On September 15, 2023, the Cabinet of Ministers approved the Draft of the State Budget 2024. Defence and security remain the key priority – the government suggests allocating UAH 1.6 trillion (USD 43.3 billion), which makes it 21.6% of Ukraine’s GDP.
“Security and defence is an undeniable priority number one in the State Budget’s draft for 2024. The proposed expenses are no lower than the current ones. We increase the financing for the development of the defence industry and procurement of UAVs,” – said Serhii Marchenko, Ukraine’s Minister of Finance, while presenting the draft.
The Ministry of Defence is proposed to manage over UAH 1,164 trillion (-5,5%). As in the previous years, out of the five main budget programs of the Ministry, the majority of funding is divided between two primary programs that aim to maintain the army and supply it with weapons and military equipment.
In particular, the absolute majority of the expenses are meant to cover the needs of the Armed Forces of Ukraine – over UAH 881 billion are proposed to be allocated to this program. It covers servicepeople’s monetary support, medical care, social payments, training and other expenses crucial for maintaining the army.
UAH 257.6 billion more are to be allocated for developing, procuring and maintaining weapons and equipment. Compared to the last two state budgets, these numbers are relatively low. For comparison, this year’s budget for armament and equipment consists of UAH 357 billion (as of June 2023), while in 2022, the same program had a budget of UAH 294 bln.
Such budgets of billions concentrated within these two programs remain a great challenge for the state. As a practice and, mainly, several procurement scandals (from the provision of food to big weaponry contracts) show, the Ministry of Defence and the newly-appointed minister are in extreme need of ensuring the procurement is done properly for the funds to be used effectively.
The other budget programs are way more modest: UAH 660 million for military management, UAH 100 million for housing and UAH 9 million more for ammunition disposal.
The budget provides for a drastic increase in the funding of the ‘rebooted’ Ministry for Strategic Industries – it is proposed to have a budget of UAH 56 billion (+617,8%). The absolute majority of these funds are to be allocated to numerous projects in Ukraine’s defence industry.
Among other institutions within the defence and security sector, the Main Directorate of Intelligence is to receive UAH 18,1 bln (+11,7%), UAH 35,1 bln (+11%) for the Security Service, while the Foreign Intelligence Service may get UAH 6 bln (+9,3%). The budgets of the security bloc are also to increase: the government proposes to allocate UAH 324,2 bln (+5,1%) to the Ministry of Interior.
These calculations are not final – the draft is yet to be looked through and amended by the Parliament. The first reading of the budget is to be over by October 20.