Ukraine Faces Its Biggest Budget Crisis Since the Invasion as Russian Strikes Hit the Economy

Ukraine is scrambling for money as intensified Russian airstrikes batter its economy. Kryvyi Rih, the hometown of President Volodymyr Zelenskiy, shows the damage. ArcelorMittal’s mining and steelmaking complex, the city’s largest employer, suspended operations last month after ballistic missile strikes. Mayor Oleksandr Vilkul said the situation is worse there than anywhere except the front line.

Steel once made up a tenth of economic output, and mills in Zaporizhzhia and other cities now stand silent. Kyiv needs $56 billion this year to close its gap, about a quarter of economic output, with $27 billion going to military spending. Officials discussed bringing forward payments from a €90 billion EU loan, and the European Commission and Ukraine say they have found funds for this year. Three sources warned that this could raise pressure next year, as election campaigns in France and Poland could erode support for Kyiv. Prime Minister Sergii Koretskyi has frozen non-essential spending, including reconstruction, to protect military costs, wages and pensions.

Rising War Costs and Falling Tax Revenue

A single day of fighting now costs $190 million, up from $140 million two years ago, according to Roksolana Pidlasa, head of parliament’s budget committee. Expensive long-range weapons and a larger army wage bill are driving costs. In the first nine months, Ukraine spent over $44 billion on defence but raised only about $42 billion in taxes. Attacks cost the budget over 49.5 billion hryvnias ($1.1 billion) in revenue, and losses could reach 70 billion hryvnias by year-end. Economist Oleksandra Myronenko called it a structural revenue problem. Grain exports fell 36.6% year-on-year in September, and about $40 billion in export revenue is at risk. Growth is forecast at just 0.5% to 1.5%, down from 1.8% in 2025.

Delayed Foreign Aid and the 2027 Budget

Ukraine has received nearly $200 billion in Western support since 2022, but $29.5 billion is at risk this year because tax and anti-corruption reforms have stalled. Koretskyi wants parliament to pass all required laws by October 15. The government has proposed a record $110 billion defence budget for next year, and Finance Minister Sergii Marchenko puts the unfunded gap above $32 billion. He suggests using frozen Russian central bank assets in Europe, about €210 billion, as part of the solution. Some businesses are scaling back, and Vasyl Khmelnytskyi scrapped plans for three factories near Kyiv.