Ukraine’s newly appointed Prime Minister Yulia Svyrydenko is likely to seek more financing from the International Monetary Fund and US Treasury Secretary Scott Bessent, as she aims to cover the financial gap Ukraine faces from Russia’s ongoing invasion.
Outside donors have so far earmarked only half of the estimated $75 billion that the war-strained budget needs for the next two years, she told Bloomberg in her first interview after appointment.
Ukraine’s allies and global economists didn’t plan for Russia’s war against Ukraine to last through to 2026, seeing it as only a worst-case alternate scenario. They forecasted the end of hostilities in 2025, leaving positive outlooks for recovery in 2026-2027. This was before Russia began using massive combined aerial attacks, each involving hundreds of drones and dozens of missiles.
Ukraine’s existing three key macro-financial packages – the Extraordinary Revenue Acceleration (ERA) loan, backed by profits from frozen Russian assets, Ukraine Facility, IMF program – will expire in 2026-2027, leaving Ukraine with uncertainty about financing.
Annual budget shortfall could be $19 billion as defense spending eats revenue
Ukraine’s defense needs keep rising as it is spending the majority of domestic revenues on defending itself against Russia, leaving a financing gap of $10-19 billion for social expenditures, according to various estimates.
“If the baseline scenario assumes the war will continue into next year, it is very likely we will have [need of] a new IMF program,” Svyrydenko told Bloomberg News.
Another source of potential financial aid is the US – Svyrydenko said she also planned to speak with US Treasury Secretary Scott Bessent on the matter “in the coming days.”
She previously worked with Bessent on the “mineral deal”, the sweeping agreement that linked US investor access to Ukraine’s raw materials with military aid, and long-term economic reconstruction.
The aid from the US may also include construction of plants in the US to produce unmanned aerial vehicles (UAV), Svyrydenko told Bloomberg News. Svyrydenko’s new cabinet is seeking cooperation with the US on weapons purchases – including Patriot air-defense systems – and joint drone production.
“The idea is that we are, indeed, a strong nation – I believe one of the world’s best examples of a unified battlefield for testing technologies,” she said.
Apart from external military aid, Svyrydenko is keen on ramping up the country’s own domestic weapons production.
“Our task is to deliver across most areas within a very short period of time,” Svyrydenko, told Bloomberg News, adding she aimed to “accomplish something over the next couple of months.”
IMF funding tied to anti-corruption reforms – but Kyiv clashes with its own watchdog
Svyrydenko gave the interview to Bloomberg hours before Ukraine witnessed another clash between its law enforcement agencies.
The Security Service (SBU) arrested several National Anti-Corruption Bureau (NABU) employees after conducting mass searches. At the same time, there is concern that inspections by the SBU of the Specialized Anti-Corruption Prosecutor’s Office (SAPO) may have unlawfully gained access to secret information relating to NABU’s investigative activities – an accusation the SBU denies.
Previously, Ukraine’s government refused to appoint the new head of the Economic Security Bureau (BEB) – NABU detective Oleksandr Tsyvinsky – even though the selection commission had unanimously decided not to restart the contest and pushed to confirm its result.
Appointing the new head of BEB is one of the key anti-corruption benchmarks on which another tranche of the IMF program is dependent.
Svyrydenko defended the government’s action, stating everyone is obeying the law. The cabinet “acted in line with established procedures: we received the nomination from the selection commission, voted collectively, and sent the decision back to the commission.”