The Ukrainian Parliament has announced its strategy for tackling the budget deficit.

Danylo Hetmantsev, head of Committee on Finance, confirmed that there are no plans to raise taxes in 2026, and that the shortfall in the state budget will be managed through alternative sources. He noted that the current year’s budget is short by ₴500B, but he is optimistic that this gap can be closed without increasing taxes. Additionally, he indicated that the state budget deficit will be larger in 2026, and that this will primarily be addressed through external sources.

Hetmantsev views eliminating Ukraine’s shadow economy as a key means by which to replenish the budget, projecting an increase of $4B (₴160-170B) in 2025 from this initiative. He cautioned that raising taxes without tackling the shadow economy would adversely affect honest businesses. Other financing options mentioned include military bonds and “fiscal savings,” which would involve eliminating inefficient programs, potentially freeing up ₴50B ($1.2B).

The OECD forecasts that Ukraine’s budget deficit will represent about 20% of GDP for 2025 and 2026, with this year’s deficit covered by external aid, notably through the ERA mechanisms from the G7 and the Ukraine Facility from the EU.