Debt bigger than the economy: in 2026, Ukraine’s public debt, according to IMF estimates, will exceed 110% of GDP

On January 15–16, the Managing Director of the International Monetary Fund, Kristalina Georgieva, paid an unofficial visit to Kyiv. Following the meetings, the prospect of launching a new extended financing program for 2026–2029 was discussed, which is intended to replace the current four-year program totaling $15.5 billion.

According to IMF estimates, Ukraine’s total external financing gap through 2029 could amount to about $136.5 billion. At the same time, as the Fund forecasts, in 2026 public debt will reach its peak, exceeding 110% of GDP — a level which, for an economy under wartime conditions and weak growth, means heightened debt-sustainability risks and dependence on external donors.

According to data from Ukraine’s Ministry of Finance and the budget plan, in 2026 the country is expected to allocate about 656.8 billion hryvnias (≈ $15.6 billion) to service the public debt — a sum comparable to up to half of all budget revenues. Such a burden increases pressure on public finances and makes the budget more vulnerable to delays in external financing.

Against the backdrop of this resource gap, the European Commission presented a support plan of €90 billion for 2026–2027. Part of the funds is expected to be directed to budget support, which will allow Ukraine to service its obligations, including payments to the IMF.

According to Georgieva, in the coming weeks the IMF Executive Board may approve the allocation of $8.1 billion under previously reached preliminary agreements. At the same time, the Fund links continued assistance to meeting a number of conditions: revising tax exemptions (including VAT on consumer goods), strengthening measures to bring the economy out of the shadow sector, maintaining the independence of anti-corruption bodies, and eliminating certain “loopholes” in labor legislation. These requirements remain politically sensitive and may face resistance inside the country.

Georgieva noted that the resilience of Ukraine’s economy is largely supported by external sources — European Union programs (including the Ukraine Facility), IMF financing, and mechanisms tied to income from frozen Russian assets (ERA loans). It was also confirmed that Ukraine’s 2026 budget was adopted with a deficit of about $45 billion.

Separately, it was reported that a $2.6 billion debt restructuring had been completed, which, according to the authorities’ estimates, made it possible to avoid potential costs through 2041. At the same time, Ukraine faces another payment to the Fund — more than $179 million — which underscores the country’s ongoing dependence on the payment schedule and decisions of external creditors.