Ukraine may face a serious financial crisis as early as February if it does not receive significant international support. According to the European Commission, the country will need at least €70 billion next year to cover a budget deficit that exceeds 18% of GDP. The issue of non-military expenditures is particularly pressing, as funds may fall short in the coming months.
This is reported by Finway
European Aid and Funding Challenges
The defense budget of Ukraine already consumes about a quarter of the national economic output, significantly limiting the funding available for other sectors. Despite recent increases in support from European countries — notably, financial packages from Sweden and Norway, as well as Germany’s promise to provide €11.5 billion — the funding situation remains critical. International partners continue to discuss ways to assist, but the issue of securing the necessary funds is still unresolved.
Use of Frozen Russian Assets: Legal and Economic Hurdles
At the beginning of Russia’s full-scale aggression in 2022, the European Union froze over €200 billion in currency reserves of the Central Bank of Russia. However, attempts to confiscate these assets and direct them towards supporting Ukraine have repeatedly faced legal and economic objections from certain EU countries.
In response, the European Commission proposed an alternative route: to borrow €140 billion secured by the frozen assets. If Russia refuses to pay reparations after the war, these assets would be used to settle debts with creditors. However, the implementation of this idea is currently complicated, as Belgium opposes such a decision.
If Ukraine does not receive a loan of €140 billion from European partners, it will run out of funds for non-military expenditures as early as February. Kyiv has a massive budget deficit — over 18% of GDP — and will need at least €70 billion in financial support next year, according to the European Commission.