Ukraine moved on Thursday to pour nearly another €30 billion into its defence needs this year, pushing total defence spending for 2026 beyond €80bn — the country’s biggest annual military outlay since Russia launched its full-scale invasion.
Roughly one-third of this year’s defence budget will go toward military salaries, and on Wednesday President Volodymyr Zelensky announced pay increases for service members.
- Advertisement -
The raises will be tied to performance in combat, with soldiers earning more the more combat missions they undertake.
Ukraine will direct an even larger share of its defence budget — about €45bn — toward military equipment.
For the first three years of the war, Mr Zelensky and other top Ukrainian officials repeatedly appealed to the United States, under both the Biden and Trump administrations, for long-range missiles capable of hitting targets inside Russia.
Those appeals have largely fallen away this year as Ukraine has expanded its own deep-strike drone capabilities, using them to hit oil refineries far inside Russia on a regular basis.
Ukraine’s military budget in 2026 was larger than its civilian budget by about €13bn
But the intensifying drone war comes at a steep price. Russia is paying heavily as well.
One version of the FP-1, a Ukrainian long-range drone, costs nearly €50,000 to build.
By the standards of deep-strike weapons, that is relatively cheap.
At the more expensive end, the Liutyi — a higher-spec Ukrainian long-range drone — costs about €170,000 to produce.
Ukraine is aiming to manufacture about seven million drones this year.
Most of them are smaller, lower-cost FPVs used along the frontline, with production costs running as low as a few hundred euro each.
Even before this week’s fresh injection of defence funding, Ukraine’s military budget for 2026 already exceeded its civilian budget by about €13bn.
With the EU’s Support Loan of €90bn now secured, Ukraine should be in a position to avoid the kind of acute financial crunch it faced last September, when the ministry of finance’s draft budget exposed an €18bn black hole.
Or, at the very least, Kyiv may be able to postpone any threat of bankruptcy until the end of 2027, when another funding crisis could loom.
Two-thirds of the incoming EU loan will be channelled into Ukraine’s defence budget.
The remaining one-third, or €30bn, will shore up the country’s civilian budget for 2026 and 2027, allowing Kyiv to keep public services operating and pension payments flowing.
The EU’s existing €50bn Ukraine Facility, created in 2024, has already played a central role in keeping the state functioning.
“If we were talking about Ukraine without any sort of EU funding, there would not be a Ukraine,” Alex Fynn, an editor at research unit Kyiv Independent Insights, told RTÉ News.
“Looking at the civilian side of the ledger, so we’re not even talking about military aid, which is keeping Ukraine in the fight, quite literally, about half of the budget for the civilian side comes directly from the EU at this point,” he said.
Ukraine’s parliament needs to continue introducing anti-corruption reforms to meet EU standards
Unlike EU money used for Ukraine’s civilian budget — which is tightly linked to Kyiv meeting reform benchmarks required for EU accession — the government has considerably more latitude in how it uses funds earmarked for defence and security.
For Ukrainian defence companies, the pressing goals are speed and scale, and the EU wants to help accelerate that effort rather than burden it.
Officials in Brussels understand that allowing Ukraine to collapse is not an option, whether viewed through a moral lens or a security one. That makes it highly unlikely the bloc would cut funding for Ukraine’s defence budget, particularly after the United States effectively pulled back its financial aid.
The EU has attached just one condition to the new defence funding: Ukraine must open a bank account at the Bundesbank, Germany’s central bank.
The requirement stems from a practical issue — the European Central Bank does not hold bank accounts, and the EU needs a mechanism to monitor how Kyiv spends the money.
Funding for Ukraine’s civilian budget, however, may not always be guaranteed.
The Rada, Ukraine’s parliament, must keep advancing rule-of-law and anti-corruption measures to meet EU standards, and lawmakers have not always moved quickly.
Political factions inside the Rada are juggling their own domestic agendas, and many MPs first elected in 2019 did not expect to become long-serving legislators in wartime.
“The Rada itself is in both a long-term sort of chronic crisis caused by the structural issues of not being able to replace deputies in the full-scale invasion and the second issue is a larger wave of political crises, which have engulfed the country in the last year,” said Mr Fynn, referring to a series of corruption investigations involving high-ranking officials.
Even so, the EU released €2.8bn to Ukraine earlier this week, the first tranche from the €90bn loan.
Marta Kos, the EU’s commissioner for enlargement, said Ukraine had “merited” the payment because of the “speed and commitment to delivering meaningful reforms”.
