Back in July, the government revised the budget and added 400 billion UAH for defense, but by the end of 2025, about 300 billion UAH for military needs are still lacking. As the media report, the sources to cover these expenses have not yet been determined: domestic borrowing and negotiations with international partners are being considered.
Source: OBOZREVATEL
Since the beginning of the war, international donors have provided Ukraine with $144.7 billion, according to the Ministry of Finance. However, using these funds for military needs is prohibited. In fact, the budget is divided into two parts:
- Defense — formed only from internal resources: taxes, fees, privatization, and domestic borrowing;
- Civil — financed mainly through external assistance and covers education, healthcare, government administration, courts, and social programs.
Despite significant partner support, Ukraine is experiencing a shortage of defense funding. In 2025, the country raised $29.5 billion, of which $21 billion went to civil expenditures. The surplus of $6–7 billion explains why the government is launching social support programs — from the “school package” to grants for private entrepreneurs in the cultural sector.
The main problem is defense spending, financed by taxes and domestic borrowing. Due to heavy funding for weapons and ammunition purchases at the beginning of 2025, the funds allocated for soldiers’ pay at the end of the year were spent in advance. Thus, in July the Ministry of Defense increased the spending plan by another 400 billion UAH through budget overperformance and borrowing. But it has already become clear that this is not enough — an additional 300 billion UAH is required.
Part of the costs is driven by one-time payments to the families of fallen soldiers — 15 million UAH per family. Due to mass exchanges of bodies of the dead, the need for funding has significantly exceeded the plan. Since September, the payment period has been extended from 40 to 80 months to ensure stable support for families.
According to the media, the government is considering two options:
- domestic borrowing — additional issuance of government bonds at the end of the year;
- allowing partners to use part of international aid for defense. An example is the UK’s participation in the ERA Loans program, where funds are already being directed to armaments.
Discussion about this post