Ukraine Lost $1.2 Billion to Fraud in 2024 as Kyiv Now Faces a Budget Gap Topping $27 Billion

Ukraine's government spent the first week of September 2026 doing two things at once: begging lawmakers and the IMF for more money, and explaining why $1.2 billion of last year's defense budget went to fraud and waste.

According to New York Times reporting, secret military audits uncovered a procurement system riddled with mismanagement in 2024, with $1.2 billion lost to fraud and waste in that year alone. The same reporting found that companies flagged in those audits kept receiving new weapons contracts anyway. No U.S. or Ukrainian source in this reporting has named specific individuals charged as a result of those 2024 audit findings.

A Budget Hole That Keeps Growing

Ukrainian Prime Minister Serhii Koretskyi told the Verkhovna Rada on Sept. 1 that the government faces a $27 billion budget deficit, according to Kyiv Post and Ukrainian outlet ua.news. He said Kyiv has identified Hr 70 billion, roughly $1.6 billion, in savings from non-defense spending, all of which will be redirected to the military. Koretskyi said pensions and salaries will not be touched and promised a "detailed audit" of the Defense Ministry's own spending.

Three days later, Finance Minister Serhii Marchenko gave a worse number. According to Ukrainian National News (UNN), Marchenko warned the deficit could reach $32.6 billion and said non-military payments may face delays. Marchenko called on European Union countries to use frozen Russian assets to close the gap. Neither Koretskyi's $27 billion figure nor Marchenko's $32.6 billion figure is reconciled in these sources. The discrepancy itself signals how fast the fiscal picture is deteriorating.

Ukraine approved a record defense budget in June, adding Hr 1.56 trillion (about $34.7 billion) to bring 2026 military spending to roughly $98 billion, per Kyiv Post. Koretskyi attributed the shortfall to rising costs of advanced weapons and Defense Ministry overspending in the first half of the year that ate into money earmarked for the second half.

Zelenskyy's Inner Circle Under Pressure

President Volodymyr Zelenskyy dismissed Iryna Mudra, a deputy head of his presidential office, on Aug. 19 as anti-corruption investigators pursued a money-laundering case involving another deputy head of the same office, according to the Associated Press as cited by Fox News Digital. Investigators have not named Mudra as a suspect, and no charges against her have been reported.

Separately, Ukraine's National Anti-Corruption Bureau (NABU) and the Specialized Anti-Corruption Prosecutor's Office (SAPO) are conducting a probe at Sense Bank, according to ua.news, which also reports the National Bank of Ukraine has launched unscheduled inspections over possible interference with financial monitoring. The Cabinet of Ministers has suspended the chair of Sense Bank's supervisory board. No verdict or conviction has been reported in that case.

Washington's Answer: 24 Agencies

Fox News Digital reported that the U.S. has committed $67.8 billion in defense articles and services to Ukraine from February 2022 through March 2026, through the Presidential Drawdown Authority, the Ukraine Security Assistance Initiative, and Foreign Military Financing. Roughly $195 billion total has been appropriated for Operation Atlantic Resolve, according to the Council on Foreign Relations, covering weapons replenishment, U.S. military operations in Europe, and economic and humanitarian aid.

Carrie Filipetti, a former Deputy Assistant Secretary of State now with the Vandenberg Coalition, told Fox News Digital that "over 24 federal agencies are involved in oversight" of that aid and that "U.S. contributions are very much protected." Filipetti's defense of the oversight architecture is a fair and standard one: multiple federal agencies do formally track drawdown authorizations and end-use monitoring for U.S.-provided weapons.

Fox's reporting focuses entirely on U.S.-side controls over American-supplied equipment. It does not address the $1.2 billion in fraud and waste the Times found inside Ukraine's own domestically funded procurement system, money that never routes through U.S. oversight mechanisms in the first place. American weapons transfers may carry strict tracking. Ukraine's internal defense budget, the one now short by tens of billions of dollars, has its own documented fraud problem that 24 U.S. agencies have no jurisdiction over.

What Comes Next

Koretskyi asked the Rada to adopt 44 decisions by Nov. 1, including 26 draft laws, to help unlock foreign financing, according to Kyiv Post. Ukraine is separately seeking $12.7 billion by year's end, including funds tied to an IMF Extended Fund Facility program, according to Roksolana Pidlas, head of the parliament's budget committee. The IMF's own review found Kyiv has fallen behind on structural benchmarks due before the end of summer, tied to $8.1 billion in funding.

Whether the Rada passes those 44 measures by the November deadline, and whether the IMF releases funding despite missed benchmarks, will determine how much of that $27-to-$32.6 billion gap gets filled before what Ukrainian officials are calling a difficult winter.