Government Approved Draft Law on Increasing State Budget Expenditures in 2023 by UAH 328.5 billion to Finance the Defense and Security Sector

Today, on September 12th, the Cabinet of Ministers of Ukraine has approved the draft Law of Ukraine "On Amendments to the Law of Ukraine "On the State Budget of Ukraine for 2023" aimed to provide financial support to the Defense and Security sector and address priority matters".

The Draft Law was developed to allocate additional resources to the Defense and Security sector and to address other priority needs of the state.

The Draft Law proposes to increase State Budget expenditures by UAH 328.5 billion, including UAH 322.5 billion for the general fund and UAH 6 billion for the special fund.

The following general fund expenditures are forseen by the Draft Law:

- UAH 302.6 billion is allocated for the Defense and Security sector, in particular:

• UAH 211 billion to the Ministry of Defense;

• UAH 79.2 billion to the Ministry of Internal Affairs;

• UAH 0.6 billion to the State Special Communications Service;

• UAH 4.2 billion to the Security Service of Ukraine;

• UAH 4.4 billion to the Ministry of Strategic Industries;

• UAH 2.5 billion to the Defense Intelligence of Ukraine;

• UAH 0.5 billion to the Foreign Intelligence Service;

• 0.2 billion UAH to the Department of the State Protection of Ukraine.

- other expenditures - UAH 19.9 billion, including UAH 16.5 billion to the Ministry of Social Policy to support IDPs, as more than 2 million people currently receive housing allowances for internally displaced persons and the number of such persons is constantly increasing.

The special fund provides for an increase in expenditures by UAH 6 billion (due to an increase in revenues under the EU budget support programmes) to ensure the implementation of infrastructure restoration projects.

The proposed increase in expenditures is to be financed by:

• reduction of the general fund expenditures based on the proposals of the main spending units of the State Budget in the total amount of UAH 11.4 billion, including savings of UAH 10.7 billion from the amount of payments on public debt servicing;

• increase of revenues by UAH 26.1 billion (general fund - UAH 20.1 billion, special fund - UAH 6.0 billion due to the increase of revenues under the EU budget support programmes).

It is also envisaged to increase the volume of state borrowings from the general fund by UAH 298.8 billion:

• external borrowings by UAH 207.6 billion (U.S. support in the amount of USD 3.3 billion);

• domestic borrowings by UAH 91.2 billion.

At the same time, the volume of public debt repayments increased by UAH 8.2 billion, including a UAH 23.6 billion increase in domestic debt repayments and a UAH 15.4 billion decrease in external debt repayments.

In addition, the Draft Law provides for a budget programme of the Ministry of Energy to provide financial support to businesses in the fuel and energy sector in the amount of UAH 350 million.