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20 January, 2022
What will the Ukrainian army not receive in 2022?
In 2022, the Ministry of Defence needs UAH 129 billion. This is evidenced by the budget request. The state budget exceeded these expectations and financed the Ministry by more than UAH 133 billion. Yet, is this enough to fully provide for the Armed Forces of Ukraine?

 

Record UAH 133 billion for the Ministry of Defence


In recent years, there has been considerable interest in the Ministry of Defence budget. The governmental agency's estimate grows almost every year: only in the last four years, it has increased by UAH 30 billion.

There were many questions about the Ministry of Defence's costs during the budget preparation for 2021. In particular, the governmental agency's estimate remained almost the same as the previous year, which ceased the upward trend. At the same time, budgets of security structures like the Security Service of Ukraine and the Ministry of Internal Affairs have grown significantly. However, this year the situation has normalized, and the estimate of the Ministry of Defence has grown to more than UAH 130 billion. This is a record for Ukraine.

According to the budget request, the Ministry needed UAH 129 billion. We are talking about the necessary minimum to provide funding for the Armed Forces of Ukraine. In order to fully cover the needs for salaries, food, healthcare, and social guarantees and, of course, armaments, the army additionally needs another UAH 151.5 billion.
 

"The Maximum Plan": how to make the Ministry happy?

 
Additional funding is required for all budgetary programs of the Ministry. However, the largest amount of money is needed for arming: over UAH 80 billion. It is not just a question of purchasing, but also of developing, repairing, and improvement of existing military equipment. For example, an additional UAH 6.7 billion would have allowed the restoration of 1,230 weapons units. More funding would also allow purchasing 230 armored vehicles and more than 2,300 vehicles instead of the planned 50 and 39, respectively. In addition, "the Maximum Plan" of the Ministry of Defence provides for the purchase of 90 unmanned aerial vehicles (UAVs). This could significantly reduce the burden on volunteers, since they are the ones who continue to regularly purchase drones for the army on a large scale.

Additional UAH 64 billion is needed to secure the Armed Forces, including UAH 26 billion needed for labor expenses. Monetary and social guarantees of service men and women definitely need improvement. And increased costs on logistics could help overhaul more than 3,000 facilities, buy 65,000 body armor vests and helmets each, and provide 11,000 additional combat ration packs for service men and women. 

The Ministry of Defence estimates that this year, the housing queue should have been reduced by 2,000 to about 43,000 service men and women (this is indicated in Form 2022-3, clause 1-2-1. on page 25 of the budget request). How, in fact, is currently unknown. Additional funding for housing would allow providing another 5,100 service men and women and their families with housing. In particular, the Ministry of Defence of Ukraine could buy more than 1 thousand apartments on the secondary housing market and receive more than 3 thousand new apartments built on defence lands. However, the 2022 estimate data are quite modest: the Ministry of Defence will only be able to buy 352 apartments on the secondary housing market and receive 169 new ones.

The Ministry-controlled State Special Transport Service also needs additional funding — UAH 1.2 billion, and about a half of this amount needs for salaries. The least amount of money is needed for the disposal of ammunition – another UAH 34 million.
 

Record 47%: is it much or little?

 
Between the first and second reading of the draft State Budget, funding for the Ministry of Defence increased from UAH 129 billion to over UAH 133 billion. This is more than the governmental agency asked for in a request. Yet, if we take into account the need for additional funding, then this amount does not look so large. In fact, this year the Armed Forces of Ukraine is provided for by at least 47%. However, such 47% is a record for the Ukrainian budget.

The Budget Request provides for not only justified costs for the following years for each Ministry and its programs. It can also describe the risks of underfunding and offer alternative ways of additional revenues. However, there are no such alternatives in the Budget Request of the Ministry of Defence. 

This document also provides a forecast in respect of costs for the next two years. It is assumed that in 2023 and 2024, the Ministry's "Minimum Plan" could return to the 2020 level, namely UAH 116 billion. At the same time, the forecast in respect of the "Maximum Plan" is not so modest: the estimate could reach UAH 150-200 billion. However, there are no proposals for alternative ways to implement budget programs for the next few years either.

The odds are that the estimate of the Ministry of Defence may stop at the "Minimum Plan" of UAH 116 billion, and soon the budget for 2022 will be nostalgically recalled as a budget of the "record 47%". 

Viktoriia Vyshnivska,

NAKO Communications and Advocacy Manager

LB.ua