By Olena Harmash
KYIV, Oct 19 (Reuters) – Ukraine’s parliament gave initial approval on Thursday for the 2024 budget, which will increase funding for the army and national defence because of the war with Russia.
Finance Minister Serhiy Marchenko said the government’s priorities next year included accumulating funds for defence and security, and securing social payments for the population “to bring Ukraine’s victory closer.”
The budget law, which was approved in its first reading, sets budget revenues at 1.7 trillion hryvnias ($46.4 billion), and spending is targeted at 3.3 trillion hryvnias, lawmaker Yaroslav Zhelezniak said on the Telegram messaging app.
The budget deficit is expected to be about 1.6 trillion hryvnias, he said.
Officials have said that about half the state budget is planned to go to the defence sector next year.
Marchenko told Reuters last week that donor “tiredness” was growing as the war with Russia dragged on but that he would continue working with international partners to raise the necessary funds to close the budget gap.
Ukraine has attracted nearly $34 billion in Western financial aid so far this year after receiving $31 billion in 2022.
Last year, the economy shrank by about one-third as millions of people fled the war, towns and cities were bombed, logistics routes and supply chains were disrupted, and the power sector and critical infrastructure were damaged by air strikes.
But nearly 20 months after Russia’s full-scale invasion, Kyiv says businesses in Ukraine have adapted to the new reality and is cautiously optimistic about the economic prospects for the rest of this year and 2024.
The government has forecast economic growth of about 5% next year after an expected increase of 4.7% this year.
Kyiv finances its defence spending with revenues from taxes, duties and domestic borrowing, while Western aid helps it to fund social and humanitarian spending.
This year the government had initially planned to spend 1.1 trillion hryvnias on defence but has twice had to increase spending on army.
The budget is still to be approved in the second reading by parliament.
(Editing by Timothy Heritage)