Ukraine, EU Say 2026 Defense Needs Are Covered as Kyiv Starts Freezing Allocations

Ukraine and the European Commission said they had found the means to cover Ukraine’s budget and defense needs for 2026, easing a cash-flow concern that Finance Minister Serhiy Marchenko raised in parliament last month. The joint statement, published in Brussels on Thursday, Oct. 1, did not say how much money was involved or where it would come from. It said both sides “reconfirmed the steps needed to ensure their timely release,” pointing to conditions Kyiv still has to meet.JOIN US ON TELEGRAMFollow our coverage of the war on the @Kyivpost_official. Prime Minister Serhii Koretskyi previously said that the government also faces a $27 billion defense funding gap this year, but the new statement from Brussels suggests that the figure may be revised or that the gap has been fully covered. For 2027, the two sides agreed to move swiftly to allocate €45 billion ($50.6 billion) under the EU’s Ukraine Support Loan, subject to the established conditions. The statement added that they would also begin work on identifying additional budgetary and defense needs. The Commission and Kyiv agreed to meet monthly to coordinate their efforts. “All sides agreed that other partners should also fulfil their financial commitments and step up their efforts in light of the significant challenges Ukraine is facing,” it said. At the same time, the EU has refused to bring forward the disbursement of its €90 billion ($102.3 billion) loan, which was supposed to tide the country over through the end of 2027, Bloomberg reported. Other Topics of Interest Russia Extends Diesel Export Ban Until Oct. 31 The ban also applies to maritime fuel, with the gasoline export ban lasting at least until January 2027 as refineries continue to be battered by Ukrainian drones. The statement follows a Ukrainian delegation’s visit to Brussels. Marchenko wrote on LinkedIn that he and his team held an informal meeting of the Ukraine Donor Platform with key partners there, as well as meetings with EU Commissioners Valdis Dombrovskis and Marta Kos. On Sept. 15, the government submitted a 2027 budget of about $162 billion, but Marchenko warned that Ukraine will run short of cash before the end of 2026. The government has already adopted a decision that allows the Treasury to limit the opening of appropriations for non-priority expenditures starting in October if the Single Treasury Account does not have enough resources to make all planned payments. The decision remains in effect until the end of the year, according to the government’s website. For 2027, Ukraine’s need for external budget support remains $52.6 billion, unchanged from previous estimates. About $20 billion has been committed, leaving a $32.6 billion gap to close. Marchenko tied the volume of financing directly to Ukraine’s reform record. “The pace of implementation will directly affect the volume of financing Ukraine will be able to attract by the end of 2026,” he wrote in the post. According to him, the parliament adopted seven draft laws at first reading in September from the list of measures critical to international financial support. They cover taxation of small international parcels, bankruptcy procedures for small businesses, the operation of the Deposit Guarantee Fund and the National Energy and Utilities Regulatory Commission, the harmonization of forestry legislation with EU standards, securitization, and covered bonds. Marchenko added that he hoped the Verkhovna Rada would back them at second reading. Olena Hrazhdan is the Business Reporter at Kyiv Post, covering Ukraine’s markets, business, and economic policy. While she reports broadly on economic issues, her core focus is banking, finance, monetary and fiscal policy. Olena previously wrote for leading Ukrainian business media and became a Fellow of the International Monetary Fund’s Journalism Fellowship in 2024.