Ukraine Faces June Cash Shortage as EU's €90 Billion Loan Stalls

Ukraine's Looming Financial Crisis

According to ХВИЛЯ: Ukraine risks a severe cash shortage by June, threatening payments to its military and essential civilian services. This crisis stems from a blocked €90 billion European Union loan package and domestic legislative paralysis, raising alarm among experts who warn the government may soon lack the funds for these critical obligations.

External and Internal Obstacles

The primary external hurdle is Hungary's veto of the EU's proposed €90 billion loan for 2026-2027. EU funding decisions require unanimous approval from all member states, and Prime Minister Viktor Orbán has blocked the aid. This standoff is part of broader tensions, highlighted by Hungary's seizure of an Oschadbank cash shipment containing $40 million, €35 million, and 9 kg of gold. Meanwhile, internal gridlock in Ukraine's parliament, the Verkhovna Rada, has prevented the country from fulfilling conditions for the EU's Ukraine Facility program, resulting in a loss of nearly €5.9 billion in expected funds. The first tranches of any EU loan are now unlikely to arrive before June, creating a critical funding gap.

The proposed structure for the future EU loan allocates the funds as follows:

• Approximately €30 billion for civilian needs;
• €60 billion for defense purposes.

Personnel payments already consume over UAH 1.14 trillion of Ukraine's defense budget, and the estimated cost of 'stability plans' for the next winter is around €5.5 billion.

To secure support from the International Monetary Fund (IMF), the government is considering a package of tax reforms. These measures include:

• Introducing taxation on digital platform incomes;
• Eliminating duty-free allowances for imported parcels;
• Applying Value-Added Tax (VAT) to individual entrepreneurs;
• Legally fixing the military levy rate at 5%.

Ukraine will receive the money 'one way or another'.

Ursula von der Leyen

Despite this assurance, without resolving both its internal legislative deadlock and the external funding blockade, the country faces a precarious financial situation that threatens its stability. This financial pressure comes as Ukraine continues to defend itself against a full-scale invasion, making timely international support crucial. The situation underscores how vital both domestic political cohesion and reliable international partnerships are for Ukraine's financial security during wartime. Further delays in receiving pledged funds could severely impact the government's ability to meet its budgetary commitments.

As Ukraine grapples with its financial challenges, the looming risk of depleted defense resources adds another layer of urgency. With essential military funding on the line, understanding the implications of delayed aid from international partners is crucial. For a closer look at how these funding issues may impact Ukraine's defense capabilities, see more in our detailed coverage on Ukraine's defense funds running out.