---
title: "A $27 billion hole: three scenarios Kyiv plans to use to close the Ministry of Defense budget deficit"
description: "Ukraine's Ministry of Defense budget has a $27 billion deficit, according to Zelensky. We break down three scenarios to cover it: front-loading of the EU loan, partner assistance, and domestic borrowing."
date: 2026-08-28T08:48:04.000Z
lang: en
url: https://xab.info/en/posts/ukraine-military-budget-deficit-27-billion-dollars-en
tags: [ukraine, defense-budget, eu-credit, imf, front-loading, zelensky, fedorov]
publisher: "XAB.info"
---

# A $27 billion hole: three scenarios Kyiv plans to use to close the Ministry of Defense budget deficit

![Zelensky and von der Leyen against a backdrop of military action and stacks of euros: Ukraine's defense budget deficit](https://xab.info/media/2026/08/28/deficit-byudzeta-minoborony-ukrainy-27-mlrd-dollarov/deficit-byudzeta-minoborony-ukrainy-27-mlrd-dollarov-1.webp)

## 🎯 Key Points

- According to Zelensky's assessment, the deficit in Ukraine's Ministry of Defense budget is about $27 billion (almost 1.2 trillion hryvnia).
- An additional $8–10 billion needs to be found by the end of the year for armaments from 2027, and about $20 billion for salaries and payments.
- Former minister Fedorov, in an interview with Reuters, named the planned deficit as only about $5 billion and did not confirm the $27 billion figure.
- Sources cite front-loading of the 90-billion-euro EU loan as the main scenario; alternatives are partner assistance and domestic borrowing via government bonds (OFZ).
- The IMF is against increasing the state budget deficit; the fund's working mission will arrive in Ukraine, and the 2027 budget draft must be submitted to the Rada by September 15.

According to an assessment by President Volodymyr Zelensky, a funding shortfall of roughly $27 billion — almost 1.2 trillion hryvnia — has formed in Ukraine's Ministry of Defense. As RBC-Ukraine's special correspondent Yury Doschatov found, Kyiv currently has three main channels to cover it: early disbursement of funds under the European Union loan, additional assistance from other partners, and domestic borrowing. The choice among them determines not only military logistics but also Ukraine's negotiating position with the IMF and Brussels.

### The scale of the problem: from $7 to $27 billion

The problem did not arise suddenly. As early as January, shortly after his appointment as defense minister, Mykhailo Fedorov stated that his ministry was short by 300 billion hryvnia — around $7 billion. By summer, the figure announced at the presidential level had grown several-fold: to $27 billion. According to Zelensky, an additional $8–10 billion needs to be found by the end of the year, and these funds are needed in advance — to equip the army with weapons and everything necessary starting from January 2027. A further roughly $20 billion is required for military salaries, compensation to the families of the fallen, and other current expenses. At the same time, as a source familiar with the situation told the publication, this is not about raising payments: "We don't have the money to pay salaries at the current level."

### Contradictory data

Here the versions of the parties diverge noticeably. Former defense minister Mykhailo Fedorov, in an interview with Reuters, expressed surprise at the very size of the deficit and said he had no idea where the $27 billion figure came from. According to him, the planned budget deficit by the end of the year was about $5 billion, and the ministry knew where it would get that money. "Perhaps the plan changed and new projects emerged that require such a budget," the former minister suggested. Thus, the gap between the sum announced by the president ($27 billion) and the planned deficit named by Fedorov (about $5 billion) is more than $20 billion, and neither side has yet disclosed the recalculation methodology. The Ministry of Defense and the Ministry of Finance did not comment on the funding shortfall situation at the time of publication.

### Three scenarios for covering the deficit

The first and, according to sources in power, the most optimal scenario is an agreement with the EU on so-called front-loading, i.e. shifting part of the payments under the 90-billion-euro loan from next year to the current one. The second scenario is attracting additional assistance from other partners. The third is increasing the expenditure part of the state budget and covering the difference through domestic borrowing via the issuance of OFZ (government bonds), an instrument already used in 2023. However, it is precisely this last path that runs into the IMF's position, which has been and remains categorically against increasing the state budget deficit; within the first review of the credit program, Ukraine did not obtain consent for such a step. It is worth noting separately that as early as May, RBC-Ukraine wrote about attempts to agree with the EU on using the funds of the 90-billion-euro loan for payments to military personnel, but the European Commission has been and remains against such a targeted reallocation.

### Front-loading of the EU loan: realistic, but conditional

In 2027, Ukraine is planned to receive 45 billion euros under the EU loan, of which 28.3 billion euros is earmarked for strengthening defense capabilities and purchasing weapons, and 16.7 billion euros — for macro-financial economic support. Kyiv intends to agree to shift part of this amount to the current year. "Theoretically, this can be agreed. It is realistic. We have already done this," notes a source familiar with the situation: at the beginning of the year, Ukraine had already shifted second-half-of-year spending to the first half, which, among other things, contributed to the growth of the current Ministry of Defense deficit. At the same time, sources are confident that the condition for front-loading will be the implementation of the schedule of all envisaged reforms, including changes to tax legislation.

### The role of the IMF and the preparation of the 2027 budget

The key external filter for any of the scenarios remains the IMF. Next week, a working mission of the fund will arrive in Ukraine to familiarize itself with the process of preparing the 2027 state budget: it will assess the implementation and needs of the budget through the end of the current year, as well as review the draft budget for next year, which must be submitted to the Rada by September 15. The outcome will determine whether Ukraine has a need for additional financing and, if so, how to cover this need. It is precisely in this dialogue that it will likely be finally determined which of the three scenarios — front-loading, partner assistance, or domestic borrowing — will become the main instrument for closing the deficit.

## 🔍 Fact-Check Verification

- [Hole in the Ministry of Defense budget: where Ukraine will get $27 billion for the army](https://www.rbc.ua/ukr/news/dira-byudzheti-minoboroni-de-ukrayina-vizme-1787856714.html) - Первичный материал: цифры дефицита, три сценария, цитаты Зеленского, Федорова (Reuters), детали фронтлоада (45 млрд евро в 2027: 28,3 + 16,7), сроки миссии МВФ и дедлайн 15 сентября.
- [Why a $27 billion hole formed in the Ministry of Defense: Zelensky explained](https://tsn.ua/ru/ukrayina/pochemu-v-minoborony-obrazovalas-dyra-v-27-milliardov-zelenskiy-obyasnil-3154898.html) - Подтверждает озвученную президентом сумму дефицита в 27 млрд долларов и контекст необходимости средств на 2027 год.
- [Ukraine's budget in the 'blind spot': amid billions in aid, the AFU again left without money](https://caliber.az/post/byudzhet-ukrainy-v-slepoj-zone) - Контекстный материал о проблемах финансирования ВСУ на фоне многомиллиардной помощи; не дает независимой верификации точной суммы 27 млрд.
- [Zakharova: 'Freya' will not save from the hole in Ukraine's Ministry of Defense budget deficit](https://life.ru/p/1917013) - Заявление официального лица РФ; не является независимым подтверждением фактов о размере дефицита и сценариях его покрытия, использовано только как фон.

## ❓ FAQ

### Q: What is the size of the deficit in Ukraine's Ministry of Defense budget?
**A:** According to President Zelensky, about $27 billion (almost 1.2 trillion hryvnia). Former minister Fedorov, in an interview with Reuters, named the planned deficit as only about $5 billion and did not confirm the $27 billion figure.

### Q: What are these funds needed for?
**A:** According to Zelensky's assessment, by the end of the year it is necessary to find $8–10 billion to equip the army with weapons from January 2027, and a further roughly $20 billion for military salaries, payments to the families of the fallen, and other expenses. According to a source, this is not about raising payments, but about a lack of funds at the current level.

### Q: What three scenarios for covering the deficit are being discussed?
**A:** Front-loading of the EU loan (shifting part of the payments from next year to the current one), additional assistance from other partners, and domestic borrowing through the issuance of government bonds (OFZ) with an increase in the budget's expenditure part.

### Q: Why is domestic borrowing not the main option?
**A:** Because increasing the state budget deficit requires coordination with the IMF, which is against expanding the deficit; within the first review of the credit program, no consent was obtained.

### Q: What is front-loading and what are its conditions?
**A:** It is shifting part of the payments under the 90-billion-euro EU loan (in 2027, 45 billion euros is planned: 28.3 billion for defense and 16.7 billion for macro-financial support) to the current year. According to sources, the condition is the implementation of the reform schedule, including changes to tax legislation.

### Q: When will the issue with the IMF be resolved?
**A:** Next week, an IMF working mission will arrive in Ukraine to assess the budget; the 2027 budget draft must be submitted to the Rada by September 15, after which the fund will assess the need for additional financing.