The ongoing war with Russia requires constant new spending from cash-strapped Ukraine. Now Kyiv has approved budget improvements. Payment of the front surcharges is due soon.
Because of the ongoing war, Ukraine, which was attacked by Russia, has passed a supplementary budget with the equivalent of over ten billion euros in additional spending, mainly for the military. According to local media reports, a clear majority in parliament voted for the law. Household spending will rise by a good 13 percent to the equivalent of over 81 billion euros – a record figure for Ukraine.
The increases in spending are to be financed through higher tax revenues and loans from the European Union, among others. There should also be savings in the social sector. Controversial tax increases are currently being discussed in parliament.
The budget changes were necessary in order to be able to pay soldiers, among other things, front-line surcharges for September. According to Prime Minister Denys Schmyhal, the original budget planning for 2024 only assumed fighting until the end of August. The basis was forecasts from the International Monetary Fund.
The budget plan has so far also been supported by a slow devaluation permitted by the central bank. Since the beginning of the year, the national currency, the hryvnia, has depreciated by a good eight percent against the US dollar and almost ten percent against the euro. Aid money and loans arriving from abroad result in larger sums in hryvnia. A devaluation of another eight percent is already planned for 2025 in the draft budget.
Ukraine has been fending off a Russian invasion for over two and a half years. Since the start of the war, Ukraine says it has received the equivalent of over 88 billion euros in financial aid from abroad.
