Ukraine’s Budget Declaration for 2027–2029: What the Government Is Relying On for Economic Growth
The Cabinet of Ministers has approved the Budget Declaration for 2027–2029, a document that sets the guidelines for state financial policy over the next three years. The Verkhovna Rada still has to consider it, but the declaration already shows what sources of growth, international support, and budget decisions the government is relying on. The document is built around a key assumption economic recovery is possible only if the security situation improves. At the same time, the government has separately included a scenario in which the war lasts longer and spending on defence and security must be revised.
Time for Action examined what the Budget Declaration through 2029 is based on, which indicators the government plans to achieve, and what its implementation will depend on.
Two Scenarios for a Country at War
The Budget Declaration does not proceed from the assumption that Ukraine will automatically return to a peacetime economy after 2026. The government has included two scenarios. The first, the baseline scenario, envisages an improvement in the security situation starting in 2027. It forms the basis for forecasts of faster economic growth, higher exports, a lower budget deficit, and a gradual increase in social standards.
The second is the resilience scenario. It takes into account the possibility of a longer war and the continued need for high spending on the security and defence sector. In that case, the state may revise planned budget expenditures depending on military needs. This approach is important. The Budget Declaration is not a guarantee that all indicators will be achieved exactly at the projected level. It is a financial model that shows what the trajectory of public finances could look like under certain conditions. The longer the war lasts, the more funds will be needed for the army, weapons production, air defence, support for veterans, assistance for people affected by the war, restoration of critical infrastructure, and protection of the energy system. These expenditures may change the balance between defence, social programmes, economic development, and investment.
GDP Growth Is Expected to Accelerate
Under the baseline scenario, the government forecasts a gradual acceleration in real economic growth. Real GDP is expected to grow by 4.5% in 2027, by 5.3% in 2028, and by 6.7% in 2029. Nominal GDP, according to the forecast, will increase from UAH 11.53 trillion in 2027 to UAH 14.95 trillion in 2029.
These figures mean that the government expects not only inflation-driven growth in incomes and prices, but also an increase in the real production of goods and services. This is important for the budget because economic growth directly affects tax revenues. The more businesses operate, household incomes grow, production expands, exports rise, and domestic consumption increases, the more resources the state can receive without additional increases in the tax burden.
At the same time, such growth rates will require a recovery in production, higher investment, more stable logistics, export growth, and continued international financial support. Without this, high GDP indicators will remain only a forecast.
Exports Must Become One of the Sources of Financial Stability
The declaration places separate emphasis on exports of goods and services. The government forecasts their growth from $60.4 billion in 2027 to $77.5 billion in 2029.
For Ukraine, exports matter not only as an indicator of business activity. They provide foreign currency revenues, support the balance of payments, create jobs, generate tax payments, and reduce the economy’s dependence on domestic consumption.
Export growth should also affect the state’s ability to service debt, finance imports of critically needed goods, and support stability in the foreign exchange market. This is particularly important in a wartime economy, as the country needs significant volumes of imports for energy, defence, healthcare, transport, and infrastructure recovery.
International Assistance Remains One of the Budget’s Key Resources
The Budget Declaration takes into account continued support from international partners, particularly within the programmes of the European Union and the International Monetary Fund. In 2027, financing from the EU is expected to reach €45 billion.
For the state budget, this is of systemic importance. External financing allows Ukraine to cover social expenditures, support the operation of state institutions, pay pensions, finance healthcare and education, provide assistance to internally displaced persons, and maintain social protection programmes.
At the same time, international support does not replace the country’s own revenues. It gives the state financial room at a time when a significant share of domestic resources is directed toward defence. This is why budget stability in the coming years will depend not only on taxes, but also on fulfilling commitments to partners, the transparency of public finances, the efficiency of expenditures, and Ukraine’s ability to continue reforms.
The Government Plans to Reduce the Budget Deficit More Than Threefold
One of the central indicators of the Budget Declaration is the gradual reduction of the state budget deficit. The government plans to reduce it from 18.5% of GDP in 2026 to 5.5% of GDP in 2029.
The budget deficit is the difference between state revenues and expenditures. When spending significantly exceeds revenues, the country has to cover this gap through external assistance, borrowing, or other financial sources.
For Ukraine, the high deficit is a direct consequence of the war. The state is forced to spend enormous sums on defence, security, social protection, support for veterans, the restoration of destroyed facilities, assistance to people who have lost their homes, or who were forced to leave their communities.
Reducing the deficit to 5.5% of GDP would mean that the government expects simultaneous revenue growth, economic expansion, stabilisation of expenditures, and a gradual reduction in the need for wartime financing. This is one of the most difficult parts of the declaration, as its implementation directly depends on the security situation.
Budget Revenues Are Expected to Rise to UAH 3.73 Trillion
The government forecasts that state budget revenues will amount to UAH 3.01 trillion in 2027, UAH 3.42 trillion in 2028, and UAH 3.73 trillion in 2029.
Revenue growth is expected to take place alongside rising nominal GDP, exports, wages, and business activity. For the state, this means greater capacity to finance basic expenditures without a critical increase in the debt burden.
However, revenue growth by itself does not automatically mean an improvement in people’s well-being. It is important what inflation will be, how real incomes will grow, whether new jobs can be created, and whether economic recovery will be sufficiently even across different regions and social groups.
Inflation Is Expected to Decline to 5.1%
Under the baseline scenario, the government expects inflation to gradually decline from 8.9% at the end of 2027 to 5.1% at the end of 2029.
For the population, this indicator matters primarily because of prices. If inflation declines, the cost of goods and services will continue to rise more slowly. This does not mean that prices will return to their previous level, but it does mean that the pace of price growth will be lower.
Lower inflation is also important for business. More stable prices make it easier to plan costs, investment, wages, procurement, and production. For the state, lower inflation makes it possible to forecast budget revenues and social expenditures more accurately.
At the same time, this forecast depends on many factors: the situation in the energy sector, the hryvnia exchange rate, the cost of imports, logistics, security, the condition of the agricultural sector, and the scale of public spending.
Wages and Social Standards Are Expected to Grow Faster Than Inflation
The declaration provides for an increase in the average monthly wage from UAH 35,010 in 2027 to UAH 44,083 in 2029.
The minimum wage is planned to rise at a faster pace than inflation. The subsistence minimum is expected to increase by the rate of inflation plus two percentage points.
This approach means that the government declares an intention not only to index basic social standards, but also to gradually increase their purchasing power. However, the real effect for people will depend on how closely actual inflation matches the forecast.
If price growth is higher than planned, the nominal increase in wages and social payments may not produce the expected result. This is why wage figures, the subsistence minimum, and inflation need to be considered together rather than separately.
Defence Will Remain the Main Budget Priority
Even under the baseline scenario, which envisages an improvement in the security situation, defence will remain the main category of public expenditure.
The 2026 budget initially planned to allocate UAH 2.8 trillion to the security and defence sector — almost 60% of all expenditures. After the changes supported by the Verkhovna Rada in June 2026, spending on security and defence increased by UAH 1.56 trillion. The total level of funding for the sector is expected to reach UAH 4.4 trillion.
These figures show the scale of pressure on public finances. Defence requires not only current spending on military salaries. It includes funding for air defence, the production of Ukrainian weapons, drone procurement, support for the army, assistance to military families, equipment repairs, and the development of the defence industry.
This is why Ukraine’s budget policy in the coming years will be forced to combine two tasks: ensuring defence while also preventing the collapse of the social sphere, education, healthcare, regions, and the population support system.
Public Investment and Debt Management Must Become More Effective
The Budget Declaration provides for the continuation of public investment reform, the digitalisation of investment project management, and higher efficiency in the use of budget funds.
For the state, this means the need to determine more clearly which projects are of primary importance. At a time of limited resources, it is important not only to find money, but also to direct it toward areas that produce the greatest effect for the country’s recovery, economy, regions, and infrastructure.
A separate area is public debt management. Ukraine needs external financing, but at the same time it must avoid a situation in which debt servicing in the future begins to displace social and investment expenditures. This is why reducing the deficit, increasing budget revenues, support from international partners, and effective debt management must operate as one system.
Support for Veterans, Internally Displaced Persons, and Regions Remains Part of Budget Stability
The declaration separately states that support for veterans, people affected by the war, internally displaced persons, and the creation of conditions for the return of migrants will continue.
The 2026 budget provided UAH 72.6 billion for support for internally displaced persons, UAH 18.9 billion for veteran policy, and UAH 468.5 billion for social protection. UAH 293 billion was planned for support for regions, including frontline territories. These expenditures cannot be viewed only as social assistance. They affect the stability of communities, people’s ability to work, receive healthcare, educate their children, rent housing, and remain economically active.
The return of people from abroad will also depend not only on the end of the war. It will require housing, jobs, access to education and healthcare, security, and clear prospects for families.
The Budget Declaration Is a Stabilisation Plan, Not a Guarantee
The Budget Declaration for 2027–2029 demonstrates a financial logic under which Ukraine should gradually move from an exceptionally high wartime deficit to a more sustainable budget model. The government is counting on faster GDP growth, higher exports, lower inflation, rising budget revenues, international support, and a gradual increase in social standards. However, every one of these indicators is linked to the main condition developments in the security situation.
The most important indicator in the declaration is not a specific GDP figure or the level of budget revenues. It is the state’s ability to finance defence, support people, preserve economic activity, and gradually reduce dependence on deficit financing at the same time.
By 2029, Ukraine may have a stronger economy, higher budget revenues, and a lower deficit. But this outcome will require not only external support, but also growth in production, exports, investment, efficient use of funds, and stability, without which no three-year budget plan can be implemented.
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