Ukraine has become critically dependent on international aid: what the budget reveals
This was announced on Facebook by Roksolana Pidlasa, Chair of the Verkhovna Rada’s Budget Committee.
The budget collected 1.3 trillion hryvnias in own revenue
According to preliminary data cited by Pidlasa, the general fund of the state budget, excluding grants, generated 1.3 trillion hryvnias in revenue during the first six months of 2026. This is virtually in line with the target and 21.7 per cent higher than in the first half of 2025.
At first glance, this is a strong result for a country that continues to fund a full-scale war. However, the structure of the budget tells a different story: even a significant increase in tax revenue does not eliminate dependence on external funding.
General Fund expenditure for the first half of the year amounted to 2.2 trillion hryvnias. In other words, the budget spends significantly more than it receives from its own sources. The state bridges this gap through international aid and domestic borrowing.
Over 37 per cent of expenditure was covered by international partners
In the first half of the year, Ukraine received over $18 billion in international aid, which was channelled towards non-military expenditure from the general fund. Almost $13 billion of this amount was grant aid.
This primarily refers to funds from ERA Loans, excluding UK funding earmarked for military purposes, as well as the EU’s Ukraine Support Loan in the form of macro-financial support.
As a result, over 37 per cent of budget expenditure is covered by international aid. This is precisely why Ukraine’s financial stability is directly dependent on meeting the conditions set by its international partners, particularly under the memorandum with the IMF, the Ukraine Facility and other programmes.
Defence accounted for 1.4 trillion UAH
The main reason for this dependence is the military nature of expenditure. In the first half of the year, 1.4 trillion UAH was allocated to defence, or 63 per cent of all general fund expenditure.
By way of comparison, 227.5 billion UAH was spent on social protection and support for veterans, excluding public investment projects. The medical guarantees and health screening programme received 92.9 billion UAH. UAH 92.7 billion was spent on teachers’ salaries via the education subvention and supplementary payments. UAH 26.5 billion was spent on grants to local budgets.
Debt remains a significant burden in its own right. Over the past six months, 288.9 billion hryvnias were allocated to repay domestic and external debt, whilst 184.5 billion hryvnias were spent on servicing it.
In other words, after defence, the second major financial reality of the budget is debt repayments. Together, they leave the state with very little scope to independently finance non-military needs.
Which taxes have filled the budget
The largest source of revenue for the general fund was import VAT – 318.2 billion hryvnias. Personal income tax and the military levy contributed 204.9 billion hryvnias, corporation tax — 186.4 billion hryvnias, and VAT on goods produced in Ukraine after refunds — 160 billion hryvnias.
The budget also received 146.1 billion UAH from the National Bank of Ukraine, 86.3 billion UAH in import excise duty, UAH 66.1 billion in domestic excise duty, UAH 46.6 billion in dividends and a share of the net profit of state-owned enterprises, UAH 30.9 billion in import duties and UAH 28.8 billion in rent payments.
The target for corporate income tax was exceeded by 25.4 billion UAH, or 15.8 per cent. For personal income tax and the military levy, the target was exceeded by 11.2 billion UAH, or 5.8 per cent. For import excise duty, the target was exceeded by 2.7 billion UAH, or 3.2 per cent. For resource rent payments, the target was exceeded by 1.8 billion UAH, or 6.7 per cent.
Where the budget fell short
The largest shortfall against the target was recorded for VAT on goods produced in Ukraine. The budget fell short by 26.3 billion UAH, or 14.1% of the target.
A further 18.9 billion UAH was not received from dividends and a share of the net profit of state-owned enterprises. This represents a shortfall of 28.8% against the target.
Revenue from import VAT was also lower than expected — a shortfall of 7.8 billion UAH — as were domestic excise duties — a shortfall of 3.1 billion UAH — and import duties — a shortfall of 738.8 million UAH.
These figures highlight the uneven nature of the economic recovery. Some businesses are reporting better profits, whilst personal income tax and the military levy are exceeding expectations. At the same time, domestic VAT, which reflects the domestic production and consumption cycle, remains a weak point in the budget.
Domestic government bonds have become a pillar of the budget
In addition to international aid, the state is actively raising funds domestically. According to Pidlasa, UAH 230.4 billion was channelled to finance the general fund of the state budget through the placement of domestic government bonds over the first six months of 2026.
The Ministry of Finance also reported that, for the first half of 2026, the volume of funds raised through domestic government bonds exceeded 254 billion hryvnias. Part of these funds comes from bond placement auctions, and part from exchange auctions.
This means that the defence budget is not reliant solely on taxes and foreign aid. The domestic borrowing market also remains one of the state’s key financing instruments.
What does this dependence mean?
The figures for the first half of the year do not indicate a budgetary failure. On the contrary, own-source revenue has risen by almost 22 per cent and is broadly in line with the plan.
However, they do reveal a structural vulnerability. Ukraine is collecting more tax revenue, yet the scale of military expenditure is so vast that more than a third of expenditure has to be covered by partners.
This makes compliance with the conditions of international programmes not merely a technical requirement, but a matter of budgetary sustainability. If external funding is delayed or reduced, the burden on domestic borrowing, the tax system and current expenditure will rise sharply.
The main conclusion from the first half of the year is not merely that the budget is being met. It is being met on the condition that international aid remains stable.
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