Kyiv’s Donors Expected Peace in 2027, but Russian Escalations Left 2026 Funding Unfulfilled

Each year since Russia’s full-scale invasion, Ukraine’s donors have bet on peace the following year.

Each year, Moscow has proved them wrong.

As of late 2026, Ukraine has been trying to work out how to counter jet-powered Russian drones, which have caused more civilian deaths and cost $1.5 billion in tax revenues by year-end, per the prime minister’s estimates. Moscow is also expanding the Alabuga-Volokno factory to raise Geran/Shahed drone production by 78%, according to Politico, even as the IMF reported that its economy grew only 1% this year.

Ukraine’s Defense Intelligence (HUR) chief Oleh Ivashchenko told Ukrinform that Russia may have enough resources to continue until 2028, and the Bank of Finland Institute for Emerging Economies (BOFIT) wrote a similar assessment: Russia can still sustain a full-scale war thanks to higher oil prices, despite weaker economic activity and a widening fiscal deficit.

“Even with the risks of continuing the war, there are no signs that the economy faces an immediate collapse into crisis,” it wrote in its latest Forecast for Russia for 2026-28.

Kyiv’s mission: two months to find almost $50 billion

The aid plans assume a happier ending in 2027, which isn’t the case in Ukraine.

In autumn 2026, the finance ministry received a bill from the defense ministry for an additional $27 billion to fund costlier warfare, and the treasury needed another $29 billion more for donor-backed social wages.

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It had neither: In October, the government delayed $2.3 billion in development payments, and businesses went without value-added tax (VAT) refunds for a while.

Part of the problem also lies with Ukraine’s lawmakers, most of whom don’t see the worst of the war coming or the need to vote for reforms that will unlock the cash. The finance ministry has been sounding the alarm in finance for almost a year, since Ukraine signed the new $8.1 billion IMF program with benchmarks lawmakers must vote on.

The EU’s reform-tied Ukraine Facility also lists steps that parliament and the government have not adopted since 2025. The list deadlocked parliament from early 2026, as the government and lawmakers failed to agree until the treasury emptied. The EU, which had earlier accepted compromises, now refuses 2026 aid unless Ukraine implements the bills.

Now, Kyiv must find financing for 2026 and 2027 in under two months. The president and defense ministry team is negotiating weapons funding – one half of the financing – while the prime minister, finance ministry and central bank work on social spending, pensions and wounded businesses.

If lawmakers fail to vote for reforms, Ukraine may have nothing to pay for its survival and could resort to printing money and face protests.

“We will lose communications with international donors. The IMF program will be impossible to maintain with quantitative easing,” Finance Minister Serhiy Marchenko said at the tax committee meeting in September.

Ukraine printed money in 2022 and landed softly, but doing so again risks Argentinian or Venezuelan-style inflation.

If the IMF blocks a tranche over poor performance, Ukraine automatically loses the ability to attract aid from others, as the IMF’s green light signals that the country can be trusted. Defense needs make this funding a lifeline as Russia shows no desire to end the invasion.

But Ukraine’s delegation has options: reassure donors that the reforms have been voted on, and again negotiate the use of Russian assets.

To complete the mission, Kyiv must clear three quests: convince the IMF in Thailand, agree on funding with the EU, and push the Ukrainian parliament to do its one job.

Ukraine’s parliament and 2026 IMF Annual Meetings funding quests

For 2026, the EU told Ukraine it will receive the committed cash for its budget needs as parliament votes on the bills, a person familiar with the matter told Kyiv Post.

“In recent weeks, the IMF team has been in talks with various partners – primarily from the European Union – regarding the mobilization of additional funds to Ukraine. But Europeans gave a clear signal we need to fulfill the conditions necessary,” the person said.

Almost immediately after taking office, the new prime minister, Serhii Koretskiy, rushed to push through the reform decisions his predecessor, Yulia Svyrydenko, left undone.

Under Koretskiy, the government adopted six decisions that missed deadlines in 2025 and the first half of 2026. Eight Ukraine Facility steps and six of 12 Ukraine Support Loan conditions remain unmet, per the RRR4U monitoring, and President Volodymyr Zelensky still has not signed the digital-platform income tax bill, another IMF benchmark.

Finance Minister Marchenko did not attend the IMF’s Annual Meetings in Bangkok, Thailand; instead, he kept a close eye on the lawmakers. When the state treasury became nearly empty, it partly worked: On the third attempt, they voted for an IMF benchmark scrapping the VAT exemption for parcels worth up to €150 ($174), and parliament began filling six of 11 Accounting Chamber seats.

The mood was somber as delegations headed to Bangkok for the IMF Annual Meetings, but the last-minute vote reassured them.

“We came to Bangkok on a low, and we leave on a high. The Rada vote changed the mood. It showed once again that, against all odds, Ukraine continues to deliver on its reform agenda,” a well-informed source told Kyiv Post.

Before the meetings, the source was skeptical that the parties would arrive with any “significant headline announcements.”

Ukraine’s finance ministry is also happy.

“For our key partners, Ukraine’s performance is no longer in question. The discussion has now shifted to determining how to ensure and structure the necessary financing for 2027 in a sustainable and predictable manner,” Deputy Minister of Finance Olha Zykova told Kyiv Post.

Kyiv Post still does not know whether Ukraine’s defense ministry shares that optimism. It did not answer Kyiv Post’s request on its $27 billion gap, but wrote that it freed up $354.5 million, 1.3% of the gap, by revising arms purchases.

Quest 2: Cash for 2027 and European partners

Immobilized Russian sovereign assets in the EU, amounting to €210 billion ($243.6 billion), remain key to Ukraine’s 2027 plan, despite earlier objections from Belgium.

Signed programs cover $20 billion for 2027, leaving $32.6 billion unfulfilled. Kyiv Post found that the EU has agreed to cover part of this, and Kyiv should find the rest elsewhere.

“Depending on the final size of the EU contribution to cover the budgetary needs in 2027, we calculate the residual amount to be covered by other donors in the range of $10-15 billion,” the second source participating in the discussions told Kyiv Post.

“It’s important to obtain those financing assurances, including from the EU, by the next IMF review scheduled by the end of the year,” the person added.

Kyiv Post was told that Kyiv’s allies are doing “a lot of work on [a] technical level” to secure Ukraine’s 2027 funding needs, with further details remaining undisclosed.

One potential option is a second Extraordinary Revenue Acceleration (ERA) loan backed by Russia’s frozen sovereign assets.

“The European Commission is working on developing various options,” a person familiar with the matter told Kyiv Post.

Partners seem less willing to confiscate the principal of the frozen assets, according to the source. And with the US, which took part in the earlier ERA Loan, also showing less enthusiasm, another option could be a new EU-backed Ukraine Support Loan, the person added.

“They can find the resource if they have the political will and simultaneously Ukrainian authorities deliver their promises,” the person said.

Negotiations should turn to specific financing assurances by early December, Zykova told Kyiv Post.

“The focus is on finding the right combination of support from the EU and our non-EU G7+ partners, while safeguarding Ukraine’s debt sustainability,” she said.

The second IMF review is planned for November, when Ukraine will again report on whether Kyiv did its homework, and partners will face another checkpoint on whether they did theirs amid a looming increase in Russian escalations across Ukraine in the months to come.