By Olena Harmash
KYIV (Reuters) – Ukrainian parliament voted on Tuesday to amend the 2023 state budget, raising spending by a record amount as Kyiv seeks additional funds for arms and military salaries following Russia’s invasion.
Lawmakers voted to increase budget spending by 537.2 billion hryvnias ($14.7 billion) this year, the finance ministry said.
“In line with the proposed changes, total funds for the security and defence sector will reach 1.67 trillion hryvnias. That’s 26.6% of GDP,” Finance Minister Serhiy Marchenko said.
“Approval of the draft law will allow Ukraine to continue counter Russia’s armed aggression effectively.”
Government officials have previously said Ukraine spent 1.48 trillion hryvnias on its defence sector last year.
The ministry said in a statement that 518.2 billion hryvnias would go towards military wages and special equipment. Roksolana Pidlasa, head of the parliamentary budget committee, said the special equipment would include drones.
A further 19 billion hryvnias is to be set aside for a reserve fund.
Russia’s war on Ukraine has had a huge economic impact. Ukraine’s gross domestic product fell by about 30% last year, critical infrastructure has suffered heavy damage, cities have been ruined and millions of Ukrainians have fled abroad.
The budget deficit is unprecedented, and the government relies heavily on Western aid to finance some key social spending. Ukraine’s budget deficit is expected to reach $38 billion this year.
The finance ministry plans to finance higher budget spending with foreign and domestic borrowing, and envisages higher revenues paid as dividends for its stakes in state-owned companies.
Ukraine also confirmed receipt of 1.5 billion euros ($1.62 billion) as the second tranche under an 18-billion-euro European Union programme.
“Since the start of 2023, the total volume of direct budget support from the EU has reached 4.5 billion euros. The macrofinance support is a considerable contribution to ensuring financial stability and speeding up victory in the war,” said Marchenko.
The changes to the 2023 budget, the second amendments made so far this year, will be confirmed once signed by President Volodymyr Zelenskiy.
($1 = 0.9278 euros)
(Reporting by Olena Harmash, Editing by Timothy Heritage)
