On May 28, the Verkhovna Rada of Ukraine ratified an agreement with the European Union to secure a loan of €90 billion for 2026–2027, alongside amendments to the state budget that provide significant increases in defense expenditures. The ratification was supported by 298 Members of Parliament, exceeding the required 226 votes. The first tranche, amounting to €3.2 billion, is anticipated to be received in June 2026, with a total of €45 billion earmarked for 2026 and another €45 billion allocated for 2027.
The budget amendment bill, passed in the first reading, stipulates that €31.8 billion of the loan funds be directed to defense and that €13.2 billion be used to offset the budget deficit. Consequently, Ukraine’s defense spending in 2026 could reach a historic high of $100 billion, up from the previously forecast $64 billion and the actual 2025 spending of $61.4 billion. Additionally, the budget deficit is expected to decrease to 12.1% of GDP from the previously projected 18.5%.
The disbursement of subsequent tranches will hinge on the implementation of agreed-upon reforms, particularly in anti-corruption policies. A relaxation of these reforms could result in the temporary suspension of funding. Similar stipulations are included in the International Monetary Fund’s $8.1 billion loan program.
Concurrently, discussions about reallocating defense resources have emerged. Opposition lawmakers have voiced concerns over a reduction in the Ministry of Defense’s spending on armament procurement, with 40 billion hryvnias being redirected to the Reserve Fund. MP Yaroslav Zheleznyak highlighted the need for additional financing to increase service members’ salaries. At the same time, Petro Poroshenko, leader of the “European Solidarity” party, advocated allocating the approximately 200 billion hryvnias annually generated by the military tax directly to the armed forces’ needs. However, it was noted that funds initially intended for salary increases will be repurposed for other objectives.
