Roksolana Pidlasa, who chairs the budget committee of the Rada, did not soften her wording. In her words, the state’s liquidity is now worse than at any time since February 2022. It sounds alarming, and the Ministry of Finance figures, unfortunately, confirm that alarm.
Let’s look at the eight months of 2026. Cash expenditures of the state budget — 4.04 trillion UAH. Revenues to the general and special funds — about 3.6 trillion UAH. You can work out the difference yourself, and it is substantial.
Two reasons Pidlasa points to
The war erodes the tax base
The first reason is simple, but no less painful for that. Enterprises have been destroyed or are operating at half capacity, energy and logistics are regularly hit, and some businesses have simply closed. Where is the economy supposed to find the taxes to finance such spending?
Partners pay for results
The second reason is external funding. Most donors do not provide money “just because” — they release funds after specific conditions are met. A reform stalls — the tranche is delayed.
The International Monetary Fund (IMF) in July, by the way, praised Ukraine: all quantitative criteria as of the end of March were met. But structural reforms are weaker — some were done late, some were not completed at all. It was necessary to agree new deadlines and additional steps.
Where the money goes
Almost half a trillion more year‑on‑year
Expenditures of the general fund for January–August are roughly 2.97 trillion UAH. Last year over the same period spending was 466.6 billion UAH lower. There’s probably no need to spell out what the difference was spent on.
62 kopiykas of every hryvnia go to defence
From the general fund about 1.84 trillion UAH was allocated to security and defence. That is roughly 62% of all fund expenditures. In August alone — 215.3 billion UAH.
And that is not all. Pensions must be paid, teachers and doctors must be paid, social support must be maintained, and damaged infrastructure repaired. Overall the state spent more than 4 trillion UAH over eight months.
What about revenues
The tax service is working, but there are no miracles
It would be wrong to say revenues “fell to zero.” Over eight months the general fund received about 2.29 trillion UAH; August brought 227.8 billion UAH. Who paid the most in August:
- corporate profit tax — 72.6 billion UAH;
- value‑added tax (VAT) on imports — 56.2 billion UAH;
- domestic VAT (after refunds) — 27.5 billion UAH;
- excise duties — 26.8 billion UAH;
- personal income tax (PIT) — 20.2 billion UAH.
Not bad? Yes. Enough for the war? No.
A large share of “revenues” are not taxes
Here is an interesting nuance. Of those 2.29 trillion UAH of revenues, as much as 569.6 billion UAH are international grants. Another 146.1 billion UAH is part of the profit of the National Bank of Ukraine (NBU). It follows that even the budget’s “revenues” largely rest not on taxation but on partners and the NBU. So when a tranche is delayed, it is felt immediately.
Liquidity — what we are actually talking about
Not “there is no money,” but “there is no money today”
It’s important not to confuse things. A liquidity crisis does not mean the state has gone bankrupt or stopped paying. It is about something else: whether there will be money in the account on a specific day when a large payment falls due.
A simple example. The EU or the IMF have already agreed everything and funds will arrive in three weeks. But the soldiers’ salaries are due tomorrow. Procurement is the day after tomorrow. Social payments are next week. That’s a cash gap, even though “on paper” everything balances.
August as an illustration
Just the general fund’s expenditures in August were 396 billion UAH. Internal and other inflows to the fund that month were noticeably lower. When you need to find hundreds of billions every month, even a small delay becomes a problem.
Borrowing hasn’t gone as planned either
OVDP bring in less than expected
The borrowing plan for January–August was executed only to 59.9%. The general fund raised 644.7 billion UAH. The domestic bond market brought in about 332 billion UAH, of which roughly 124.9 billion UAH were military domestic government bonds (OVDP).
External loans
About 312.7 billion UAH were borrowed from abroad, roughly 7 billion dollars. So the budget currently rests on several “legs” at once: taxes, bonds, loans, grants, and specific partner programmes. If one leg fails, the whole structure wobbles.
How dependent we are on assistance
A shortfall of 140 billion dollars
The IMF in July calculated that in a baseline scenario Ukraine lacks about 140.3 billion dollars for 2026–2029. For the period from Q3 2026 to Q2 2027 partners pledged 52.3 billion dollars (this excludes money from the Fund itself).
The scale is such that a delay of even a single tranche is already an event.
What about the IMF programme
In July the IMF’s Executive Board completed the first review of the new Extended Fund Facility programme. Ukraine received about 690 million dollars, and in total roughly 2.2 billion dollars have been disbursed under the programme so far.
But the IMF always comes with a list of conditions: taxes, budget policy, public administration, energy, and the financial sector. At each review some of these conditions are checked. And the Fund warned bluntly: slow reforms are a risk, and some checkpoints have already had to be postponed.
Brussels pays regularly
The European Union (EU) is doing its part. On 18 September the European Commission transferred another 3.3 billion euros for defence procurements through the Ukraine Support Loan mechanism.
The whole mechanism is 90 billion euros for 2026–2027. A third, 30 billion, will go to the budget, the remaining 60 billion to defence. After the September payment, Ukraine has received almost 15 billion euros under this mechanism for 2026. But every programme has its own schedule and conditions, so do not expect “one big payment once a year.”
Why reforms are about money, not paperwork
First a step, then a tranche
The scheme is simple: Ukraine implements agreed steps — partners transfer funds. That is how the IMF and most EU programmes work. They check laws, reforms of state bodies, and tax changes.
Where it stalls
The IMF says the pace of reforms has slowed over the past year. Some checkpoints were closed late; new timelines were set for others. The Fund highlights several areas in particular:
- tax evasion;
- management of state-owned enterprises;
- public investment;
- changes to the tax system;
- strengthening institutions.
Delay any of these items — and you get the money a few weeks later. It’s very down‑to‑earth.
The deficit isn’t going away
There is nowhere to cut spending
The deficit is not a one‑month accident. A state at war always spends more than it collects. Rapid spending cuts are not possible: over 60% of general fund expenditures are defence, and the rest are wages, social spending and basic services.
IMF forecast
The Fund expects the deficit to remain at double‑digit levels relative to GDP. The IMF’s prescription is to seek new revenues and keep non‑war spending under control.
The economy is barely growing
The IMF’s June forecast for 2026 is real GDP growth of 1–1.6%. The reasons are clear: war, strikes on infrastructure, and weak external conditions.
With such growth you cannot expand the tax base much. So the budget operates in two parallel modes: domestic revenues cover a significant share of current needs, and partners’ money patches the remaining gap.
Five factors that will determine the state’s financial resilience
No single tranche or month will change things dramatically. What matters is a combination of factors:
- whether taxes and customs duties arrive steadily;
- whether the government can borrow on the domestic market on time;
- whether Ukraine meets the conditions of the IMF and the EU;
- whether grants and loans arrive on schedule;
- whether non‑war spending can be restrained.
So far the budget is performing its core functions, partners are helping, and they are helping significantly. But with such war expenditures and such reliance on external funds, any delay hits hard. That is precisely Pidlasa’s warning: the task now is not to “find money in general,” but to manage the timing so that huge current payments, taxes, borrowing and partners’ tranches converge at the right moments.
