Monthly chart: Ukraine struggles to cover budget needs for 2 months in a row as foreign financing dwindles

The following is a chart based off of data originally published in the Kyiv-based Center of Economic Strategy's "Ukraine War Economy Tracker." The Kyiv Independent is republishing it with permission.

Since the beginning of Russia’s full-scale invasion, Ukraine has been largely dependent on foreign budget support.

Ukraine uses virtually all of its domestic revenues such as taxes and customs duties to finance defense, with defense spending amounting to around 50% of all state budget expenditures. The other half includes everything from social payments to healthcare and education.

Ukraine received $73.6 in foreign financing from March 2022 until December 2023, or about $3 billion a month. While it is an enormous sum, it covered only two-thirds of Ukraine’s state budget financing needs, with the rest mostly covered by issuing domestic bonds.

The situation deteriorated sharply in 2024 with a drop in foreign funding due to uncertainty in the U.S. and EU, which are Ukraine’s key donors. In January, Ukraine received only $400 million from Japan; in February, $800 million was disbursed by Japan, Norway, and Spain.

While the outlook for the next few months looks more positive due to the approval of the EU aid and the expected disbursement of the first tranche of 4.5-billion-tranche in March, the experience of the first two months of the year raises the uncomfortable questions of how Ukraine will be able to finance its huge expenditures if the support stops.

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The Kyiv IndependentChris York