Hungary’s position has left Brussels unable to finalise the €90 billion loan to Ukraine, with the first tranches originally expected in April. How serious would a pause in funding be for Kyiv, and could Ukraine cover the shortfall on its own?
Ukraine awaits outcome of Hungarian Elections
12 April 2026 could prove to be a defining moment not just for Ukraine, but for Europe as a whole. Hungary heads to the polls that day in parliamentary elections that could see Viktor Orbán and his Fidesz party lose power for the first time in 16 years. As of late March, the opposition Tisza party was leading by 12 points, on course for 51% against Fidesz’s 39%, according to Politico.
In Brussels, there is a clear expectation: only an Orbán defeat would unblock a unanimous EU decision on the long-delayed €90 billion loan for Ukraine. Hungary remains the sole country to have formally vetoed the package, while Slovakia has limited itself to political objections without triggering legal mechanisms.
In the meantime, Hungary’s pro-Moscow stance has pushed Ukraine to the edge of a severe financial squeeze. Bloomberg estimates that, without fresh assistance, Kyiv could face an acute funding shortfall within two months. The contrast is stark: as Ukraine scrambles for support, Russia is reaping windfall gains from rising energy prices driven by the war in the Middle East.
Orbán and the pipeline – a possible Russian operation?
The €90 billion package — framed as a “loan that does not need to be repaid,” with costs to be covered by future Russian reparations — was approved with much fanfare at the end of 2025. With Ukraine holding sufficient reserves to cover spending in the first quarter of 2026 — including an IMF loan and remaining funds from the G7 ERA programmes and the Ukraine Facility — EU disbursements were expected to begin in April.
That timeline was derailed on 20 February, when Hungary, despite having initially backed the plan, blocked the decision following the controversy around the Druzhba oil pipeline. It is difficult to ignore the possibility that the episode played into a broader Kremlin script: damage to its own pipeline not only disrupts Ukraine’s financing, but also hands Orbán a convenient tool for pre-election messaging.
With no sign that Budapest will shift its position before a new government takes office, April funding is now effectively off the table. In a best-case scenario, the first disbursements could arrive in June. If Orbán retains power, the delay could stretch much further.
European Commission President Ursula von der Leyen insists the money will come through regardless: “The loan is blocked because one leader is not keeping his word. But I repeat what I said in Kyiv: we will deliver on our promise one way or another.”
Even so, Ukraine needs to brace for a difficult stretch — a period when existing reserves begin to run dry and fresh funds have yet to arrive.
Financial damage control tools
For now, there is no immediate cause for panic. Ukraine’s own budget revenues remain intact and continue to cover just under half of total expenditures.
In this situation, the government has two main fiscal tools at its disposal.
The first is cutting spending — a form of budget sequestration. In practice, that could mean temporarily freezing capital projects, delaying payments to public sector workers, or scaling back social support programmes.
The second option is to raise taxes. The government is currently pushing large-scale changes to tax legislation through the Verkhovna Rada, arguing they are needed to maintain support from the International Monetary Fund. The proposals include taxing income from digital platforms, scrapping duty-free exemptions on parcels, introducing VAT for sole proprietors, and locking in the military levy at 5% after martial law ends.
Tax hikes, however, come at a cost. In the middle of a full-scale war, they risk putting additional strain on an already fragile economy. Measures such as VAT for sole proprietors could effectively dismantle the simplified taxation system that has helped Ukraine’s small and medium-sized businesses stay afloat. The paradox is clear: while the IMF and other partners seek to support Ukraine through loans, they are also pushing for policies that could undermine its economic resilience.
For that reason, tax increases look like a blunt and ultimately counterproductive tool. Temporary spending cuts appear the more viable option — particularly if the funding gap proves short-lived.
Cash boost, domestic bonds and other measures
The most immediate way to bridge a funding gap is monetary emission — effectively, printing money. National Bank Governor Andriy Pyshnyi recently told Bloomberg that the NBU stands ready to step up lending to the Ministry of Finance if international assistance is disrupted.
But this is a high-risk option. Printing money is the fastest way to raise cash, yet it carries a significant inflationary threat. Ukraine already went down this path in 2022, when monetary financing pushed inflation above 26%. A return to that policy is clearly undesirable — but it remains a realistic fallback if other options dry up.
Another route is to ramp up domestic borrowing through government bonds (OVDPs). The government could try to draw in more funds from banks and households by raising yields. However, with rates already hovering at elevated levels of 14–17%, it is far from clear how much additional demand such measures would generate.
Beyond that, there is always the option of turning to individual partners. Germany, the United Kingdom, the Netherlands, the Nordic countries, and other consistent allies could step in with loans or grants outside the EU framework if the situation becomes critical. Finding an extra €4–6 billion per month should be within reach. As President Volodymyr Zelenskyy put it: “They will find ways to partially finance us. I believe that in any case, even while finding alternative, temporary solutions, the EU must find a way out.”
Budget reserves to carry Ukraine until summer
Ukraine can rely on its budget reserves for now, but the clock is ticking. Once these reserves run out in June, a funding gap of two to three months could push the country toward a worst-case scenario: a sharp devaluation of the hryvnia and the potential unraveling of the economic stability painstakingly built over the past four years. If EU funds do not start arriving by September, the situation could become truly dire.
For the time being, however, Ukraine has a buffer stretching at least until the end of summer. Combined with the fiscal and financial measures already outlined, this should allow the government to hold the line until the €90 billion loan is finally unblocked.
Much of the uncertainty will be resolved — or compounded — on the night of 13 April, when the first results of Hungary’s parliamentary elections are announced.
