Ukraine will use the €90 billion from the EU for state survival and the war
The Russian invasion has devastated the Ukrainian economy, and the budget for 2026 anticipates additional borrowing for this year equivalent to 18% of GDP
“It’s really a question of our life, of surviving.” Volodymyr Zelenskiy couldn’t have put it more clearly this Wednesday in an interview on CNN. The Ukrainian president was referring to the €90 billion ($105 billion) loan that the European Council approved for his country on Thursday. The approval comes after months of delays and just when economists were warning that the Ukrainian government only had enough resources left to last until summer.
The war has devastated the Ukrainian economy; its GDP is 21% lower than at the start of the Russian invasion in 2022, according to official government figures. However, reality suggests that the consequences of the conflict are even worse, according to the Kyiv School of Economics (KSE), a Ukrainian economic research institution. In February, the KSE published a report stating that current and future losses to the Ukrainian economy amount to three times the country’s GDP.
To this must be added some nine million Ukrainians who have fled abroad during the invasion, mostly women and children. Ukraine has lost more than 20% of its population in four years. While 41 million people lived in free Ukraine before the war, now there are 29 million, according to data from a conference on demography held Wednesday by the media outlet LB. In addition to the nine million living abroad, there are three million in provinces occupied by Russia, representing 20% of the national territory. This conference presented a telling figure: the population decline represents a loss of €120 billion ($140 billion) annually for the Ukrainian economy.
The 2026 state budget anticipates additional borrowing this year equivalent to 18% of GDP. State revenues have plummeted while expenditures have skyrocketed: the country’s armed forces are now one million strong. External financing covers nearly half of the state budget. The problem is that virtually the entire burden now falls on Europe because Washington has completely cut off aid to Ukraine since Donald Trump’s return to the White House in January 2025.
Under Joe Biden’s presidency, the United States provided €110 billion ($129 billion) in aid to Ukraine between 2022 and 2025. This represented a third of the total aid supplied by allies, according to data from the Kiel Institute, Germany’s leading center for monitoring international aid to Ukraine. The United States has withdrawn this support, and now it is primarily European countries that must shoulder the burden.
The International Monetary Fund established in 2025 that Ukraine’s public finances will require a minimum of approximately €130 billion ($152 billion) in external assistance until 2027 to remain afloat. State expenditures projected for the 2026 budget are €94 billion ($110 billion), while revenues are €56 billion ($65 billion). A major problem is the debt accumulated after four years of war.
“The number one priority is receiving this money for our army, our budget, and our citizens,” Zelenskiy explained Wednesday in a digital meeting with journalists. Pensions, government employees’ salaries, public services, and many other administrative obligations must continue, but the country’s military defense consumes the majority of resources. The €90 billion loan from the EU will allow Ukraine to avoid financial collapse by 2026, although a European Commission report, published Wednesday by the newspaper Kyiv Independent, warns that nearly €20 billion ($23 billlion) of defense needs remain unmet.
Ukraine will spend over €134 billion ($157 billion) on its military in 2026, according to this Brussels document. This is more than double the €54 billion ($63 billiion) projected in the state budget, which represents 60% of government spending. The KSE already detailed in February that the actual amount allocated to defense in 2025 was €79.5 billion ($93.2 billion), almost double the budgeted amount, equivalent to 71% of total state spending that year.
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