefore 23 per cent on most personal-income categories. The 2025–2026 yield from the Military Levy increase is approximately UAH 60–80 billion in incremental revenue [TBD-VERIFY against Ministry of Finance and KSE Institute estimates]. The PIT-Military-Levy base is structurally affected by the population displacement (the approximately 4.3 million refugees abroad pay PIT in their host country, not in Ukraine) and by the active-duty mobilisation (servicemember pay is taxed differently and partly exempt from certain categories).
Corporate Profit Tax (CPT) at approximately 10–13 per cent of total tax revenue (approximately UAH 170–260 billion). The CPT is at 18 per cent on standard corporate profits; the wartime Bank Excess-Profits Tax — initially set at 50 per cent on the 2023 bank-sector windfall profits — has provided a one-time-style increment that tapered through 2024 and 2025. The 2026 budget includes the residual operation of the Bank Excess-Profits Tax at moderated rates and assumes the resumption of normal CPT collection on a recovering corporate-profit base.
Unified Social Contribution (USC) at approximately 12–15 per cent of consolidated-budget revenue (approximately UAH 300–400 billion). The USC funds the Pension Fund and other social-insurance commitments; it is administered by the STSU. The USC base is constrained by the wartime labour-market contraction and the population-displacement effects.
Excise duties at approximately 8–10 per cent of total tax revenue (approximately UAH 140–200 billion). Principally on fuel, tobacco, alcohol, electricity, and electronic-cigarette products. The October 2024 tax-package raised excise duties on fuel and tobacco, providing an incremental yield of approximately UAH 30–50 billion in 2025–2026.
Customs revenue at approximately 7–10 per cent of total tax revenue (approximately UAH 120–200 billion). Customs revenue collapsed in 2022 with the loss of Black Sea trade routes and the supply-chain disruption; partial recovery through 2023–2025 has been supported by the Romanian and Polish overland trade routes and the Black Sea Grain Initiative operational period (UA-F-05 reference). The 2026 assumption envisages continued recovery.
Other revenue at approximately 5–8 per cent (approximately UAH 90–160 billion). Includes property taxes, environmental taxes, rent payments for state-owned-asset use, dividends from state-owned enterprises (Naftogaz, Ukrenergo, Privatbank, Oschadbank, Ukrposhta — though many SOEs have not paid dividends under the wartime conditions), and miscellaneous fees and fines.

The structural-revenue base is constrained by three principal factors:

The shadow-economy estimate — approximately 25–30 per cent of GDP on KSE-IER methodology, somewhat lower on State Statistics Service methodology, and possibly higher on independent academic estimates [TBD-VERIFY against KSE Centre for Economic Strategy, IER, and IMF Article IV estimates that vary within and beyond this range]. The shadow economy includes both the unreported domestic-activity component (cash-economy retail, undeclared agricultural production, informal-services provision) and the cross-border component (smuggling, customs evasion). The wartime conditions have increased certain shadow-economy components (the cross-border movement of goods and people; the cash-economy frontline-area activity) while reducing others (some categories of formal-economy activity have moved further toward formality through Diia integration).
The population-displacement effect — the approximately 4.3 million Ukrainian refugees abroad as of mid-2025 [TBD-VERIFY against UNHCR Ukraine refugee data and the IOM displacement-tracking reports] do not pay Ukrainian PIT; the approximately 3.7 million internal IDPs pay PIT in their new locations rather than their pre-war locations, affecting the regional tax-revenue distribution; the demographic contraction from approximately 41 million pre-war to approximately 28–30 million by 2025 (a contraction of approximately 25 per cent, although the precise figure remains contested across methodologies) represents a permanent tax-base reduction.
The occupied-territories revenue loss — the territories currently under Russian occupation (approximately 18 per cent of pre-war Ukrainian territory including Crimea, the Donetsk and Luhansk oblasts in part, and the Zaporizhzhia and Kherson oblasts in part) generated approximately 12–15 per cent of pre-war Ukrainian tax revenue [TBD-VERIFY against pre-war Ministry of Finance regional-revenue distribution data]. The loss is partly compensated by the relocation of business and population to Ukrainian-controlled territory but represents a structural tax-base reduction.

The Diia-platform tax administration has been one of the most-consequential institutional achievements of the post-2019 Zelensky-era reform agenda (UA-D-01 reference). The Ministry of Digital Transformation under Mykhailo Fedorov has integrated the State Tax Service operations into the Diia digital-government platform, enabling: (i) electronic-only tax filing for most categories; (ii) integrated business-registration and tax-administration interfaces; (iii) real-time tax-payment processing; (iv) cross-referencing of tax records with other state databases. The Diia-integrated tax administration has improved compliance, reduced administrative cost, and enabled the wartime tax-administration continuity. The 2026 budget includes continued Diia-platform investment under the Ministry of Digital Transformation's budget allocation.

The opposition position on the revenue side — articulated principally by Batkivshchyna (Tymoshenko), with supporting articulation from European Solidarity (Poroshenko) and Holos — emphasises the need for progressive tax reform: shifting from the 18 per cent flat-rate PIT to a graduated structure; strengthening the property-tax base; expanding the corporate-tax base through anti-avoidance enforcement; addressing the shadow-economy base through enhanced administrative measures. The November 2025 second-reading amendments included several progressive-taxation proposals that were not incorporated into the final budget but that established the opposition's revenue-policy programme. The progressive-taxation question is likely to recur in successor budgets and in any post-ceasefire fiscal-architecture reform.

9. The Wartime Tax Architecture

The wartime tax architecture — built incrementally across 2022–2025 — represents one of the most substantial tax-policy reform sequences of any contemporary European state during a comparable timeframe. The architecture's design has been shaped by four conjoint pressures: the immediate fiscal-emergency requirement; the IMF–EFF conditionality on structural revenue mobilisation; the EU Ukraine Facility reform-conditionality on tax-administration modernisation; and the political-economy of wartime fairness in burden-sharing.

The October 2024 tax-package legislation — Law of Ukraine No. 4015-IX On Amendments to the Tax Code of Ukraine and Certain Other Legislative Acts of Ukraine on Ensuring the Balance of Budget Revenues During Martial Law (adopted by the Verkhovna Rada on 10 October 2024 in second reading and signed by President Zelensky in late October 2024 [TBD-VERIFY exact signing date]) — is the most-consequential tax-policy measure of the wartime arc. The package's principal elements were:

Military Levy increase from 1.5 per cent to 5 per cent of personal income, military pensions, dividends, royalties, and other PIT-subject income categories. The increase entered into force on 1 December 2024 [TBD-VERIFY exact effective date] and was projected to yield approximately UAH 90–120 billion in incremental annual revenue [TBD-VERIFY against Ministry of Finance and KSE Institute estimates]. The Military Levy is administered alongside PIT through standard payroll-deduction mechanisms.
Bank Excess-Profits Tax extension at moderated rates from 2025 onward. The initial 2023 Excess-Profits Tax at 50 per cent on bank-sector windfall profits yielded approximately UAH 68 billion in 2024 [TBD-VERIFY]; the extension at moderated rates produced approximately UAH 25–40 billion in 2025 and is assumed to produce approximately UAH 20–35 billion in 2026 [TBD-VERIFY against Ministry of Finance estimates].
Excise-duty increases on fuel, tobacco, electronic-cigarette products, and alcohol. The fuel-excise increase aligned more closely with EU directive minima as part of the EU-acquis approximation under the Ukraine Plan. The tobacco-excise increase continued the multi-year acceleration trajectory.
Minimum Tax Liability for individual entrepreneurs in the single-tax (simplified-taxation) regime. The Minimum Tax Liability addresses the long-standing tax-base erosion in the simplified-taxation system, under which approximately 1.5 million individual entrepreneurs operate at low effective rates. The reform was extensively contested in the Verkhovna Rada second-reading deliberation and was implemented in a moderated form relative to the original Ministry of Finance proposal.
Corporate Profit Tax base broadening through anti-avoidance and transfer-pricing administration strengthening, in line with OECD BEPS standards and the EU-acquis approximation requirements.

The 2025 supplementary tax measures and the 2026 budget-embedded tax measures continued the trajectory at a more moderate pace. The Ministry of Finance and the State Tax Service have prioritised the consolidation and effective administration of the October 2024 package rather than further headline-rate increases; the 2026 budget assumes the steady-state operation of the October 2024 architecture with marginal adjustments in the Verkhovna Rada amendment process.

The State Tax Service institutional reform — operating under continuous EU and IMF conditionality through 2024–2026 — has produced significant institutional modernisation. The reform agenda includes: (i) the organisational restructuring of the STSU under the State Tax Service Strategy 2024–2030, with consolidation of regional offices, separation of large-taxpayer administration from general administration, and strengthening of the tax-audit function; (ii) the personnel-management reform with competitive recruitment for senior positions, periodic integrity vetting, and salary-rationalisation alignment with comparable public-sector benchmarks; (iii) the digital-administration deepening under the Diia integration with continued investment in the e-Cabinet, the e-Audit functions, and the cross-database integration; (iv) the anti-corruption hardening under cooperation with NABU, SAPO, and the Bureau of Economic Security on tax-related fraud and evasion cases. The institutional reform is a long-running EU and IMF priority and is among the more-consequential post-2022 governance reforms in Ukrainian public-sector institutional architecture.

The Bureau of Economic Security of Ukraine (BES) — established under Law of Ukraine No. 1150-IX of 28 January 2021 and operational from 2021 — is the central economic-crime investigative agency that combines tax-evasion, customs-evasion, and broader financial-crime investigation functions. The BES has been the subject of repeated reform contestation across 2022–2025, with significant debate about its institutional independence, its leadership selection, and its operational effectiveness. The 2024–2025 reform sequence under EU Ukraine Facility conditionality has strengthened the BES's institutional architecture; the 2026 budget includes the funding line for the reformed BES. The BES reform is one of the principal anti-evasion architectural elements of the wartime tax architecture.

The financial-monitoring architecture under the State Service for Financial Monitoring of Ukraine (SFMSU; the Derzhfinmonitoryng) operates under the FATF-aligned anti-money-laundering and counter-terrorism-financing framework and has been progressively strengthened under EU Ukraine Facility conditionality. The SFMSU's cooperation with NABU, SAPO, BES, and the National Police is the principal cross-institutional architecture for financial-crime detection and prosecution.

The opposition critique of the tax architecture — articulated principally by Batkivshchyna (Tymoshenko) — emphasises three concerns: (i) insufficient progressivity at the top of the income distribution, with the 18 per cent flat-rate PIT (or 23 per cent including the 5 per cent Military Levy) failing to capture rents from high-income earners and high-wealth holders; (ii) insufficient property-tax base development, with the Ukrainian real-estate property-tax architecture undeveloped relative to comparator European cases; (iii) insufficient anti-evasion enforcement at the level of structured tax-avoidance schemes by larger corporate taxpayers. The European Solidarity critique partially overlaps with the Batkivshchyna critique but emphasises additional concerns about the wartime-tax architecture's effect on small-and-medium-sized enterprises and on the post-war business-environment trajectory. The Holos critique is more technocratic and emphasises tax-administration effectiveness and the institutional independence of the STSU.

The structural-revenue-base reform questions that remain unresolved as of June 2026 include: (i) the medium-term tax-policy trajectory — whether the wartime tax architecture should be retained essentially unchanged through the war's continuation or modified to address the structural-revenue base over a longer horizon; (ii) the shadow-economy reduction strategy — what combination of administrative-enforcement intensification, formalisation incentives, and structural-policy measures most effectively reduces the shadow-economy share; (iii) the EU-acquis tax-harmonisation trajectory — how rapidly the Ukrainian tax architecture should converge to EU-acquis standards in advance of accession; (iv) the post-ceasefire tax-architecture redesign — how the wartime tax measures (Military Levy, Bank Excess-Profits Tax, the simplified-taxation Minimum Tax Liability) should be modified or wound down in a post-ceasefire fiscal architecture.

10. The Structural Deficit, Public-Debt Trajectory, and Monetary-Financing Discipline

The 2026 budget's headline general-government deficit assumption — approximately 16–20 per cent of GDP, varying within the range according to the treatment of grant-financed expenditure and the precise revenue-and-expenditure assumptions [TBD-VERIFY against Ministry of Finance budget tables, IMF EFF Eighth Review staff report, and Razumkov Centre estimates] — represents the central fiscal-architecture constraint. The headline figure is high by any peacetime standard but is a moderate reduction from the 2023 peak (approximately 23–26 per cent of GDP) and a stabilisation against 2024 (approximately 19 per cent of GDP) and 2025 (approximately 17–22 per cent of GDP).

The deficit-financing structure in the 2026 budget combines four principal sources:

External grants (predominantly from the EU Ukraine Facility Pillar I and bilateral grants) supplying approximately 35–45 per cent of the deficit financing;
Concessional external loans (from the IMF, World Bank, EBRD, EIB, and bilateral concessional lenders) supplying approximately 30–40 per cent;
Domestic-market debt issuance (the War Bond / Voennyi Bond programme administered by the Ministry of Finance and conducted through NBU-coordinated auctions) supplying approximately 15–25 per cent;
The G7 ERA mechanism continued operation supplying approximately 5–10 per cent.

The precise breakdown varies across the Verkhovna Rada Budget Committee's published summaries and across the Ministry of Finance's monthly budget-execution reports; the IMF EFF Eighth Review staff report provides the most authoritative external assessment of the financing-mix assumption.

The public-debt trajectory is the principal medium-term sustainability question. The public-debt-to-GDP ratio has evolved across the wartime period approximately as follows [TBD-VERIFY against Ministry of Finance Public Debt Management Strategy and the IMF EFF staff reports]:

2021 (pre-war): approximately 48–49 per cent of GDP;
2022: approximately 78 per cent (the sharp wartime increase reflecting the deficit financing and the GDP contraction);
2023: approximately 84–88 per cent;
2024: approximately 90–93 per cent;
2025: approximately 95–98 per cent;
2026 (projected): approximately 100–105 per cent.

The approach to and modest breaching of the conventional 100 per cent of GDP threshold is the central medium-term sustainability marker. The trajectory has been cushioned by three structural features:

The concessional structure of approximately 75–80 per cent of the external debt — much of it on grant-equivalent or near-grant terms (the EU Ukraine Facility Pillar I disbursements are loans on concessional terms; the IMF EFF disbursements are on standard but relatively favourable terms; some bilateral disbursements are on grant-equivalent terms);
The currency-and-tenor structure with the external debt predominantly in euros and US dollars at long tenors and the domestic debt predominantly in hryvnia at medium tenors;
The debt-restructuring track record — the September 2024 successful restructuring of approximately $20 billion in Eurobond debt with a 37 per cent haircut and maturity extension to 2034–2036 [TBD-VERIFY precise restructuring terms against Ministry of Finance and Reuters/FT reporting] reduced the debt-service profile substantially.

The debt-sustainability assessment in the IMF EFF Eighth Review concluded that the Ukrainian public-debt trajectory remains sustainable under the programme's baseline assumptions, with significant downside risks principally associated with: (i) the war's intensity and duration; (ii) the external-financing-architecture timeliness; (iii) the GDP growth trajectory; (iv) the post-ceasefire fiscal-architecture design. The IMF's debt-sustainability analysis applies the standard Sovereign Risk and Debt Sustainability Framework for Market-Access Countries (MAC SRDSF) with adjustments for the wartime context.

The NBU's commitment to non-monetisation of the deficit — maintained continuously since the 2022 transitional period during which the NBU supplied approximately UAH 400 billion in monetary financing to bridge the emergency-budget gap — is the principal macroeconomic-stability anchor. The 2023, 2024, 2025, and 2026 budgets have all operated under zero new monetary financing; the NBU has been able to maintain this commitment due to the external-financing flows that have substituted for monetary financing. Under any scenario in which external financing falls short and the gap cannot be closed by domestic-debt issuance, the NBU would face a renewed monetary-financing question; under the 2026 baseline assumption, this scenario is not anticipated.

The NBU's monetary policy under Governor Andriy Pyshnyy (in office since 7 October 2022) has maintained the policy-rate framework around a 13–15 per cent rate band through 2025–2026, with the headline rate adjusted to balance inflation containment and credit-channel support. The CPI inflation trajectory — from approximately 26.6 per cent year-on-year in December 2022 to approximately 5.1 per cent in December 2023, approximately 12.0 per cent in December 2024, approximately 11.5 per cent in mid-2025, and a projected 7–9 per cent for end-2026 [TBD-VERIFY against NBU Inflation Report quarterly figures] — has remained within the macroeconomic-stability range that distinguishes the Ukrainian wartime monetary architecture from the inflationary-collapse cases of comparable wartime episodes.

The exchange-rate regime evolution from the July 2022 fixed-rate setting (UAH 36.6/USD) to the October 2023 managed-flexibility regime has proceeded under IMF EFF technical assistance. The hryvnia has depreciated from approximately UAH 36.6/USD in mid-2023 to approximately UAH 38–40/USD in mid-2024, approximately UAH 41–43/USD in mid-2025, and is assumed at approximately UAH 43–46/USD for the 2026 budget [TBD-VERIFY against Ministry of Finance budget assumptions and NBU Inflation Report exchange-rate projections]. The exchange-rate flexibility within the managed framework provides a partial absorption-buffer for external-account shocks and is consistent with the IMF EFF's foreign-exchange-policy framework.

The foreign-exchange-reserves position of the NBU — approximately $40–45 billion at end-2024 [TBD-VERIFY against NBU monthly reserve-data publications] and assumed to remain in the $35–45 billion range across 2026 — provides the macroeconomic-stability buffer against external-account shocks. The reserve position has been maintained through the IMF EFF Net International Reserves (NIR) floor compliance and through the structural inflow of the external-financing architecture.

The medium-term-fiscal-framework reform required under the IMF EFF Eighth Review's Structural Benchmarks is the principal structural-reform agenda for 2026. The reform aims to establish a credible three-year forward-looking fiscal framework that explicitly links the annual budget to medium-term sustainability constraints; the framework should include explicit deficit and debt anchors, expenditure rules, and contingency provisions for fiscal shocks. The 2026 budget's Medium-Term Budget Declaration for 2026–2028 (adopted by the Cabinet of Ministers in July 2025) provides the first draft of this framework; the Eighth Review's Structural Benchmarks call for the operational implementation of the framework across 2026 with the FY2027 budget process as the first full-cycle test.

11. The Post-Ceasefire Fiscal Trajectory Question

The post-ceasefire fiscal-trajectory question is the central forward-looking question of the 2026 budget process and the central uncertainty in the medium-term-fiscal-framework reform required under the IMF EFF Eighth Review. The 2026 budget itself operates under a continuing-war assumption: no ceasefire is presumed in the budget's headline figures; the defence-spending floor at 26–27 per cent of GDP is assumed across the full FY2026; the external-financing assumption is built on continued IMF EFF, EU Ukraine Facility, and ERA mechanism operation under wartime conditions. The post-ceasefire question is therefore not embedded in the 2026 budget's operational architecture but is the subject of medium-term fiscal-framework design work in the Ministry of Finance, the IMF EFF Structural Benchmark catalogue, and the academic-and-think-tank fiscal-architecture community.

The defence-spending-floor question is the most-consequential single component. Under a post-ceasefire scenario, the defence-spending share would need to taper from the wartime 26–27 per cent of GDP toward a sustained-deterrent peacetime level. The principal reference cases are:

The Israeli sustained-deterrent posture at approximately 5–6 per cent of GDP across most of the post-1973 period (peaking modestly above this during high-tension intervals);
The South Korean sustained-deterrent posture at approximately 2.5–2.8 per cent of GDP across the post-1953 stabilised-armistice period;
The Cold War European-NATO posture at approximately 3–5 per cent of GDP for front-line states and 2–3 per cent for rear-area states.

The Ukrainian post-ceasefire sustained-deterrent floor would plausibly be in the 5–10 per cent of GDP range — above the Israeli or South Korean levels because of the proximity and scale of the Russian threat, and possibly closer to the Cold War West German level of approximately 3–4 per cent of GDP plus a substantial supplementary security-architecture commitment from NATO and EU partners. The trajectory of reduction — over how many years, on what conditional-sequencing, with what political-economy management of the demobilisation — is unspecified and is the subject of intense behind-the-scenes Ministry of Defence, Ministry of Finance, NSDC, and Office of the President planning work.

The reconstruction-spending shift question is the corresponding compensating dynamic. Under a post-ceasefire scenario, the reconstruction-spending requirement — currently flagged at approximately $524 billion in ten-year reconstruction and recovery needs under the February 2025 RDNA-5 assessment (UA-G-03 §3 reference) — would become the dominant fiscal-architecture question. The reconstruction-spending architecture as currently designed under the Ukraine Facility, the ERA mechanism, the World Bank PEACE umbrella, the EBRD and EIB pipelines, and the US–Ukraine Reconstruction Investment Fund (the minerals-deal) provides the institutional architecture; the absorption-capacity question — whether Ukrainian state and private-sector institutions can effectively absorb the reconstruction-spending volume — is the principal operational constraint. The shift from wartime operational spending to reconstruction capital spending is the central post-ceasefire fiscal-design challenge.

The demobilisation-and-veteran-integration question is the third major component. The cost of demobilising approximately one million servicemembers (UA-D-04 reference) and managing the veteran-integration transition is estimated at approximately UAH 600 billion to UAH 1.0 trillion across the first three post-ceasefire years [TBD-VERIFY against Ministry of Social Policy, Ministry of Veterans Affairs, and KSE Centre for Economic Strategy projections that vary across the range]. The components include:

Demobilisation payments to discharging servicemembers (severance, transition allowance, mobilisation-period compensation);
Veteran pensions — the Pension Fund commitment to military pensions, including disability pensions, will substantially expand as the active-duty mobilisation winds down and pensions activate;
Healthcare commitments — the wounded and traumatised veteran population requires sustained medical and psychological care under the Ministry of Health and the Ministry of Veterans Affairs architecture;
Disability benefits — the estimated 100,000–250,000 disabled veterans [TBD-VERIFY against Ministry of Veterans Affairs and Ministry of Social Policy estimates] will require continuing disability-benefit support;
Labour-market reintegration — the absorption of demobilising servicemembers into the post-war labour market requires active labour-market policy, retraining programmes, and the management of the demographic-and-labour-market constraint.

The demographic-and-labour-market constraint conditions the entire post-ceasefire fiscal trajectory. The pre-war Ukrainian population of approximately 41 million has contracted to an estimated 28–30 million by 2025 through a combination of refugee outflow (approximately 4.3 million abroad as of mid-2025), the territorial loss (approximately 18 per cent of pre-war territory under occupation), war-time mortality, and the demographic-rate effects of the wartime conditions. The post-ceasefire population trajectory will depend on the refugee-return rate, which itself depends on the perceived security environment, the reconstruction-progress trajectory, the labour-market opportunities in Ukraine relative to host countries, and the family-and-social-network dynamics. The Ptoukha Institute of Demography and Social Studies projections — published across 2024–2025 [TBD-VERIFY specific Ptoukha publications] — indicate that even under optimistic refugee-return scenarios, the long-term Ukrainian population would stabilise at approximately 30–34 million, a permanent reduction of 17–27 per cent from the pre-war baseline. The fiscal implications include: (i) a permanently smaller tax base; (ii) a permanently smaller labour force to support the dependency-ratio commitments; (iii) a need for substantial labour-market policy to absorb both the demobilising servicemembers and the returning refugees, while attracting some net migration inflow to compensate for the demographic loss.

The public-debt-sustainability question in a post-ceasefire scenario is potentially more manageable than it appears in the wartime context. The reasons include: (i) the concessional structure of the existing debt; (ii) the prospective resumption of normal market access for new debt issuance; (iii) the higher GDP growth trajectory under a credible peace scenario (the World Bank and IMF growth projections for a credible post-ceasefire Ukrainian economy reach approximately 5–7 per cent annual real GDP growth across the first five years [TBD-VERIFY against World Bank Ukraine Economic Update and IMF projections]); (iv) the reconstruction-financing architecture's continued provision of grants and concessional loans; (v) the prospective ERA mechanism's potential expansion under a confiscation scenario. The principal risk is that the post-ceasefire architecture fails to materialise — that the ceasefire is interpreted by external partners as the end of the emergency requiring extraordinary financing and that flows wind down faster than the Ukrainian state can adjust.

The EU accession trajectory (UA-F-02 reference) is the principal medium-term institutional anchor of the post-ceasefire fiscal architecture. The 2025 cluster-opening sequence and the 2026 chapter-opening expectations [TBD-VERIFY against the European Commission's November 2025 Ukraine 2025 Enlargement Report] set the institutional-reform trajectory; the eventual accession (currently estimated at 2028–2032 by most policy-analyst projections [TBD-VERIFY against ECFR, Carnegie Europe, and European Policy Centre projections]) would integrate Ukraine into the EU fiscal-coordination framework, the Cohesion Policy architecture, and the Common Agricultural Policy architecture. The post-accession fiscal architecture would be substantially restructured by the EU-budget transfers (net beneficiary status for Ukraine across an extended initial period) and by the EU-fiscal-rule integration (the Stability and Growth Pact framework, the European Semester coordination, and the Fiscal Compact provisions).

The post-ceasefire fiscal-architecture forward-stub designation for subsequent corpus documents is UA-D-11 or successor designation, to be written when (a) a credible ceasefire architecture is in place, (b) the FY2027 budget process has begun under post-ceasefire assumptions, or (c) the IMF EFF successor-programme is under negotiation under post-ceasefire parameters. The 2026 budget itself does not embed the post-ceasefire architecture but provides the bridge from the wartime fiscal architecture to the post-ceasefire fiscal architecture.

12. The Forward View — Three Accounts, the Forward Calendar, and the Open Questions

The 2026 budget is the central fiscal-architecture artefact of the post-Oval-Office order, the first comprehensive Ukrainian fiscal design in the absence of direct US grant flows, and the structural framework within which Ukrainian state operations through FY2026 will be conducted. Its design choices — the defence-spending floor; the EU Ukraine Facility anchor; the IMF EFF continuation; the domestic-revenue mobilisation; the wartime tax architecture's consolidation; the public-debt trajectory's approach to 100 per cent of GDP — together produce a coherent if brittle architecture that will require continuous re-validation through the FY2026 execution.

The Three Accounts

The government-on-track account — represented by Minister of Finance Sergii Marchenko, NBU Governor Andriy Pyshnyy, Budget Committee Chair Roksolana Pidlasa, Prime Minister Yulia Svyrydenko, and the Sluha Narodu Budget Committee majority — emphasises the institutional achievement of having designed and adopted a fiscal architecture under conditions of severe external-financing volatility. The achievements registered in this account include: (i) the maintenance of the zero-monetary-financing rule across the wartime period after the 2022 transitional episode; (ii) the IMF EFF continuous performance across eight reviews to Q1 2026; (iii) the EU Ukraine Facility's deep institutional embedding; (iv) the successful September 2024 Eurobond restructuring; (v) the inflation moderation from the 2022 peak; (vi) the foreign-exchange-reserve maintenance; (vii) the October 2024 tax-package as a substantial structural-revenue-mobilisation measure; (viii) the Made in Ukraine procurement-substitution policy operationalisation; (ix) the macroeconomic-stability anchor's preservation across the post-28 February 2025 stress. The account treats the 2026 budget as a credible operational architecture for the year ahead and as a credible foundation for the medium-term-fiscal-framework reform required under the IMF EFF.

The opposition-stress account — represented by Batkivshchyna (Tymoshenko), European Solidarity (Poroshenko), and Holos — emphasises the structural fragility of the financing assumptions and the political-economy contestations embedded in the budget design. The stresses registered in this account include: (i) the over-reliance on EU Ukraine Facility disbursement timeliness, with the risk of further conditionality contestation under future SBU-NABU-type confrontations; (ii) the absence of a credible US-replacement strategy beyond the EU expansion, with the question of what happens if European political conditions shift; (iii) the regressivity questions in the tax architecture, with the Military Levy and Bank Excess-Profits Tax burden distribution; (iv) the defence-procurement transparency residual concerns notwithstanding the DPA-DOT reform sequence; (v) the under-design of the post-ceasefire fiscal trajectory and the absence of a credible medium-term framework that addresses post-ceasefire scenarios; (vi) the structural-revenue base erosion from population displacement and territorial loss; (vii) the public-debt trajectory's approach to and breaching of the 100 per cent of GDP threshold; (viii) the political-economy of the social-spending floors under wartime conditions. The opposition-stress account does not reject the 2026 budget — none of the principal opposition factions voted against it in totality — but emphasises the structural risks and the policy alternatives that should be considered in future budget cycles.

The structural-vulnerability account — represented by economic-policy think-tanks (KSE Institute, Centre for Economic Strategy, Institute for Economic Research and Policy Consulting, Razumkov Centre) and by independent academic commentary (including Tymofiy Mylovanov, Hlib Vyshlinsky, Veronika Movchan, Yuriy Gorodnichenko, Oleg Ustenko, Olena Bilan, and others) — emphasises the deeper structural questions that condition the 2026 budget and the post-ceasefire fiscal trajectory. The vulnerabilities registered in this account include: (i) the tax-base erosion from the shadow economy (approximately 25–30 per cent of GDP on KSE-IER methodology), from population displacement, and from the occupied-territories loss; (ii) the demographic-and-labour-market constraint with the population fall from 41 million to approximately 28–30 million representing a permanent tax-base reduction; (iii) the public-debt sustainability over the 2027–2030 horizon under realistic GDP-growth assumptions and external-financing-architecture parameters; (iv) the political-economy of demobilisation with the cost and complexity of veteran-integration and labour-market absorption; (v) the structural-reform fatigue with the question of whether the Verkhovna Rada and the executive can sustain the pace of reform required under continued external conditionality; (vi) the institutional-architecture stress with the recurring anti-corruption-architecture confrontations and the broader executive-judicial-civil-society dynamics; (vii) the post-ceasefire transition design with the absence of a comprehensive framework for the demobilisation, the reconstruction, the labour-market, and the demographic-recovery dimensions.

The three accounts are not symmetric in evidentiary weight or in political-stake, and they should not be read as competing alternatives. The government-on-track account correctly identifies real institutional achievements that distinguish the Ukrainian wartime fiscal architecture from comparable wartime cases; the opposition-stress account correctly identifies risks that are not fully addressed in the 2026 budget design and that will require policy response in future cycles; the structural-vulnerability account correctly identifies the deeper questions that condition the long-term fiscal trajectory and that no single annual budget can fully resolve. The analytical task is to integrate the three accounts rather than to choose among them.

The Forward Calendar

The forward calendar through 2027 includes the following principal fiscal-architecture milestones:

Q2 2026: IMF EFF Ninth Review completion; the parallel Article IV Consultation; the EU Ukraine Facility Q2 disbursement against the Ukraine Plan reform conditions.
July 2026: Cabinet of Ministers adoption of the Medium-Term Budget Declaration for 2027–2029 — the central forward-looking budgetary framework document.
Mid-September 2026: Ministry of Finance submission of the Draft Law on the State Budget of Ukraine for 2027 to the Verkhovna Rada — the first FY2027 budget design, which will need to address the IMF EFF programme-expiry question and the post-2027 EU Ukraine Facility successor-instrument question.
Q4 2026: IMF EFF Tenth Review (the penultimate review of the four-year programme); the Verkhovna Rada 2027 budget second-reading deliberation and adoption.
End-2026: Calendar-year close on the 2026 budget execution; the Ministry of Finance budget-execution outcomes report.
Q1 2027: IMF EFF Eleventh Review (the programme's final review); the negotiation of the IMF EFF successor programme; the EU Ukraine Facility 2027 disbursement; the question of the post-2027 successor instrument design.
2027 onwards: The post-EFF and post-Facility-cycle architecture; the eventual EU accession trajectory under the cluster-opening sequence; the post-ceasefire fiscal architecture (if a credible ceasefire is in place) or the continued wartime fiscal architecture (if active hostilities continue).

The Open Questions

As of June 2026, the principal open questions concerning the Ukrainian fiscal architecture include the following:

Will the EU Ukraine Facility's 2026–2027 disbursement schedule be maintained on time, or will sustained conditionality contestation force intra-year budget amendments? The Q3 and Q4 2025 disbursement record showed two quarterly tranches withheld around the July 2025 SBU-NABU confrontation; the recurrence-risk is the principal operational risk for the 2026 fiscal architecture.
Will the IMF EFF Ninth, Tenth, and Eleventh Reviews complete on schedule, and what successor programme architecture is negotiable for the post-March 2027 period? The successor-programme question is the principal external-financing architectural question for FY2027.
Will the G7 ERA mechanism continue at the planned schedule, and will the underlying immobilised Russian sovereign assets be confiscated or retained on the profits-only basis? The confiscation debate is intensifying across 2025–2026 and could produce a substantially different post-2027 financing architecture.
Will the US–Ukraine Reconstruction Investment Fund (the 30 April 2025 minerals deal) produce operational revenues for the Ukrainian government over the medium term, and how will the structured-review provisions of the agreement evolve? The mid-2026 review of the fund's operations is a near-term inflection point.
Will the domestic-revenue mobilisation continue to perform against the budget assumptions, or will tax-base erosion and the structural constraints force further revenue-policy intervention? The Q2 and Q3 2026 revenue-execution data will be the first substantive test.
Will the Verkhovna Rada opposition factions' progressive-tax-reform agenda gain traction, or will the wartime tax architecture remain principally unchanged? The political dynamics of the 2027 budget cycle will be the first electoral-cycle test.
Will the post-ceasefire fiscal-architecture design work — currently conducted in the Ministry of Finance, the IMF EFF Structural Benchmark catalogue, and the academic-and-think-tank community — produce a credible framework that the Verkhovna Rada can adopt under any eventual armistice scenario? The forward-stub UA-D-11 (or successor designation) anticipates this question.
Will the European fiscal-burden shift be sustainable politically and economically across 2026–2027, or will European fatigue produce a stress moment that requires a structural re-design? The post-Trump-2 European architecture's resilience is the principal exogenous variable.
Will the public-debt trajectory's approach to and breaching of the 100 per cent of GDP threshold trigger market-access constraints or require further restructuring, or will the concessional structure of the existing debt continue to provide adequate cushion? The medium-term-debt-sustainability assessment is the principal sustainability marker.
Will the anti-corruption-architecture stress events of 2025 (the July 2025 SBU-NABU confrontation) recur, and how will any recurrence affect the external-financing-conditionality architecture? The institutional-resilience question conditions the entire external-financing-architecture stability.

The 2026 budget is the central fiscal-architecture document of the present Ukrainian moment. Its execution across FY2026 will determine whether the post-Oval-Office fiscal-architecture transition produces a sustainable medium-term framework or whether the post-2026 architecture requires a further structural re-design. The 2027 budget cycle, which begins in earnest in May–June 2026 and culminates in the Verkhovna Rada adoption in late 2026, will be the first comprehensive test of the architecture's medium-term operability. The post-ceasefire architecture — if and when a credible ceasefire emerges — will be the second-order architectural question of the late-2020s Ukrainian fiscal trajectory. This document records the 2026 budget as adopted and as in early-FY2026 execution as of the May–June 2026 corpus update horizon; subsequent documents will record the FY2026 execution outcomes, the FY2027 budget design, and (in due course) the post-ceasefire fiscal-architecture design.

13. June–August 2026 Update: A New IMF Arrangement, a Record Mid-Year Defence-Spending Amendment, and the Revived Frozen-Assets Debate

[Added 2026-08-29. This section extends the analysis above with developments verified through 29 August 2026. Evidentiary note: retrieved through web-search synthesis rather than direct primary-document fetch in this session; precise figures below carry inline TBD-VERIFY tags pending confirmation against the underlying Ministry of Finance, IMF, and Verkhovna Rada session-protocol texts, but the core sequencing — a new IMF facility, a large mid-year defence-budget amendment, and a revived EU reparations-loan debate — is corroborated across multiple independent outlets.]

Three developments through June–August 2026 update the external-anchor and defence-spending-floor analysis of Sections 5–7 materially enough to require integration into this document's forward calendar (Section 12).

A new, and larger, IMF arrangement. The IMF architecture this document describes in Sections 6 and 12 — the $15.6 billion EFF running 2023–2027 with a sequence of "Eighth" and "Ninth" reviews — appears, on the basis of IMF press-release material located through web search, to have been superseded by a new four-year Extended Fund Facility arrangement of USD 8.1 billion, approved by the IMF Executive Board on 26 February 2026 with an immediate USD 1.5 billion disbursement [TBD-VERIFY: the relationship between this new arrangement and the pre-existing 2023 EFF — whether the earlier programme concluded, was cancelled, or was formally succeeded — requires reconciliation against the IMF's own programme documentation; this document's Sections 6 and 12 should be read as describing the pre-February-2026 programme architecture, now superseded]. Under the new arrangement, IMF staff reached a staff-level agreement on the First Review and concluded the parallel 2026 Article IV Consultation on 12 June 2026; the IMF Executive Board then completed that First Review on 20 July 2026 (press release PR26254), releasing a further disbursement reported as SDR 503 million (approximately USD 690 million) and bringing cumulative disbursement under the new programme to approximately USD 2.2 billion. IMF communications characterised Ukraine's performance as "broadly satisfactory," with all end-March 2026 quantitative performance criteria met, though implementation of some structural-reform benchmarks was reported as delayed [TBD-VERIFY: the specific structural benchmarks reported as delayed should be confirmed against the published Article IV staff report and Letter of Intent]. This is a materially different external-anchor picture from the one this document's earlier sections construct around the original 2023 programme's review cadence, and the forward calendar in Section 12 (which anticipates a "Ninth Review" in Q2 2026 and an "Eleventh Review" as the 2023 programme's final review in Q1 2027) should be read as requiring revision to track the new programme's own review sequence instead.

A record mid-year defence-and-security budget amendment. Independently of the IMF track, the Verkhovna Rada in June 2026 adopted, in a second reading and as a whole (Draft Law No. 15224, reported as passing with 242 votes against a 226-vote threshold, following an earlier first-reading vote of 240), an amendment to the 2026 state budget increasing security-and-defence spending by approximately UAH 1.56 trillion (reported as roughly USD 34.7–38 billion) [TBD-VERIFY: the discrepancy between the 34.7bn and 38bn USD figures across outlets likely reflects different UAH/USD conversion dates or different scope definitions (defence-only versus security-and-defence); the exact allocation should be confirmed against the Ministry of Finance's published budget-amendment text]. Reported allocations within the amendment include approximately UAH 1.37 trillion for weapons procurement and domestic production (the defence-industrial dimension covered in UA-E-08) and approximately UAH 174 billion for military salaries, together with an additional defence-sector contingency reserve. Ukrainian reporting (УНН) explicitly linked the amendment's financing to the disbursement of EU support: Ukraine's 2026 state budget is reported to receive EUR 45 billion in EU financing overall, of which EUR 31.8 billion is earmarked to strengthen security and defence capability, drawn from the European Parliament-approved "Ukraine Support Loan" package providing up to EUR 90 billion across 2026–2027 — the market-borrowing-backed EU facility (distinct from the immobilised-Russian-asset "reparations loan" discussed below) that emerged from the December 2025 European Council after the reparations-loan proposal was blocked. This confirms the "European fiscal-burden shift" this document's Section 7 anticipates as a live and, on the mid-2026 evidence, substantially realised trend rather than a contingent risk.

The revived frozen-Russian-assets "reparations loan" debate. This document's Section 12 (Open Question 3) flags the G7 Extraordinary Revenue Acceleration (ERA) mechanism's continuation and the confiscation-versus-profits-only debate as an intensifying question. By end-May 2026, G7 countries had reportedly provided Ukraine with a cumulative USD 45.5 billion in ERA-mechanism loans backed by frozen Russian sovereign-asset profits (USD 37.9 billion disbursed in 2025, a further USD 6.6 billion in 2026), carrying reported 11–12 year grace periods and serviced from Russian-asset proceeds rather than the Ukrainian budget [TBD-VERIFY: the precise disbursement figures and grace-period terms should be confirmed against G7 Finance Ministers' communiqués]. The separate, larger "reparations loan" proposal — reported at roughly EUR 140 billion and structured around the principal (not merely the profits) of the approximately EUR 210 billion in immobilised Russian central-bank assets held mostly in Belgium — remained blocked by Belgian opposition as of the December 2025 European Council, which instead produced the smaller EUR 90 billion market-borrowing facility referenced above. Through August 2026, this question resurfaced: on 22 August 2026, Ukrainian diaspora and civil-society organisations held rallies in eleven cities across multiple countries demanding that European governments use the frozen Russian assets for Ukraine's benefit; on 27 August 2026, Sweden, the Netherlands, Spain, and Poland were reported to have revived pressure on Brussels to resume work on the reparations-loan mechanism, eight months after Belgium's veto [TBD-VERIFY: whether this revived push produced any formal European Council or Ecofin agenda item by 29 August 2026 could not be confirmed in this session]. This document's Section 12 open question on ERA-mechanism continuation and asset confiscation should accordingly be read as unresolved but newly active, rather than dormant, as of the close of the wave-11 update window.

Looking to FY2027. Consistent with the forward calendar in Section 12, the Cabinet of Ministers began formal preparation of the draft 2027 state budget during the summer of 2026, with the Ministry of Finance notifying budget-fund administrators of spending ceilings in August and collecting budget requests through the month; reporting places the target date for Cabinet-level submission at 8 September 2026, ahead of the constitutionally-required Verkhovna Rada submission by 15 September [TBD-VERIFY: the precise statutory submission deadline and whether it was met should be confirmed in the Wave 12 recency sweep]. Reporting attributes to the government (under the new premiership discussed in the companion update to UA-D-09) a stated set of FY2027 priorities — "strengthening defense capability, ensuring financial stability, and a well-thought-out social policy" — that tracks closely with the three-pillar structure (defence floor, external anchor, domestic-revenue/social-spending balance) this document uses to organise the FY2026 budget itself.

Document v2026-08-29. Status: [DRAFT]. Section 13 (added 2026-08-29) extends the record through 29 August 2026; several figures in that section carry inline TBD-VERIFY tags pending primary-source fetch, which was unavailable in this session due to an environment-level network-egress restriction (see the Wave 11 Ukraine recency log). Forward-stubs identified: UA-D-11 (post-ceasefire fiscal architecture), UA-O-03 (demobilisation and veteran integration), UA-O-04 (demographic crisis — wartime population loss), the FY2027 budget-architecture document to be written when the FY2027 budget process advances. TBD-VERIFY tags should be closed in subsequent verification waves as primary sources are consulted (Ministry of Finance budget tables; IMF EFF First and subsequent Review staff reports under the February-2026 arrangement; European Commission quarterly Ukraine Facility implementation reports; NBU Inflation Report series; State Tax Service quarterly reports).