This policy brief introduces the first report in the series “In-depth review of the non-military 2026 budget”. The goal of this series is to identify the main non-military spending areas in public finances and suggest ways to rethink them.

Each report focuses on a specific non-military function of the state budget: social protection, education, healthcare, civilian public order, economic activities, and other government roles.

This work can help line ministries improve spending policies and align budgeting with strategic planning goals.

The research is prepared with the support of the International Renaissance Foundation.

Ukraine’s 2026 draft budget shows the limits of what a country drained by war is capable of. For the fourth year in a row, Ukraine is living on a survival budget — enough to hold off the enemy but too tight to turn the tide of the war.

Almost all internal resources the state can gather, about a quarter of GDP or €51 billion, go to defense. The fifth war year won’t bring any breakthroughs in terms of the budget.

Other sectors are running at bare minimum, and the situation isn’t likely to improve in 2026. Budget figures will probably be revised upward, as they have been this year and in past years, but the overall picture remains grim — Ukraine is fighting not just Russia, but also its own financial limits.

In these conditions, just “surviving” isn’t enough. The way the government spends money needs to change — funds should be aimed not only at today’s issues but also allocated for the future. This means two things: first, making strategic investments: in people, institutions, and technologies that will lay the foundation for recovery. Second, spending smarter: cutting duplication, pointless programs, and the system’s chronic inertia. This isn’t about cutting for its own sake, but about managing limited resources wisely. That’s how resilience is built — when finances become a tool not just for defense, but for development too.

Total state budget spending has been growing every year since 2022, mostly due to war-related expenses. Real spending in 2024 has doubled compared to 2021.

The sharp rise in budget spending is mainly due to a massive increase in funding for the defense sector. In 2024, spending on national security and defense made up 58% of the total government budget. Compared to 2021, nominal defense spending increased 20 times, while in real terms (2021 prices), it grew 14 times.

At the same time, spending on non-military state functions like social protection, healthcare, education, and other civil areas, shows a different trend. Their nominal growth was limited to 40%, which, considering high inflation since the start of the full-scale invasion, actually means a 7% cut in real funding.

Next, we take a closer look at the biggest areas of the government budget’s functional classification separately.

The research is prepared with the support of the International Renaissance Foundation.