Kryvyi Rih, the hometown of Ukrainian President Volodymyr Zelenskiy, is struggling to survive. Russian airstrikes have brought the city's huge steel plant and mines to a standstill, dragging the local economy to its knees — and the financial squeeze on the city of about 600,000 people underlines a national crisis: Ukraine is navigating its biggest budget shortfall since Russia's full-scale invasion in 2022, with the war now costing about $190 million a day.
What have the strikes done to industry?
Last month, the city's largest employer — ArcelorMittal's mining and steelmaking complex — suspended its operations following a series of Russian ballistic missile strikes that darkened its furnaces. Mayor Oleksandr Vilkul, a former mining executive, said in a video address that the city was doing everything possible to keep hospitals open, lights on in kindergartens and schools, and buses running.
"In Kryvyi Rih, the situation is actually worse than anywhere else, apart from the front line itself," Vilkul said. "It's about survival. Right now, we need to survive."
It is a scene playing out across Ukraine's once-mighty steel industry, which accounted for a tenth of economic output before the war. Giant mills in Zaporizhzhia in the southeast and other industrial cities stand silent and exports have stopped. An escalation in Russia's drone and missile strikes this summer destroyed factories and warehouses across Ukraine, damaged ports and railways, and forced shops and businesses to close, slowing economic growth and tax revenue.
Agriculture — Ukraine's largest source of export revenue — has been particularly hard hit. Russian attacks on Ukraine's Black Sea ports led to a 36.6 percent fall in grain exports year-on-year in September. About $40 billion in export revenue is at risk this year as a result of the effective blockade, Economy Minister Oleksandr Kravchenko said.
How expensive has the war become?
Two years ago, a single day of fighting cost Ukraine $140 million. That figure has jumped to $190 million, according to Roksolana Pidlasa, the head of parliament's budget committee — and that does not include direct military support to Kyiv from its Western allies.
Rising costs are driven partly by the need for expensive medium- and long-range weapons capable of striking Russia's oil refineries and military factories to reduce Moscow's ability to continue its war. The wage bill for an expanded army is higher than ever before, and the state must support a growing number of military families of disabled or deceased soldiers. "Expenditure will continue to rise," Pidlasa told a conference in Kyiv. "This is one more pragmatic reason why the US and Europe need to act faster to force [Russia] to end this war."
In the first nine months of this year, Ukraine spent more than $44 billion on defense alone — while the government raised only about $42 billion in tax revenue as the economy slowed. Pidlasa said the budget lost over 49.5 billion hryvnias ($1.1 billion) in tax revenue in that period because of Russian attacks that damaged property and goods, disrupted logistics and shut shops and businesses for hours at a time. By year-end, cumulative losses could reach 70 billion hryvnias, the government estimates.
"We have not a temporary but a structural problem with the revenues at the very time when spending really requires resources," said Oleksandra Myronenko, an economist at the Centre for Economic Strategies, a Kyiv-based think tank.
How is Kyiv trying to close the gap?
Ukraine needs $56 billion to fund this year's gap — equivalent to about a quarter of its economic output, of which $27 billion is military spending. To bridge the shortfall, Ukrainian officials met European partners in Brussels last week to discuss bringing forward disbursements due next year under a €90-billion ($101-billion) EU loan. The European Commission and Ukraine said they had identified funds to close this year's gap — but three sources familiar with the talks said accelerating these payments risked increasing budget pressure next year, at a time when looming election campaigns in European allies including France and Poland could erode support for Kyiv.
Billions of euros in foreign loans have also been delayed by failure to pass bills including unpopular tax reforms and anti-corruption legislation demanded by Ukraine's Western allies — leaving $29.5 billion in foreign aid at risk this year. The government postponed about $900 million of capital spending until December, hoping to pass all required legislation in parliament by October 15. "Only then we will get all the money," Prime Minister Sergii Koretskyi said. "This is absolutely vital. It needs to be done as soon as possible."
Koretskyi acknowledged the situation is "challenging": the government has frozen non-essential spending — including reconstruction of damaged buildings and infrastructure — to prioritize military spending, public sector wages and pensions. "All resources should be channelled into critically important areas," he told reporters.
Legislators are now discussing next year's budget. The government has proposed record defense spending of $110 billion — not including direct military aid — and Finance Minister Sergii Marchenko has estimated the unfunded gap for next year at more than $32 billion. Part of the solution, Marchenko said, is to use frozen Russian assets in Europe to fund Ukraine's budget: EU countries immobilized some €210 billion of Russian central bank assets after Moscow invaded Ukraine.
"Ukraine continues to mobilise domestic resources, but the scale of Russia's war puts clear limits on our capacity," Marchenko said.
Even with tens of billions of euros in foreign support, Ukraine's economy is expected to grow only between 0.5% and 1.5% this year, economists say — down from 1.8% in 2025. Some businesses have started scaling back operations, and business sentiment is darkening. "The risks are simply too great right now — both for the business and for the people," said Vasyl Khmelnytskyi, founder of an industrial park near Kyiv, who scrapped plans to build three new factories. Ukraine is bracing for a difficult winter — with its survival now measured in budgets as well as battlefields.
