War on credit and $10 thousand for every Ukrainian: how Anatoliy Amelin explains Ukraine’s debt trap
The growth of public debt for a country at war means increasingly tighter pressure on the State Budget, which is forced to simultaneously finance the army, social benefits, medicine, education, and the basic functioning of the state. The larger the debt, the less room the government has for its own decisions, because an increasing part of the funds is directed in advance to payments to creditors. The consequences of this situation will be felt by Ukrainians through taxes, budget restrictions, reduced opportunities for recovery, and the transfer of the financial burden to future years.
Anatoliy Amelin, Director of Economic Programs at the Ukrainian Institute for the Future analyzes Ukraine’s public debt as a problem that already goes beyond the limits of current budget policy. The growth rate of borrowing and the cost of servicing it are bringing the country to the point where it will be necessary to talk about reviewing the terms of repayment themselves.
The economist asks the questions that he considers the most relevant for the coming decade: “So, dear Ukrainians, how will we repay our debts?”
He gives basic figures that determine the scale of the problem. If in February 2022, Ukraine’s state debt amounted to about $95 billion, then on January 1, 2026, according to the data he provided, it reached $213.3 billion. Over four years, the increase amounted to $118 billion, that is, the debt increased 2.2 times.
“The Ministry of Finance predicts $240 billion by the end of 2026. And by 2028–2029 we will approach the mark of $290–300 billion ($10 thousand for each Ukrainian, including children). I repeat the question, what will we pay back?
Trump tried to present us with $350 billion in debt (but we don’t pay attention to it).
In 2025, interest on the debt was – $11.5 billion (!) Pensions and all social security – $10.16 billion.
For the first time in modern Ukrainian history, the state pays creditors more than pensioners.
Full service together with the repayment of the body – $26.6 billion, or 42% of all own budget revenues – those that the state collects within the country (!)
Almost every second hryvnia that the state collects from the economy today goes to creditors.
Not for the army. Not for schools. Not for hospitals…”, – the expert emphasizes.
To show how acute he considers the Ukrainian situation, Amelin makes a comparison with Poland and Turkey. In the case of Poland, he cites a debt level of about 55% of gross domestic product and interest expenses at the level of approximately 2.2% of gross domestic product. Polish discussions about debt, he notes, already look serious, although they are talking about a burden that would look much milder for Ukraine. At the same time, he mentions Turkey as another example of a country where debt service is also perceived painfully, although the ratio there, in his assessment, is far from the Ukrainian scale. Due to such parallels, the expert concludes that for Kyiv the problem has long crossed the line of ordinary budgetary hassle and has approached a state that he calls a debt hole.
Amelin formulates his opinion most harshly on the widespread scenario where the state tries to compensate for the debt pressure by increasing the tax burden. In his opinion, in an economy weakened by the war, such a step triggers a chain of deterioration: businesses go into the shadows or move their activities outside the country, the budget receives less, the deficit grows, and the debt continues to swell.
The expert notes: “We have nothing to pay off our debts. And raising taxes for this is not a solution. It will get even worse.” He then cites the examples of Argentina and Lebanon, which, in his opinion, have followed a similar trajectory and ended in default, the destruction of the middle class, and a protracted economic recession. Because of this logic, he rejects the idea that the debt burden can be gradually absorbed by conventional fiscal means. The problem should be solved at the level of negotiations on the terms of return, otherwise the country will approach a forced scenario.
A separate node of the economist’s argument concerns the nature of the debt itself, which has grown over the years of the invasion. Amelin interprets these $118 billion as a direct price of Ukrainian defense, and therefore as a price of security for the wider European space. He proceeds from the fact that Ukraine spent the resource not on luxury or unsuccessful economic experiments, but on a war that the entire civilized world recognizes as jointly significant.
From here follows his main thesis: the increase in military debt must either be covered by the countries that benefit from this protection, or written off in whole or in part. A burden of such magnitude, he believes, cannot be shifted to a society exhausted by war, losses, falling incomes, and military spending by households.
In this part of the text, Amelin offers a very clear choice scheme: “Either we will have a civilized solution. Or default. Unfortunately, there is no third option.”
The expert supports his position on the possibility of debt write-off with historical examples. He recalls that over 300 sovereign restructurings have been documented over 200 years, and the average write-off level in such agreements, according to his data, was 45%, while the median value was 38 percent. For him, this is an argument in favor of the fact that write-off is a common tool for getting out of the debt trap, and not something exceptional.
Anatoliy Amelin then moves on to specific cases. In 1953, he recalls, the Allies wrote off half of Germany’s debt. In 1991, Poland received a large-scale write-off of bilateral and commercial debt in exchange for reforms and a course towards the European Union. In 2004, Iraq, with the support of the United States, had 80 percent of its debt written off through the Paris Club. Through these examples, he makes a simple point: big geopolitical decisions have repeatedly outweighed the rigid logic of a full return of every dollar when the stability, reconstruction, and security of entire regions were at stake.
After historical examples, Amelin moves on to specific parameters that, in his opinion, could reduce the pressure on Ukrainian finances. He calls the target interest costs on the state debt up to 3–4% of gross domestic product. This corresponds to financially healthy countries, while Ukraine already has about 5.5% of its gross domestic product in interest alone.
From here he derives a list of negotiating demands. Among them are the cancellation of at least 30–50 percent of the official bilateral debt of the G7 countries, the extension of payments on the remaining debt for 20–30 years, as well as a separate approach to loans within the framework of the ERA mechanism. These $50 billion should be repaid exclusively from frozen Russian assets, because they were attracted for the needs of the war, which was not a choice of Ukraine for its own benefit.
However, the expert is cautious about the rapid use of Russian assets, recalling the lack of a legal basis, litigation and political uncertainty surrounding negotiations between major players, so he suggests preparing for a tougher scenario, without laying these funds as a guaranteed solution.
A separate place in the expert’s argument is occupied by the time factor. According to Amelin, the window for serious negotiations is open until March 2027, while the agreements within the GCU stand-still and the International Monetary Fund program are in effect. After that, conditions for Ukraine will worsen, and each year of delay will bring another $40–50 billion in new debt.
The expert concludes his opinion with a sharp negotiating formula that he believes is understandable to creditors: “50% now — or 0% later. The choice is theirs.”
In this presentation, Amelin builds a coherent structure: Ukraine’s war debt arose as a defense payment, the burden on the State Budget has already reached a dangerous level, he considers fiscal belt-tightening a dead end, and he sees the only realistic way out in a big talk about restructuring and write-offs. Within this logic, the question for him is extremely tough — either the creditors agree to a civilized revision of the terms, or the country is approaching default, which will not benefit anyone.
