Ukraine faces a $27bn defence gap as Russia intensifies drone-missile campaign

Key facts

• Ukraine PM Sergii Koretskyi warns of a $27bn defence funding gap in 2026; Kyiv expects to cover about $7bn domestically and seeks partners for the rest.
• Politico reports Russia launched more than 190 missiles and drones overnight in a nationwide assault targeting energy infrastructure, causing blackouts in Kyiv.
• EU budget support is partly conditional on Ukrainian reforms; von der Leyen cites €37bn still available this calendar year, while Kyiv urges faster disbursement and action on immobilised Russian central-bank assets.

3 minute read

Ukraine’s leadership is signalling an acute near-term liquidity problem colliding with a worsening air and infrastructure war. Prime Minister Sergii Koretskyi told journalists that Kyiv faces a $27 billion defence funding gap this year, planning to cover roughly $7 billion domestically and seeking external partners for the remainder. The shortfall is framed not as an abstract budget debate but as an operational constraint: Ukraine needs cash now to place advance orders for weapons and ammunition scheduled for delivery next year, and Koretskyi explicitly highlighted long-range drones as a critical requirement to sustain strikes inside Russia.

The warning comes as Russia escalates near-continuous drone and missile attacks against critical infrastructure. Politico reports an overnight nationwide assault involving more than 190 missiles and drones, heavily targeting energy infrastructure and causing blackouts in Kyiv. Zelenskyy renewed demands for additional air defences and interceptors, arguing that the approach of winter increases urgency. Ukraine is described as struggling to cope with Russia’s increasing number of jet-powered drones, a trend that, if sustained, will drive higher interceptor consumption rates and raise questions about the cost-exchange balance between relatively cheap attack drones and expensive surface-to-air missiles.

For Europe, the article underscores a structural shift: with U.S. new aid largely halted after Donald Trump returned to the White House, EU member states and EU-level instruments become the decisive backstop for Ukrainian fiscal stability and air-defence sustainability. The EU is paying instalments under a two-year €90 billion loan facility, but Kyiv is pressing for faster disbursement to cover the autumn gap. Brussels, however, is linking the pace of budget support to the passage of reforms in the Verkhovna Rada as part of Ukraine’s EU-accession roadmap; Commission President Ursula von der Leyen referenced €37 billion still available within the calendar year, contingent on reform progress.

Kyiv is simultaneously intensifying political pressure on the EU to revisit the more than €200 billion in immobilised Russian central-bank assets held across the Union, portraying bold action on these reserves as a potential bridge for Ukraine’s financing needs. Looking beyond 2026, Ukrainian Finance Minister Serhii Marchenko reportedly told donors that 2027 requires $52.6 billion in aid, with about $32.6 billion unfunded—an outlook that, if unresolved, would force austerity choices that risk impacting not only non-priority spending but potentially protected expenditures such as military pay and core social payments.

While Russia is also absorbing growing fiscal strain—Reuters is cited on plans to raise 2027 military spending to 17.1 trillion rubles (€180 billion), around a third of total spending—its larger tax base and ability to raise revenues give it more endurance. For European defence officials and procurement leaders, the immediate implication is that Ukraine’s air-defence and interceptor pipeline, plus its domestic long-range strike programmes, are becoming inseparable from EU budget mechanics, reform-conditional disbursement schedules, and political decisions on Russian sovereign assets.

Source: Politico Europe