Ukraine amends 2024 budget to channel more funds for defense

Ukraine has also increased the pace of mobilization and needs more funds to pay soldiers’ wages. (FILE/AFP)

• Ukraine spends most of its state revenues on funding the national defense effort
• The government plans to increase a war tax paid by residents to 5% from the current 1.5%

KYIV: Ukraine’s parliament amended the 2024 budget on Wednesday, raising defense spending by an additional 500 billion hryvnias ($12 billion) as the war against Russia rages on after nearly 31 months.
Yaroslav Zheleznyak, a lawmaker from the Holos party, said total budget spending for this year had been increased to a record 3.73 trillion hryvnias ($90 billion).
As Ukrainian troops defend more than 1,000 km (620 miles)of front lines, demand for ammunition and weapons is growing and more money is required. Ukraine has also increased the pace of mobilization and needs more funds to pay soldiers’ wages.
Ukraine spends most of its state revenues on funding the national defense effort, and relies on financial aid from its Western partners to be able to fund pensions, public sector wages and other social spending. The finance ministry said that total budget spending was up by nearly 11 percent, reaching 2.1 trillion hryvnias in the first eight months of the year.
The spending included about 965.8 billion hryvnias on soldiers’ wages, ammunition, equipment and other military needs, it said in a statement.
To raise additional funds for the army for the rest of the year, the government plans to increase taxes and will borrow more from the domestic debt market, the finance ministry said.
Kyiv has also agreed a deal to restructure over $20 billion of international debt, saving about $11.4 billion over the next three years.
The government plans to increase a war tax paid by residents to 5 percent from the current 1.5 percent, and will introduce additional war-related taxes for individual entrepreneurs and small businesses. It has already increased some import and fuel duties.
Parliament has given its initial approval to the planned tax hikes and is expected to vote for the bill in the final reading later this month or in early October.
Tax changes are expected to bring about 58 billion hryvnias to the budget this year and about 137 billion next year, officials have said.