Ukraine Faces Budget Hole as Hungary Blocks Crucial EU Funds
Ukraine is running out of room to maneuver as a vital EU funding package remains blocked by Hungary, raising the risk of a serious budget shortfall later this year. While IMF support and early Japanese disbursements may keep the government afloat through the spring, officials say there is no dependable backup plan unless European money begins to flow.
Ukraine has few viable ways to replace a critical European Union cash package that Hungary continues to hold up, leaving Kyiv on course for a major fiscal gap unless the deadlock is resolved.
The loan package, approved unanimously by EU leaders at a summit in December, would provide 90 billion euros ($103 billion) to Ukraine over 2026–2027 and cover roughly two-thirds of the country’s financial and military needs. But Hungarian Prime Minister Viktor Orban later reversed course, reportedly in connection with a dispute over the transit of Russian oil through Ukraine.
For now, Ukraine is staying afloat thanks to a recent $1.5 billion transfer from the International Monetary Fund, as well as support from Japan, which has brought forward more than $1 billion that had originally been scheduled for later in the year. According to Ukrainian officials familiar with the country’s finances, those measures should keep the budget stable until the end of spring.
Beyond that, however, the picture darkens sharply. A senior Ukrainian official, speaking anonymously to the Kyiv Independent, said there is no “reliable alternative option” after spring unless EU funds start arriving. Domestic stopgaps, including additional borrowing, would come at a significant cost.
Oleksandra Myronenko, an economist at the Ukrainian think tank Center for Economic Strategy, warned that domestic borrowing can only go so far. “We have little capacity to raise more domestic debt,” she told the Kyiv Independent. “This year, we actually planned to repay more than to borrow on the internal debt market. The only resource we are relying on is the 30 billion euros from the European Union.”
That 30 billion euro portion of the package is intended specifically to cover Ukraine’s budget needs. At the same time, around $6 billion in funding from the World Bank and the EU’s Ukraine Facility could also be delayed, as Ukraine’s parliament struggles to pass the reforms required to unlock the money amid an ongoing parliamentary crisis.
Despite the growing pressure, Ukrainian officials told the Kyiv Independent that their focus remains fixed on securing the European funds. One official said Brussels and Kyiv are currently meeting twice a week in preparation for the expected arrival of the money in April.