Government reshuffles budget to free up UAH 107 billion for army

30 March, 06:45 PM
Ukraine's Finance Minister Serhiy Marchenko (Photo:Finance Ministry of Ukraine)

Ukraine's Finance Minister Serhiy Marchenko (Photo:Finance Ministry of Ukraine)

The Cabinet of Ministers of Ukraine has made changes to the country’s budget, freeing up some UAH 107 billion (EUR 3.3 billion) to provide additional funds for the nation’s military needs.

Military spending is a priority for the government’s financial planning as of now. Finance Minister Sergiy Marchenko said, Ukrainian-based news agency  Interfax Ukraine reported on March 30

“Public spending (amendments) have been passed, that’s more than UAH 1.5 billion (EUR 47 billion). Under martial law, our government has all the powers to restructure, sequester and prioritize our spending policy. As of now, we’ve sequestered (funds) at the scale of UAH 107 billion,” Marchenko said.

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“We cut funding of non-prioritized directions, freeing up some UAH 107 billion, which went to the budgetary reserve fund. Then these funds will be used to support the army and to be spent on other short-term needs,” Marchenko added.

According to him, Finance Ministry is preparing another decision to cut budgetary spending. Funding for the country’s army and its defensive operation against Russian aggression is a priority.

“The only types of spending that are conducted are short-term and necessary for the functioning of government institutions,” Marchenko said.

The budget revision was announced earlier by Prime Minister Denys Shmygal. He said the scale would be greater than UAH 107 billion, with additional cuts in spending of UAH 70 billion (EUR 2.2 billion).

The Ukrainian economy has a large public sector, with the list of country’s largest employers including the Ministry of Education, Ukrzaliznytsya, the government-run railway company, and Ukroboronprom, the state-owned defense holding.

The Cabinet of Ministers is prioritizing the fulfillment of all the liabilities it has for the employees of the public sector payroll.

On March 30, the government has launched a nationwide social program providing payments at a scale of UAH 6,500 (EUR 200) to each Ukrainian citizen employed as a private entrepreneur or through any other legal mechanism. To get such a payment, one should have the Diya digital app installed on his or her phone.

Besides, the Cabinet of Ministers is extended a lending line for private businesses within the 5-7-9 lending program that includes a break on servicing such a debt, and a 0% interest rate for some.

According to the European Business Association, a lobby group, small and medium enterprises have been the most badly hit by Russia’s war against Ukraine.

Thirty-two percent of those employed at small- and medium-sized enterprises have only enough funds to survive for a few more months. Another 22% say they will be able to stay afloat for not more than one month. Some 9% could stay afloat for six more months, while only 5% say they would able to survive for more than a year. Some 24% of SMEs do not have any substantial financial reserves.

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