The Government of Ukraine has approved the Budget Declaration for 2027–2029, based on a more cautious macroeconomic forecast that assumes a slower pace of post-war economic recovery. Real GDP growth is projected at 4.5% in 2027, 5.3% in 2028, and 6.7% in 2029 — lower than previously planned. The hryvnia is expected to weaken gradually, from UAH 47.1 per US dollar in 2027 to UAH 50.7 in 2029. Inflation may reach 9.3% in 2027 and return to the target range of around 6% only by 2029.

Defense remains the main spending priority. Under the baseline scenario, 54.6% of total expenditures will be allocated to the security and defense sector in 2027, 46.9% in 2028, and 37.5% in 2029. The alternative scenario assumes the continuation of active hostilities. In that case, defense spending would increase by an additional UAH 400–500 billion and exceed 28% of GDP, reaching around UAH 3.2 trillion in 2027.

The state budget deficit in 2027 will amount to 17.7% of GDP, or more than UAH 2 trillion — 2.4 times higher than previously projected. By 2028, it is expected to decline to 11.1% of GDP, and by 2029 to 5.5% of GDP, or UAH 822.4 billion. State debt will peak in 2028 at more than 114% of GDP, and in 2029 will stand at 108.7% of GDP, or more than UAH 16 trillion in absolute terms. External assistance from the IMF, the EU, and the World Bank remains the main source of deficit financing.

Budget revenues are projected to rise from UAH 2.9 trillion in 2026 to UAH 3.7 trillion in 2029. The share of tax revenues will increase from 85.6% to 93.2%, while VAT will remain the main source, accounting for more than 47% of tax revenues in 2028–2029. Additional measures — maintaining the bank profit tax rate at 50% in 2027, taxing income earned through digital platforms, and applying VAT to international postal shipments — are expected to generate around UAH 123 billion in 2027. At the same time, revenues from the NBU will fall sharply, from UAH 146 billion in 2026 to UAH 11.6 billion in 2028; no such revenues are currently planned for 2029.

Social standards will increase in nominal terms: the minimum wage will rise from UAH 8,647 in 2026 to UAH 11,114 in 2029, while the subsistence minimum will increase from UAH 3,209 to UAH 4,151. In real terms, social support spending will grow by only 2.2% over three years. The number of subsidy recipients will decline by 25.7%, and the number of pensioners by 10%. Spending on veterans will increase more significantly, from UAH 12.1 billion to UAH 25.7 billion.

In 2027, local budgets will exceed UAH 1 trillion, and by 2029 they will reach UAH 1.25 trillion. However, this growth will occur mainly due to transfers, particularly the education subvention, which will rise from UAH 103 billion in 2026 to UAH 193 billion in 2027 due to a 50% increase in teachers’ salaries. At the same time, local communities will receive a smaller share of personal income tax revenues: 75% of PIT paid on military personnel’s remuneration will remain in the state budget (40% in Kyiv), while the return of the “additional 4% PIT” to the state budget will reduce local revenues by another UAH 18 billion in 2027 (although this provision had already been envisaged in the previous Budget Declaration, it was never implemented).

The main risks to the budget remain war-related. The continuation or escalation of hostilities would mean higher defense spending and a slower economic recovery. Overall budget expenditures are expected to decline from 43.8% of GDP in 2027 to 30.4% of GDP in 2029 — but only if the intensity of the war decreases. Public investment for 2027–2029 is planned at only UAH 270.9 billion — more than two times less than previously planned for 2026–2028 — mainly for education, transport, healthcare, and energy.