Financial Deficit to Soar in Ukraine Without Urgent Reforms

Analysts predict a significant increase in Ukraine's financial deficit next year if Russia's attacks continue and reforms are not implemented, the Gaze reports, citing Reuters.

Andriy Pyshnyy, head of the National Bank of Ukraine, said that only a third of the promised $65 billion in foreign aid for 2026–2027 has been allocated, and negotiations on the rest are ongoing. A survey of eight economists showed that Ukraine needs between $39 billion and $58 billion in external financing next year.

Nevertheless, negotiations may be complicated by Ukraine's failure to meet key targets agreed with creditors.

As The Gaze informed earlier, on July 22, the Verkhovna Rada of Ukraine passed a controversial law that significantly undermines the independence of two anti-corruption bodies. Although on July 31, the Ukrainian parliament voted in favor of a new law proposed by President Volodymyr Zelenskyy to restore the independence of these institutions, the damage has already been done.

"Although Europe is unlikely to walk away from Ukraine, future financial and military support will likely come under much more scrutiny, leading to delays that Ukraine can ill afford," said Evghenia Sleptsova, senior economist at Oxford Economics.

To unlock tranches from the EU and IMF, Ukraine needs to implement reforms, namely increase the number of judges in the anti-corruption court, reform the agency for nationalized assets, and appoint a head of the Economic Security Bureau.

The Gaze previously reported that the European Union will reduce its next aid payment to Ukraine by €1.5 billion after Kyiv failed to meet all reform milestones required under the Ukraine Facility.