Ukraine scrambles for money as Russian strikes batter economy

By the Editorial Team · Sunday, October 11, 2026

Russian missile strikes have severely damaged key industrial facilities in Kyryvyi Rih, disrupting steel production and crippling the local economy, while Ukraine faces a major budget crisis worsened by ongoing attacks and delayed reforms. The government is prioritizing defense spending amid a $56 billion funding gap and is seeking to unlock Western aid and use frozen Russian assets to cover costs as economic and military pressures intensify.

Kyryvyi Rih, a key industrial city in Ukraine and hometown of President Volodymyr Zelenskiy, is facing severe economic disruption following Russian missile strikes that have crippled its major steel and mining operations. The city’s largest employer, ArcelorMittal’s steel complex, halted production last month after attacks damaged its infrastructure, leaving the local economy in distress and challenging municipal services such as hospitals, schools, and public transportation.

Mayor Oleksandr Vilkul described the situation as dire, noting that the city, which has a population of around 600,000, is experiencing conditions worse than most areas except those on the frontline. The steel industry, which previously accounted for roughly 10% of Ukraine’s economic output, has been similarly impacted in other industrial centers like Zaporizhzhia, where factories remain shuttered and exports have ceased amid ongoing Russian drone and missile attacks.

The intensified assaults this summer have damaged critical infrastructure, including factories, warehouses, ports, and railways, forcing closures of businesses and shopping centers and curbing economic growth and tax revenues. Ukraine is now grappling with its most significant budgetary crisis since Russia launched its full-scale invasion in February 2022.

The government faces a funding gap of $56 billion this year—nearly a quarter of Ukraine’s economic output—with $27 billion allocated to military expenditures. Efforts to secure foreign loans have been delayed by legislative gridlock, as necessary tax reforms and anti-corruption measures demanded by Western allies remain unpassed. Ukrainian officials recently convened in Brussels with European partners to explore accelerating disbursements from a €90 billion ($101 billion) EU loan package, identifying some funds to address the shortfall in 2026. However, sources familiar with the discussions caution that front-loading aid could strain next year’s budget, especially amid upcoming elections in key European countries that could affect political support for Kyiv.

Prime Minister Sergii Koretskyi acknowledged the fiscal challenges, emphasizing that non-essential spending—including infrastructure reconstruction—has been frozen to prioritize defense, public sector salaries, and pensions. “All resources should be channelled into critically important areas,” he said.

The cost of the conflict continues to rise. According to Roksolana Pidlasa, chair of parliament’s budget committee, daily war expenses have surged from $140 million two years ago to $190 million currently. Expenses are driven by the procurement of advanced weapons systems designed to strike deep into Russian territory and by increased personnel costs as the military expands and supports the families of casualties. Ukraine has spent more than $44 billion on defense in the first nine months of this year, exceeding tax revenues of around $42 billion amid an economic slowdown.

Tax revenue losses attributed to Russian attacks are estimated to total over 70 billion hryvnias ($1.1 billion) by year-end, caused by damage to property and disruptions to logistics and commerce. Economists warn that these revenue losses reflect structural, rather than temporary, problems at a time when spending demands are intensifying, prompting some businesses to reduce operations or defer investments.

Ukraine’s agricultural sector, a vital source of export income, has also suffered heavily. Russian assaults on Black Sea ports led to a 36.6% drop in grain exports year-on-year in September, posing a threat to roughly $40 billion in export revenue this year, according to Economy Minister Oleksandr Kravchenko.

Despite receiving nearly $200 billion in fiscal support from Western partners since 2022, Ukraine risks losing $29.5 billion in aid this year due to delays in enacting key reforms, Koretskyi said. Lawmakers aim to pass the necessary legislation by October 15 to unlock these funds. The government has postponed nearly $900 million in capital spending pending legislative approval.

Looking ahead, the government has proposed a defense budget of $110 billion for the coming year, excluding direct military assistance from allies. Finance Minister Sergii Marchenko highlighted a budget gap exceeding $32 billion and suggested that using frozen Russian assets held in Europe—estimated at €210 billion—could help bridge Ukraine’s funding shortfall. “Ukraine continues to mobilize domestic resources, but the scale of Russia’s war puts clear limits on our capacity,” Marchenko said.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.