Brussels – In a December that increasingly resembles a race against time to finance Ukraine, the European Commission has put forward two possible solutions to maintain support in 2026-2027, amounting to €90 billion. Yet a central question remains: how much does Kyiv actually need – particularly from the EU?
According to the Commission’s own estimates, the EU candidate country’s funding gap over the next two years stands at roughly €135.7 billion: €52.3 billion in macro-financial needs and €83.4 billion for military support. “Ukraine’s financing needs remain structurally high because the country is bearing the dual burden of a full-scale war and the early stages of reconstruction,” says Bohdan Popov, a political adviser at United Ukraine, speaking to The New Union Post.
Worse (and less-worse) case scenarios
For 2026 alone, the Ukrainian state budget anticipates total expenditure of €97.1 billion (UAH 4.75 trillion) against revenues of €59.1 billion (UAH 2.89 trillion), leaving a fiscal gap of about €39 billion (UAH 1.9 trillion). This is almost seven times the deficit recorded in 2021, before the full-scale invasion.
Even a ceasefire brokered by the United States – still an open question given Donald Trump‘s interests and objectives – would not resolve Kyiv’s financial pressures. “Ukraine would need to spend substantially on defence to deter future Russian aggression,” warns Ondřej Ditrych, senior analyst at the European Union Institute for Security Studies (EUISS), reached by The New Union Post. He notes that any such deal could involve “unfavourable” conditions for Kyiv, such as a forced withdrawal from remaining defensive positions in the Donbas.
United Ukraine’s Popov echoes his words. He adds that, even if the fighting ended by year’s end, Ukraine’s military needs “may stabilise, but they will not fall quickly.” The armed forces would still need re-equipping, rotation, modernisation and sustained logistical support. The government expects to allocate around €26.7 billion (UAH 1.3 trillion) solely for military salaries and allowances in 2026. A ceasefire, then, would not eliminate Ukraine’s budget deficit, but it would merely “slow the upward trajectory of defence spending.”
The scenario policymakers must realistically prepare for, however, is the continuation of Russia’s full-scale invasion. In this case, Ukraine’s financing needs for 2026-2027 would be “in the range of €70-80 billion annually from external partners,” Popov slightly corrects a rialzo the Commission’s estimates. Even if a ceasefire were reached during this period, the country’s external funding requirement “could drop, but not dramatically,” as Ukraine would still be faced with reconstruction costs, social protection obligations and defence-industrial modernisation.
The Commission’s proposals for financing Ukraine
On 3 December, European Commission President Ursula von der Leyen announced two proposals to cover “two thirds” of Ukraine’s financing needs for 2026-2027, totalling €90 billion. The first would involve EU borrowing, backed by the EU budget (within the headroom of the current Multiannual Financial Framework), to meet needs before the 2028-2034 MFF comes into force. Amending the current MFF would permit the budget to support a loan to Ukraine, but this would require unanimity among all 27 Member States.
The second option is the so-called ‘reparations loan’, which would enable the Commission to borrow cash balances from EU financial institutions holding immobilised Russian Central Bank assets – amounting to a total of €210 billion across several Member States, including Belgium, France, and, to a lesser extent, Cyprus, Germany, and Sweden. Despite resistance from Belgium, which holds the majority of these immobilised assets (around €140 billion currently at the Euroclear financial institution), adopting this solution would only require a qualified majority vote.
The reparations loan, backed by the frozen assets, would cover the funding gap even after repayments of ERA loans – the Revenue Acceleration initiative, which provides approximately €45 billion in financial support to Ukraine – are deducted. However, EUISS’ Ditrych warns that it may still fall short. “It would buy time, but likely not much more.” If this option is seen as a substitute for aid, “that temptation must be resisted,” he adds, emphasising that the reparations loan should be used “not just as a vehicle to keep Ukraine afloat, but make a real splash and strengthen Ukraine to give it a decent chance to push back.”
For the EU, the broader objective should be to force Russia to the negotiating table and secure a mutually acceptable compromise, while providing Ukraine with the financial horizon it needs to survive the war and rebuild afterwards.
For this reason, as United Ukraine’s Popov stresses, “the most sustainable option” is a multi-pillar financial package combining traditional macro-financial assistance, guarantees for Ukraine’s sovereign borrowing, and a structured mechanism linked to revenues from immobilised Russian sovereign assets. “This architecture should become the backbone of long-term support,” because Ukraine’s fiscal needs over the next decade “cannot be met by grants alone.”
