EU Parliament study: 2028–2034 budget insufficient for Ukraine’s reconstruction

Brussels – Financial support for Ukraine: the European Union is showing plenty of goodwill, but even more of a lack of precision. This is because the commitments made do not match what Kyiv will actually need. The European Parliament’s think tank has crunched the numbers and sounded the alarm in a working document commissioned by the European Parliament’s Committee on Budgets. It makes it clear, first and foremost, that “the estimate of the public funding requirement for ten years of post-war recovery and reconstruction amounts to €196.5 billion, or €19.7 billion per year.” In response, the proposed budgetary allocations (€88.9 billion for the period 2028–2034, equivalent to €13.5 billion per year, both at 2025 prices) “are insufficient, given the key role of EU aid in supporting Ukraine.” 

Here, then, lies the European Union’s first major miscalculation, to which at least one other—and by no means insignificant—one must be added. The data shows that the proposed allocation for Ukraine in the EU’s next multiannual financial framework (MFF 2028–2034) “is lower than the EU aid disbursed in the period 2022–2025 (€193 billion, ed.) and declared for the two-year period 2026–2027 (the 90-billion-euro aid package).” Furthermore, the EU Parliament’s working document notes that the European Union’s economic and financial decision “does not take into account all the consequences of a reduction in U.S. aid under the second Trump administration and the limited role of other official donors.”

In their support for Kyiv, therefore, the European Commission and the EU Member States seem to be counting their chickens before they hatch. What is more, the approach is overly focused on austerity, with a lending strategy that is considered difficult to implement. “The predominant role of loans ignores the current high level of Ukrainian sovereign debt, which exceeds 100 per cent of Ukraine’s GDP.” There is a real risk of stifling the country’s economy, which is already grappling with a massive debt-to-GDP ratio and the associated difficulties in reducing it. That is why “grants should play a greater role,” the document suggests. In other words: non-repayable loans, a strategy that is hard to swallow for those in the EU who want to avoid wasting money. However, it is emphasised that “fiscal guarantees can encourage private sector involvement in the recovery and reconstruction process.” 

In short, financing Ukraine’s recovery and reconstruction through the 2028–2034 multiannual financial framework appears unlikely and even unsustainable. The main recommendation is to “increase the size of the reserve allocation for Ukraine, prioritising grants over loans from the planning stage onwards.” According to European Parliament experts, this “will help reduce the likelihood of a revision of the Multiannual Financial Framework, given all the intra-EU institutional constraints, including the unanimity requirements for the adoption and revision of the common budget.”