Serhii Marchenko, Ukraine’s finance minister, has proposed a plan for the West to help finance the Ukrainian military during Wednesday’s meeting with G7 finance representatives.
Marchenko noted that it is possible to simultaneously address both Ukraine’s financial dilemma and the Russian threat to Europe if the West can help finance Ukraine’s military via the “integration of Ukraine’s military potential into the European security system.”
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“A systemic solution is needed to preserve macro-financial stability and protect Europe from the Russian [sic] threat,” Marchenko said, according to the ministry’s press release.
Military matters
The finance minister argued that the Ukrainian military possesses the skills and experience to deter threats from Russia, and the capital required to help fund Ukraine’s military will only “[represent] a small share of EU GDP.”
“The cost of maintaining Ukraine’s armed forces to help ensure European security represents a small share of EU GDP. This cost could be distributed among participating countries and considered within the framework of NATO defense spending obligations,” Marchenko said.
Marchenko’s words echoed estimations from Germany’s Kiel Institute that just a 0.2% annual GDP increase from Europe would be enough to replace US aid to Ukraine, boosting European aid to Ukraine from €44 billion to €82 billion ($50 billion to $93.3 billion).
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Marchenko also suggested that the massive size of the Ukrainian military, the second largest in Europe after Russia, could help fill the personnel shortage faced by many European nations’ armed forces.
“Given current military risks, Europe is already exploring ways to bolster its defense, including expanding army sizes. However, building such capacity will take years and require vast resources. Integrating Ukraine’s military capability is a practical, immediate solution,” he added.
Financial support for Ukraine’s war-torn economy in 2026 was one of the key agenda items during the meeting in Banff, Canada.
Ukraine’s financial dilemma
Ukraine has received funding via different programs to address social needs, but Marchenko advocated for increased financing for its military.
It will balance Ukraine’s urgent need to fund its defense against Russia and strengthen its macroeconomic stability.
“In 2021, the State Budget deficit was 3.8% of GDP. After the full-scale war began, the economy contracted by almost 30%, and the deficit rose to 20% of GDP due to a sharp increase in defense spending – from 5% to 30% of GDP,” the press release states, citing Marchenko’s address to the G7 representatives.
“Excluding military expenditures and wartime factors, the deficit would have gradually declined: from 6.8% of GDP in 2022 to 4.2% in 2023, 0.6% in 2024, and 0.2% in 2025. Therefore, war is the main driver of economic and financial losses,” it adds.
Marchenko previously told Kyiv Post that half of Ukraine’s state budget relies on financial aid from other countries because of defense spending due to Russia’s invasion, and returning to pre-war normal is “impossible” during wartime.
“Wartime conditions require that military spending and equipment needs remain at 2022 levels,” Marchenko said at the G7 meeting.
Ukraine’s high defense needs and limited sources to cover them threaten both the country’s microfinancial stability and the need to protect Europe from the Russian threat, according to Marchenko.
