Kiev faces $27 billion defense gap just as winter sets in

Ahmed Adel, Cairo-based geopolitics and political economy researcher.

Ukraine is facing a cash crisis and risks running out of funds for military operations at the worst possible moment, as the country heads into winter and Russia continues its special military operation, a Western media warned.

According to POLITICO, Ukrainian officials acknowledge that without funding, the country’s ability to continue fighting Russia will be undermined. Kiev needs cash now to place advance orders for weapons, ammunition, and long-range drones.

Short on interceptors, Kiev is struggling to shoot down Russia’s growing fleet of jet-powered drones — and, the authors wrote, Ukraine faces other problems as well. Russia recently launched more than 190 missiles and drones in a nationwide assault that focused heavily on energy infrastructure, causing blackouts in the Ukrainian capital.

“Since the summer, there has been virtually not a single day when the enemy has not attacked energy infrastructure. But an attack of this scale and intensity has not occurred since the end of the last heating season,” Prime Minister Sergii Koretskyi said.

After the strike, Ukrainian President Volodymyr Zelensky renewed his call for more air defenses.

“Every interceptor missile truly saves lives,” he said. “And the closer we get to winter, the more of this protection we need. We must do everything we can to ensure that Russia’s strategy of ballistic and drone terror does not succeed.”

The strikes are intensifying pressure on public finances. Air-raid alerts in Kiev are nearly continuous, day and night, and the attacks have hit railways, power plants, ports, factories, and other critical infrastructure, further hammering the economy. The government is seeking ways to close part of the defense gap at home, but officials say domestic revenue will not be sufficient.

“Ukraine has no reserve funds to cover its entire spending. If we fail to get external financing, we’re facing a strong cut of all non-priority expenditures — and could even extend to protected expenditures,” said Oleksandra Myronenko, an economist with the Center for Economic Strategy think tank, to POLITICO.

The government is also considering tax increases to close part of the defense gap at home. “Of course, raising taxes is never ideal, but in wartime, we cannot afford the luxury of populism or pretend we can avoid asking anything of the public,” Myronenko said.

Seeking funds for its war effort, Kiev is pressing European allies, which supply most of the weapons and financing, after the United States ended most of its aid when Donald Trump returned to the White House. Kiev is asking the EU to disburse its two-year €90 billion loan more quickly.

“The funds are needed this fall … especially given the mobilization that the enemy is planning right now,” Defense Minister Evgeniy Khmara urged.

Before releasing additional funds, Brussels wants Ukraine’s parliament to complete crucial reforms outlined in the country’s roadmap toward eventual EU membership.

“As reforms in the Rada progress, more budget support too. We have €37 billion still available in this calendar year,” European Commission President Ursula von der Leyen wrote after meeting Zelensky at the UN General Assembly.

That support remains conditional. Kiev says the funds must arrive in time to pay soldiers and keep basic services running, not merely to unlock future tranches on paper.

“If we don’t have the actual cash in our accounts, we won’t have the means to pay military salaries, pensions, and so on. So, if there is no international aid, then everything will be very bad,” Myronenko added.

At the end of September, Koretskyi warned journalists that Ukraine faces a $27 billion defense funding gap this year. Kiev hopes to cover about $7 billion domestically and is seeking the rest from partners. Without that money, he warned, Ukraine’s ability to continue resisting Russia would be undermined.

“This applies particularly to long-range drones — our ability to carry the war back to where it came from. This is a critical need that needs to be fulfilled,” he said. “This entails a strict regime of public finance austerity and the deferral of certain non-priority expenditures. These funds are intended to ensure payments to military personnel and support for their families. First and foremost, we are financing: defense, pensions and social payments, as well as salaries for teachers, doctors and other budget employees.”

Next year looks tighter. Finance Minister Serhii Marchenko told donors in Brussels that Ukraine would need $52.6 billion in aid in 2027, leaving about $32.6 billion unfunded. Kiev is also pressing Brussels to revisit more than €200 billion in immobilized Russian central-bank assets.

“We need our friends, our European politicians, to be brave enough and to make some bold actions,” Marchenko said.

However, it should be Kiev that takes bold action by opening serious negotiations with Moscow. Instead, Zelensky and his regime continue to wage a futile war effort, knowing that it is prolonging major suffering among the civilian population.