The European Union is urgently looking for a way to cover Ukraine’s budget deficit for 2026: what are the options?

The European Union is looking for ways to cover Ukraine’s budget deficit of up to $19 billion in 2026.

This was reported in the Financial Times, citing its own sources.

The IMF report states that Ukraine’s financial needs for the next year are covered, but on the condition that Russian aggression ends in 2025 or mid-2026. However, both the EU and Ukraine do not consider this scenario to be realistic.

The European Commission is discussing various options with EU members, including providing military assistance to Ukraine in the form of extra-budgetary grants, providing Kyiv with loans under the G7 initiative for $50 billion, and using Russian assets frozen in the EU.

“There is growing concern about next year, and many stakeholders who were counting on a ceasefire agreement this year are being forced to recalculate their costs and realise that no matter how hard they try, they will still have a hole (in funding – ed.),” the source told the FT.

It is noted that the European Commission adjusted Ukraine-related spending in 2025 in response to the continuation of the Russian Federation’s war against Ukraine and the lack of confidence in a quick ceasefire.

The publication’s source stated that the EU’s goal is to ensure Kyiv’s needs in advance, especially given the uncertain prospects for further military support from the US.

One proposal under consideration by the EU is to channel military support to Ukraine in the form of bilateral grants, which would be accounted for separately as an “extra-budgetary external transfer” but would also count towards national defense spending targets.

“Instead of duplicating capabilities, European allies could jointly fund Ukrainian troops, viewing this as a service that Ukraine provides to strengthen continental security,” says a document that Ukraine sent to G7 partners, which the publication reviewed.

Another option is to make payments from the current G7 scheme worth $50 billion in the form of loans to Kyiv, which would be financed by the proceeds from frozen Russian state assets.

Another option could be to extract more value from Russia’s frozen assets by reinvesting them in riskier asset classes. However, this approach is riskier for the EU, as it would be liable for them and incur losses.

Earlier it became known that the Cabinet of Ministers of Ukraine approved the Budget Declaration for three years ahead – for 2026-2028 .

By the way, the Cabinet of Ministers of Ukraine approved changes to the state budget for 2025, providing an additional over 412 billion hryvnias for the security and defense sector .

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