Ukraine will establish a $10.1B ‘rainy day fund’, using ERA money.

Ukraine plans to allocate the external financing received from G7 countries through the ERA mechanism, funded by frozen Russian assets, into three parts. One portion will be designated for financing the current year’s budget, another for pre-financing the budget deficit for the following year, and the third will serve as conditional financing against critically negative scenarios.

Last year, $1B was received through the ERA, this year $39.4B will be received, next year $2.4B, and in the first quarter of 2027, $1.3B. Regarding the financial buffer, $9.1B from this year’s ERA proceeds and $1B from next year’s proceeds will fund its creation.

Under the baseline scenario, which anticipates the end of the war by the end of this year, the external financing required to cover 2025’s deficit will be $39.8B, with $20B needed next year, and $3.1B in the first quarter of 2027. If the war continues until mid-2026, the external financing needed to cover the deficit this year will reach $48.8B, while next year it will be $21B and $7.1B in the first quarter of 2027.