EU turns page on Ukraine's $27bn deficit, says all needs are covered

The European Commission has concluded that Ukraine’s financial and military needs for this year are fully met, one month after Kyiv flagged a $27 billion (€23.92 billion) shortfall in its Ministry of Defence that caught Brussels off guard.

“Today, through coordinated joint efforts, we have identified the means to cover Ukraine’s budget and defence needs for 2026,” the Commission said in a vaguely worded statement shared by President Ursula von der Leyen on Thursday.

“We have also reconfirmed the steps needed to ensure their timely release.”

With this, the executive closes the debate that began in late August when Ukrainian President Volodymyr Zelenskyy called on allies to fill the $27 billion gap, warning essential weapon deliveries were at risk.

“We need more money, much more,” Zelenskyy said.

Since then, the Commission has been engaged in technical talks with the Ukrainian government to pin down the exact scope of the financing hole.

From the outset, EU officials were reluctant to validate the $27 billion figure, later reduced to $20 billion, which they considered unexpected and unexplained.

Instead, they shifted the focus to the €90 billion loan, the bloc’s main line of assistance. It foresees €45 billion for 2026 and another €45 billion for 2027.

At first, Zelenskyy suggested that a share of the loan earmarked for next year be moved to this year, but the request was never formalised.

As technical talks dragged on, Brussels dialled up the pressure on Kyiv to advance the reforms necessary to unlock the support loan and the Ukraine Facility, a prior assistance envelope. The Commission is frustrated by the slow legislative pace.

The loan and the facility have roughly $37 billion still available until the end of the year, which EU officials insist is enough to keep Ukraine on a solid footing.

With 2026 settled, attention now turns to the much direr 2027.

In its statement, the Commission promised to “swiftly” allocate the loan’s second €45 billion half to ensure fast disbursements, “subject to the established conditions”.

Brussels and Kyiv will “begin work on identifying additional budgetary and defence needs”, it added, urging allied nations to increase their contributions.

“All sides agreed that other partners should also fulfil their financial commitments and step up their efforts in light of the significant challenges Ukraine is facing.”

In response to the Commission’s statement, Zelenskyy praised the “good results” of the bilateral consultations about the 2026 and 2027 needs.

“We have agreed on the format, timeline, and steps needed to ensure full coverage,” he said. “Going forward, we will coordinate this work and align our actions every month, ensuring continuous coordination.”

Earlier this week, Ukrainian Finance Minister Sergii Marchenko said the country faces a staggering $78 billion hole in 2027: $32.6 billion on the budget and $45 billion on military expenditures. (The Commission has not yet validated the numbers.)

Marchenko warned that Russia’s non-stop attacks, targeting data centres, telecoms, power grids, factories and railways, coupled with the blockade in the Black Sea, threaten to paralyse the Ukrainian economy and cripple tax collection.

The wartime costs for 2027 could exceed Marchenko’s estimates, says Oleksandra Myronenko, an economist at the Centre for Economic Strategy in Kyiv.

“These are the realities of war. When the €90 billion support loan was adopted, the partners understood that Ukraine would still need to seek additional resources to meet all its necessary needs. And we did indeed expect that part of the defence needs would be covered by in-kind support,” Myronenko told Euronews.

“Unfortunately, that in-kind support has decreased, increasing the need for additional funding. Moreover, the war is indeed becoming more expensive and more intense.”

Read the full article here