Ukraine Approves New Budget, Aims To Strengthen Army Amid War With Russia

Ukraine's parliament approved a state budget for next year on Thursday, aiming to strengthen its army and defences as Kyiv battles Russia in a 20-month-old war that has no end in sight.

Budget revenues are set at 1.77 trillion hryvnias ($48.4 billion) while spending is planned at 3.35 trillion hryvnias. Ukraine will face a huge budget deficit of about $43.58 billion in 2024, government officials said.

Next year, more than half of all Ukrainian budget spending is planned for the defence sector to fund the war effort against Russia, which launched a full-scale invasion in February 2022.

"The priorities are clearly set in the budget. All our internal resources will go so we can withstand and win over the enemy," Prime Minister Denys Shmyhal said after the vote.

"Practically 50% of our spending - for defence and security of Ukraine. There will be more weapons and vehicles, more drones, ammunition and missiles. Every hryvnia from a taxpayer will go to the army."

Shmyhal also said the government planned to increase minimum wages and pensions to help millions cope with the rising cost of living during the war.

Lawmakers said 276 deputies voted to support the budget, which also envisages higher spending for the education and health sectors next year.

Finance Minister Serhiy Marchenko said financial aid from Ukraine's Western allies would be key to be able to cover the budget gap and pay for social and humanitarian spending.

The government had already received $35.4 billion this year and about $31 billion last year from its partners.

But getting foreign financial support next year could prove more challenging. Marchenko acknowledged that donor fatigue had grown as the war dragged on.

The government plans for the economy to grow next year, forecasting gross domestic product growth at 4.6% after a nearly 5% increase expected this year.

Last year, the Ukrainian economy shrank by nearly a third as millions of people fled the war, cities and towns were bombed, critical infrastructure damaged and supply and logistics chains severely disrupted.

With the war in its 21st month, businesses and people have adjusted to a new wartime reality. However, risks and uncertainty remain high, the government and analysts said.

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