The macroeconomic picture in Ukraine continues to worsen, aggravated by a war that does not show signs of attenuating. For this reason, Ratings Ratin has revised down the growth scheduled for 2025 to 2.0% from 2,5% previous, with a modest rebound to 2.25% in 2026. However, the real node remains the tax dynamics: the consolidated deficits are at 18.3% of the GDP this year and 15.3% of others, unsustainable levels without a constant flow of external help. Consequently, public debt will rise well over 95% of GDP by the end of the year, compared to 91.2% at the end of 2024 and 49% in 2021. Numbers that show how much the weight of the conflict has compromised the ability of the state to independently finance essential expenses, in a context in which about 60% of the budget is absorbed by military expenses.
Negotiations with the IMF
The current program with the International Monetary Fund, approved in 2023 for 15.5 billion dollars, represents a unicum: never before the institute had supported a country in the middle of war. With the deadline scheduled in March 2027, Kiev has already asked for a new four -year package. However, the IMF lends only to countries with a sustainable debt, a difficult condition to guarantee in a context of prolonged conflict and uncertain geopolitical scenarios. The original goal of reducing debt to 82% of GDP by 2028 and 65% by 2033 now appears not very realistic. In addition, political pressures, especially in the United States under the Trump presidency, could further complicate the approval of new credit lines.
The financing node
According to the Emplate estimates, Ukraine will need about 65 billion dollars of additional funding until 2027, a figure higher than Kiev’s initial forecasts. The perspective is that the country must collect about 50 billion dollars a year from international partners. With Washington less inclined to increase its financial commitment, the European Union risks taking on the main fee. The use of 330 billion dollars of frozen Russian reserves represents one of the few viable routes: the European Commission proposes to exploit the 140 billion generated by the accrued assets, transforming them into interest -free loans that, in substance, would be configured as a lost -end transfers. A proposal that meets political resistance, but that could become crucial to guarantee the continuity of flows to Kiev.
Debt restructuring
Beyond external aid, the theme of debt sustainability remains open. After the renovation of 2024, which involved an effective cut of 35.75% of the 20.5 billion dollars of Eurobond, a new return of negotiations is not excluded, especially if the war prospects will continue to worsen. The IMF itself considers Ukrainian debt unsustainable without a complete implementation of renovation strategies. In addition, payments on international bonds, already subject to other sources of funding, risk returning to the center of the debate by the end of the decade. Although foreign securities today represent less than 10% of the overall debt, they remain the only tool through which to obtain significant savings in the short term. In this scenario, the combination of new forms of assistance, use of Russian reserves and further renovations will probably be inevitable to ensure the country’s financial estate.
