Over the 2026–2028 period, the debt burden will remain one of the key challenges for Ukraine’s public finances. According to the government’s debt strategy, annual public debt payments during this period will average more than UAH 1 trillion. This means that approximately one-tenth of the country’s Gross Domestic Product (GDP) will be directed toward servicing existing liabilities rather than toward development. At the same time, the government emphasizes improvements in the debt structure and a reduction in its cost. However, the high level of external and foreign currency obligations creates additional risks for the country’s financial stability in the medium term.
Public Debt Payments
The 2026–2028 debt strategy, approved by the government on December 24, states that Ukraine’s debt payments during this period will average 1.19 trillion UAH per year, or approximately 10.4% of the country’s expected GDP. The debt strategy essentially outlines the financial framework for the budget for several years ahead and determines how many resources the state can allocate to other priorities.
According to Ministry of Finance calculations, the total expenditure on debt redemption and interest payments will gradually increase. In 2025, the state is set to spend 1.05 trillion UAH; in 2026 — 1.17 trillion UAH; in 2027 — 1.26 trillion UAH; and in 2028 — 1.29 trillion UAH. This results in an average annual expenditure of 1.193 trillion UAH.
In relation to GDP, the debt burden will gradually decrease but remain high: 11.7% of GDP in 2025, 11.3% in 2026, 10.5% in 2027, and 9.5% in 2028. Even with this downward trend, debt payments will continue to occupy a significant portion of budgetary resources.
Debt Structure
The Ministry of Finance notes that Ukraine has managed to significantly improve its public debt structure over recent years. Most borrowing is secured on concessional terms, which has allowed for a reduction in its cost. For instance, in the summer of 2025, the weighted average interest rate on public debt stood at 4.9%, compared to 7.2% before the start of the full-scale war.
At the same time, the debt structure remains vulnerable. Approximately 75% of the public debt is external, and 77% of obligations are denominated in foreign currency. The Ministry of Finance acknowledges that this creates high currency risks for future debt sustainability.
Meanwhile, the domestic market plays a vital role in budget financing. This demonstrates that domestic borrowing helps the government maintain financial stability and reduce dependence on external creditors.
“At the same time, the domestic market remains an important source of liquidity: net financing from 2022 through the second quarter of 2025 amounted to 659 billion UAH,” the strategy notes.
Conclusion
Despite the decrease in debt servicing costs, Ukraine is entering a period of consistently high debt payments. Annual expenditures exceeding one trillion hryvnias will substantially limit the state’s budgetary capabilities. The high share of external and foreign currency debt intensifies the sensitivity of finances to exchange rate fluctuations and external factors. According to IMF forecasts, Ukraine’s public debt will exceed 110% of GDP as early as next year, underscoring the scale of the challenge. Meanwhile, the total volume of public and state-guaranteed debt reached $192.71 billion as of the end of August. Under these conditions, effective debt management and the preservation of international support will remain critically important for the country’s financial stability.
