Ukraine and the EU Budget for 2028–2034: Deep Integration but Still No Membership

In the draft Multiannual Financial Framework (MFF) for 2028–2034, the European Commission proposes creating a dedicated budgetary instrument for Ukraine—the Ukraine Reserve—with funding of up to €100 billion. This decision demonstrates that the EU sees Ukraine not only as a future member state but also as a country that will gradually become fully integrated into the EU’s financial architecture. No other candidate country has ever reached this level of involvement.

The Ukraine Reserve will be a large-scale, long-term mechanism of macro-financial assistance for Ukraine. It is designed to continue previous and current programs such as Macro Financial Assistance+ (MFA+), under which Ukraine received €18 billion in 2023, and the Ukraine Facility (2024–2027), totaling €50 billion. This indicates that the European Union is moving toward establishing a stable financial foundation for Ukraine for decades to come. (Note that the current EU budget also includes an item titled Ukraine Reserve, but it amounts to only €17 million, which may be used for unforeseen expenditures under the Ukraine Facility. It should not, therefore, be confused with the new instrument.)

However, the provision of this support will not be automatic. As with the current macro-financial assistance programs, funds will be disbursed in exchange for continued reforms—primarily in the areas of the rule of law, anti-corruption, public administration reform, and harmonization of legislation with EU standards. The implementation of these reforms will likely determine both the scale and pace of utilizing the potential €100 billion and will serve as a key measure of trust from European institutions.

At the same time, Ukraine must already begin acting as a full participant in the EU budget process. This entails not only having plans in place but also developing an integrated portfolio of projects in areas such as recovery, infrastructure modernization, and green and digital transformation—prepared in line with EU program methodologies and accompanied by clear objectives, performance indicators, detailed budgets, and monitoring mechanisms. At present, the country’s unified project portfolio is available on the DREAM platform.

Meanwhile, Ukraine must institutionalize its system for managing EU assistance—from establishing a national coordination platform with functions for project selection and support to introducing European standards in financial management, public procurement, and policy impact assessment. A key requirement will be transparent auditing—moving toward joint procedures with European auditing and anti-corruption institutions, integrating anti-corruption mechanisms, and implementing electronic systems for monitoring the use of funds. The government should continue incorporating EU legal norms into national legislation to harmonize budgetary, administrative, and oversight processes. Taken together, these steps will demonstrate Ukraine’s capacity to use the resources of the Ukraine Reserve effectively and will strengthen its case for deeper integration into the European Union’s financial system.

Financial instruments of the EU available to Ukraine

The European Union’s Multiannual Financial Framework (MFF)—or simply the EU budget—for 2028–2034 potentially opens a broad window of financial, security, and political opportunities for Ukraine through a dedicated thematic support instrument—the Ukraine Reserve—under the Global Europe program. This instrument affirms Ukraine’s status as a priority strategic partner of the European Union—one that requires resources to ensure security and resilience in its fight against the aggressor.

The European Commission proposes setting the total funding under the Ukraine Reserve mechanism at up to €100 billion (or €88.9 billion in 2025 prices), with a maximum possible annual allocation of €14.3 billion. The exact amount will be determined by the European Parliament once the budget is adopted, which is expected by the end of 2027. The Ukraine Reserve provides for enhanced funding flexibility, allowing unspent resources to be carried over to subsequent years and enabling a more effective response to Ukraine’s needs throughout 2028–2034. Operating outside the EU’s main budgetary ceilings, the Ukraine Reserve enables spending beyond the annual limits when additional priority or crisis-related needs arise, ensuring flexibility in meeting Ukraine’s requirements. Financial assistance will be provided in the form of grants and guarantees. Given the EU’s policy priorities and Ukraine’s needs, the key areas of support will likely include budgetary stability, institutional development, defense capability, and the restoration of critical infrastructure.

In addition to macro-financial assistance from the Ukraine Reserve, which is expected to be provided during 2028–2034, Ukraine may also be eligible for military aid delivered through the European Peace Facility (EPF). There is also a strong likelihood of receiving funding for the development of critical security infrastructure under the newly established Security Action for Europe (SAFE) instrument. 

The Extraordinary Revenue Acceleration (ERA) is a mechanism designed to provide Ukraine with $50 billion in financial assistance from the G7, of which the EU’s contribution amounts to €18.1 billion. The funds are guaranteed by revenues generated from frozen Russian sovereign assets and are structured to avoid any financial liability for the Government of Ukraine, ensuring that they function as a non-repayable financial resource. Backed by profits from frozen Russian assets and international guarantees, the mechanism provides support to Ukraine without burdening its financial future.

The ERA may later be replaced by a “Reparations Credit” of up to €130 billion. Under this mechanism, funds secured by frozen Russian assets would be used by Ukraine, while the legal claim to them would remain with the Central Bank of Russia. Repayment of these funds would become possible only if Russia were to pay reparations—an extremely unlikely scenario. The overall amount of financing will depend on Ukraine’s budgetary needs as verified by the IMF and may be lower than the announced €130 billion, with disbursements made in tranches rather than as a single payment.

Additional flexibility in EU funding may be provided through the Flexibility Instrument and the Single Margin Instrument—mechanisms outside the Ukraine Reserve designed to respond to unforeseen events and shifts in political priorities within the overall EU budget. They allow the EU to exceed pre-established budgetary ceilings. The Flexibility Instrument allows the annual mobilization of up to €2 billion (in 2025 prices), as well as additional resources drawn from unclaimed balances of previous years, including savings and fines. These funds may be used to address new crises or needs that were not anticipated during the budget’s formation. The Single Margin Instrument enables the carryover of unspent funds from previous years to finance additional needs in the future. Together, these instruments play a crucial role in maintaining the flexibility, stability, and resilience of the EU budget—allowing, among other things, the financing of additional assistance to Ukraine or responses to external shocks.

The above-mentioned instruments and mechanisms will help address Ukraine’s key needs—from postwar reconstruction and defense to the implementation of reforms, including those related to European integration. However, these funds will not be sufficient to meet all of Ukraine’s future requirements—either for maintaining its defense capability or for achieving full-scale reconstruction and recovery.

In addition, despite the prospect of substantial financial support, the MFF 2028–2034 documents contain no direct references to Ukraine’s accession to the EU during this period. The primary mechanism through which EU budget funds will be directed to Ukraine—the Ukraine Reserve—is a long-term support instrument for a candidate country, without any definitive political decision on membership during 2028–2034.

EU priorities for supporting Ukraine in 2028–2034

The areas of support for Ukraine proposed in the EU budget for 2028–2034 outline the overall framework for the Union’s long-term engagement in the country’s postwar recovery, transformation, and gradual alignment with European Union standards as a candidate state. In this context, the main areas of EU financing in Ukraine are expected to include the following:

• Financial stability and budgetary support. The EU will likely continue to employ instruments of macro-financial assistance and direct budgetary support to maintain the functioning of public finances, fulfill social obligations, and advance key reforms.
• Reforms and European integration. The main priorities for reform will continue to include public administration, justice, anti-corruption policy, and the rule of law. Funding will be directed toward legislative harmonization, digitalization of public services, development of local self-government, and the strengthening of institutional capacity as prerequisites for EU membership.
• Reconstruction and modernization of infrastructure. In line with the EU’s foreign policy priorities for 2028–2034, investments are expected to focus on rebuilding and upgrading energy, transport, water, and digital infrastructure. These projects will align both with national recovery plans and with EU priorities for green transformation, digitalization, and economic integration.

Political and economic significance

Ukraine’s inclusion in the EU Multiannual Financial Framework (MFF) for 2028–2034, facilitated through the Ukraine Reserve instrument, represents a significant step toward institutional convergence with the European Union. The declared funding of up to €100 billion over seven years demonstrates the EU’s commitment to providing long-term financial support to Ukraine as a candidate country. For the first time, at the level of a strategic budgetary document, Ukraine has been designated as a permanent beneficiary—integrated into the EU’s financial architecture.

At the same time, the volume of funding provided—despite its political significance—is considerably smaller than Ukraine’s estimated financial needs. According to the World Bank’s RDNA4 assessment, Ukraine’s total postwar recovery requirements exceed $524 billion (€506 billion) over a ten-year period. Moreover, the KSE macroeconomic forecast (July 2025) indicates that the annual deficit of Ukraine’s general budget fund in 2025–2027 may reach $35–40 billion, while additional financing needs for the defense and security sectors are estimated at no less than $20 billion per year.

Thus, the funding provided under the Ukraine Reserve—amounting to €100 billion (€14 billion annually)—together with a portion of the €30.5 billion from the European Peace Facility, will be directed toward Ukraine’s reconstruction, including budgetary support, infrastructure recovery, reforms, and defense capability. However, this anticipated funding may prove insufficient in the event of a protracted war or a deterioration in the security environment, which could lead to a shortfall of financial resources needed to safeguard Ukraine’s fiscal stability and security in the years ahead.

The MFF 2028–2034 regulation allows for the revision of financial parameters in the event of EU enlargement; however, it does not yet include any formal commitments concerning Ukraine’s accession to the European Union.

Recommendations for the government of Ukraine

To fully realize the opportunities opened to Ukraine by the new EU Multiannual Financial Framework (2028–2034), the government must act in a comprehensive and coordinated manner. This requires not only securing funds but also establishing a system capable of managing them effectively and demonstrating results that align with the EU’s priorities and Ukraine’s strategic interests.

First and foremost, Ukraine should begin developing an integrated portfolio of priority projects for 2028–2034 in the areas of postwar recovery, modernization of critical infrastructure, defense capability, and green and digital transformation, ensuring that these projects are aligned with the key mechanisms of the Ukraine Reserve, the European Peace Facility (EPF), SAFE, and other relevant instruments. It is essential to institutionalize a national coordination platform for engagement with EU budgetary instruments—combining the functions of project selection, application preparation, financial management, monitoring, reporting, and anti-corruption auditing—and operating under the principle of shared management, as practiced in EU member states. At the same time, the regulatory, administrative, and financial framework should be aligned with European legislation in the areas of public procurement, fiscal management, regulatory impact assessment (RIA), justice, energy, and sustainable development.

It is important to establish an integrated system for assessing the impact of European assistance on Ukraine’s economy—specifically its effects on GDP growth, employment, tax revenues, reform implementation, and the country’s overall resilience. Such a system would provide the basis for substantiating future funding requests. Ukraine must learn to work with EU financial instruments as a full participant in the Union’s budget process, applying medium-term planning, performance indicators, and strategic frameworks.

Cooperation with European institutions should be strengthened to increase and prioritize funding for Ukraine’s urgent needs—both during the war and throughout the reconstruction period—with particular attention to the protection of critical infrastructure, defense, energy resilience, and social stability.

Conclusions

The new seven-year EU budget (MFF 2028–2034) will open significant financing opportunities for Ukraine. The European Union has proposed establishing a special financing instrument—the Ukraine Reserve—set out as a separate budget line within the EU’s MFF and intended for a country that is not yet a member of the Union. Its total volume will amount to up to €100 billion, provided in the form of grants and guarantees. These funds are likely to be directed toward supporting the state budget, reconstruction, and the implementation of reforms necessary for EU accession. No other candidate country has ever received such extensive and flexible support.

In addition to the Ukraine Reserve, other important sources of financing will likely remain available to Ukraine, including:

• European Peace Facility (EPF)—at least €11 billion for weapons, ammunition, and training for the Armed Forces of Ukraine
• The new SAFE instrument—for investments in security infrastructure
• Flexible response reserve instruments—the Flexibility Instrument and the Single Margin Instrument, which allow funds to be rapidly directed to urgent needs

According to the draft MFF, Ukraine may receive a total of €130–150 billion between 2028 and 2034—around €100 billion as budgetary support and the remainder through off-budget mechanisms. However, access to these funds will not be automatic. Each financing instrument is linked to specific conditions that are standard for candidate countries and, more broadly, for states seeking integration into the European Union—from strengthening the rule of law and combating corruption to aligning national legislation with EU standards and ensuring the transparent use of resources.

Therefore, Ukraine must already begin operating as a full participant in the EU budget process. This entails not only having plans in place—clearly defined priorities, preparation of corresponding budget programs, and the like—but also developing an integrated portfolio of projects in the areas of recovery, infrastructure modernization, and green and digital transformation. These projects should be prepared in accordance with EU program methodologies and include clear objectives, performance indicators, financial estimates, and monitoring mechanisms.

In parallel, it is necessary to institutionalize the system for managing EU assistance—from establishing a national coordination platform with functions for project selection and oversight to implementing European standards of financial management, public procurement, and policy impact assessment.

A key requirement will be transparent auditing—shifting to joint procedures with European auditing and anti-corruption institutions, integrating abuse-prevention mechanisms, and implementing electronic systems for monitoring the use of funds. At the same time, the government should continue aligning its legal and administrative framework with EU norms, thereby enabling the standardization of budgetary, managerial, and oversight processes.

The success of these steps will determine not only Ukraine’s ability to use the resources of the Ukraine Reserve effectively but also the level of trust it enjoys from the European Union. In fact, Ukraine is gradually becoming a participant in the EU budget process even without formal membership—a powerful political signal, though not a guarantee of automatic accession. Nevertheless, such financial integration lays the groundwork for future membership, provided that Ukraine proves its ability to manage substantial European resources and implement reforms in a systematic manner.

The volumes of funding provided may change through the expansion of existing or the creation of new off-budget mechanisms; however, this will require fulfilling the conditions of previous programs and maintaining Ukraine’s status as a priority partner of the European Union. It should already be recognized that even the resources allocated in the EU budget for 2028–2034 will not fully cover Ukraine’s needs: according to the latest World Bank estimates, the country’s recovery requirements over the next decade amount to approximately $524 billion.