The warning, highlighted by the Associated Press, has put extraordinary pressure on EU leaders ahead of a decisive summit.

The assessment is based on International Monetary Fund projections covering Ukraine’s financing needs for 2026–2027.

European leaders are now debating unprecedented measures to prevent state insolvency while sustaining Ukraine’s war effort.

IMF Numbers Drive Alarm

According to IMF estimates cited by the Associated Press on December 17, 2025, Ukraine will require about €137 billion ($160 billion) in external financing over 2026 and 2027 combined.

The funds are needed to cover budget deficits, military spending, and basic economic stabilization as the war continues.

Without firm commitments by spring 2026, officials warn that Ukraine could face an inability to pay soldiers, civil servants, and pensions, or to maintain essential state services.

It is this risk—not an immediate default—that prompted the AP’s description of Ukraine as being “on the brink of bankruptcy.”

Heavy Reliance On Foreign Aid

Ukraine’s economy has avoided collapse since Russia’s invasion, posting modest GDP growth of roughly 3–5 percent in 2023–2024.

That resilience, however, masks deep dependence on foreign assistance.

Domestic revenues largely cover defense costs, while civilian spending relies almost entirely on external support.

For 2025, Ukraine’s budget deficit is projected at around 19–20 percent of GDP.

About $38–39 billion in foreign funding has been secured for the year, including EU support through the Ukraine Facility and proceeds from profits generated by frozen Russian assets.

The challenge intensifies in 2026–2027, when defense spending remains elevated and reconstruction costs mount.

EU As The Primary Backstop

EU officials expect the bloc to shoulder roughly two-thirds of Ukraine’s €137 billion financing gap, or about €90 billion, with the remainder potentially coming from the United States, the IMF, and other G7 partners.

That expectation places the burden squarely on Brussels at a time of growing political friction inside the union.

Options under discussion at the December 18–19 EU summit include a so-called “reparations loan” backed by immobilized Russian central bank assets.

Between €210 billion and €300 billion of such assets are frozen in Europe, mostly held at Euroclear in Belgium. Alternative proposals involve joint EU borrowing to raise funds on capital markets.

Legal And Political Constraints

Despite pledges to secure funding “by any means necessary,” EU leaders face legal hurdles and political resistance.

Some member states have raised concerns about retaliation risks and the legal precedent of using Russian assets, while others warn about fiscal exposure and unanimity requirements.

The AP report notes that bankruptcy is not inevitable if international commitments hold.

But the scale of the numbers, combined with the prolonged war, underscores how Ukraine’s financial survival has become inseparable from high-level political decisions in Brussels, Washington, and other partner capitals.