For Ukraine, the war with Russia is not only being fought on the battlefield but also on a critical financial frontline. Keeping the economy stable has become essential for the country’s survival and its long-term future.
Ukraine’s Finance Minister Sergii Marchenko says maintaining a strong economy is directly tied to the country’s ability to defend itself. According to him, Ukraine’s taxpayers are already contributing heavily to the war effort, with much of the government’s internally raised revenue being directed toward military defense.
Kyiv also sees its economic resilience as key to its ambition of joining the European Union. To support the country during the ongoing war, the EU has approved a massive €90bn loan package that could help Ukraine manage its budget shortfall over the next two years.
This funding forms the largest part of a broader international support package worth over $136bn. Without this assistance, Ukrainian officials say the country would struggle to maintain essential services while continuing its military operations.
Despite international support, Ukraine is being forced to make difficult financial decisions. In late 2024, the government introduced its first wartime tax increases, affecting personal income, small businesses, and financial institutions. These measures are expected to help bring about $67.5bn into state coffers this year.
However, the government’s spending plans for 2026 are projected to reach around $112bn, with roughly 60% allocated to military needs. This leaves a funding gap of about $45bn, prompting the government to propose additional tax reforms and stricter revenue collection policies.
The International Monetary Fund has also stepped in with an $8.1bn loan programme, urging Ukraine to improve tax collection and reduce financial loopholes. The first $1.5bn from that package has already been delivered.
Complicating matters further are political tensions within Europe. Hungarian Prime Minister Viktor Orban has delayed parts of the EU’s financial support package amid disputes over a pipeline transporting Russian oil through Ukraine.
Meanwhile, ordinary Ukrainians are feeling the economic pressure of the prolonged war. Inflation has dropped from its wartime peak but still affects daily life, with many citizens struggling to cope with rising costs of food, utilities, and basic goods.
Businesses are also facing challenges due to energy shortages caused by repeated Russian attacks on Ukraine’s infrastructure. Frequent power outages force many companies to rely on generators, increasing operating costs and reducing productivity.
Despite the economic strain, Ukrainian officials remain hopeful. Leaders in the country’s business community say foreign investors are already preparing for future reconstruction projects once the war ends.
Estimates suggest rebuilding Ukraine could cost about $588bn, covering repairs to homes, infrastructure, transportation systems, and land damaged by the conflict.
Although the challenges remain immense, officials insist the resilience of the Ukrainian economy and its people will help the country recover and rebuild in the years ahead.
