What will happen to the hryvnia exchange rate and the budget if the West provides less money

How much does today’s hryvnia exchange rate depend on the National Bank, can the state replace international aid with domestic borrowing, and when does the risk of faster devaluation arise. Dilo explains how a budget crisis would affect personal finances and business.

The company’s main forecast is positive: Ukraine will still receive the required $53 billion in external financing. However, most of that amount still needs to be found. Right now there isn’t enough money, and the state is already feeling it: on 12 October Finance Minister Serhiy Marchenko officially announced a budget liquidity crisis.

Why is the dollar exchange rate now determined not by the market but by decisions made at Bankova Street? Let’s explain.

Who actually supports the hryvnia exchange rate

Today the dollar rate in Ukraine depends not only on supply and demand but also on the National Bank’s actions, explains Olena Bilan. If there is a sharp jump, the NBU sells dollars from its reserves to stop panic. That helps as long as the NBU has enough currency. International aid works like a lifeline here. When the government receives dollars or euros from partners, international reserves grow. If aid does not arrive on time, reserves shrink.

On 1 October international reserves stood at $47,1 billion. In September they fell by 3,2% or about $1,6 billion. The NBU says this level is still sufficient to control the market. A decline in reserves by itself does not mean the exchange rate will immediately plunge.

There is no money: budget reality

However, delays in partner funding have already led to a shortage of cash for the state to pay all bills on time. The government prioritizes the military, pensions, and salaries. Everything else is postponed.

About 39 billion UAH of other expenditures were moved to the end of the year.

The Treasury still has pending payments totaling 46 billion UAH.

VAT refunds of 18 billion UAH were simply stopped.

What this looks like in practice. Here is one real-life example — some Lviv street cleaners and tram drivers may not receive their scheduled October salary, Lviv mayor Andriy Sadovyi said at the beginning of the month.

This does serious harm to business. When the state delays VAT refunds, companies do not receive the working capital they expected. The problem is worsened by budget underperformance: in the first nine months of 2026 the treasury did not receive nearly 50 billion UAH, and by year-end this amount could grow to 70 billion UAH.

When will the NBU be forced to let the hryvnia go?

Olena Bilan describes two scenarios. If aid arrives unevenly, the foreign exchange market can cope. But if there is not enough money to cover the budget deficit, the NBU will have to change the terms.

“That could mean faster devaluation to limit reserve losses,” warns the Dragon Capital economist. Simply put, the National Bank would allow the hryvnia to depreciate more quickly to spend fewer dollars supporting it. Bilan says this is only a "Plan B." Analysts’ main scenario assumes financing is received and the exchange rate remains stable.

Where to find $52,6 billion for 2027 year?

The Finance Ministry believes that Ukraine will need $52,6 billion in external financing in 2027. $20 billion of that sum already have confirmed sources. The remaining $32,6 billion (more than 60% of the whole amount) still needs to be found.

Even what has been agreed is not guaranteed. Head of the parliamentary budget committee Roksolana Pidlasa said at a Center for Economic Strategy discussion on 24 September that in order to receive tranches by the end of 2026 the parliament must pass about 40 bills. Deputies’ decisions affect $12 billion in aid, and Pidlasa is not confident the Rada will pass everything in time.

Add macroeconomic risks. Dragon Capital forecasts that Ukraine’s economy will shrink by 0,5% in 2026 and by another 1% in 2027. A weaker economy yields fewer taxes, while military spending remains very large.

Why not just print money or take a loan?

When currency is scarce, two simple but mistaken answers appear.

Option 1: Borrow domestically. The Finance Ministry can sell more domestic government bonds (OVDPs) to banks and the public. But Olena Bilan warns that domestic debt is expensive and short-term, up to three years. If that debt grows, the budget will face even greater pressure in coming years. Western aid mostly comes as grants that do not need to be repaid.

Option 2: Turn on the printing press. Emission already helped the budget in 2022. But NBU Deputy Governor Volodymyr Lepushynskyi said at a CES discussion that printing money is an extreme measure. “Emission does not give the country new real resources,” he says. “It only increases pressure on the foreign exchange market and on prices.” People will lose savings to inflation. Although in theory limited emission could be possible even now under an IMF program, the NBU does not consider it appropriate while there is a chance to get money from partners.

What does this mean for us?

If the pessimistic scenario takes hold and the hryvnia depreciates quickly, importers will be hit first. Goods, equipment, and raw materials from abroad will become more expensive in hryvnia, and that will show up on store price tags. People with hryvnia savings will see their capital decline in dollar terms.

For now Dragon Capital sticks to an optimistic forecast. In 2027 we will all need to be vigilant. To see the direction of the economy, it’s enough to watch four indicators:

The dollar exchange rate.

The rhythm of aid inflows from partners.

The volume of the NBU’s international reserves.

The scale of the National Bank’s foreign exchange interventions.

If the West provides money, the NBU will continue to calmly hold the exchange rate. If money doesn’t come, faster devaluation will become the painful decision that allows preserving at least part of the reserves for survival.