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Ukrainian defense industry budget 2024: UAH 100bln allocated for weapons and drones

Ukrainian defense industry budget 2024: UAH 100bln allocated for weapons and drones Photo: $3.4 billion will be allocated towards the manufacturing of drones and weapons (Vitalii Nosach, RBC-Ukraine).

The state budget law of Ukraine for 2024, passed by the Verkhovna Rada on November 9, allocates an extra UAH 94.3 billion for the production of weaponry and drones. For further details on defense and weaponry expenses included in the 2024 budget, refer to RBC-Ukraine's article.

The article was prepared using sources such as the budget law text, the press services of the Ministry of Finance and Defense, and statements from Finance Minister Serhii Marchenko and Prime Minister Denys Shmyhal.

The budget allocates funds for the production of weapons and drones

Minister of Finance, Sergii Marchenko, stated that revenue from personal income tax collected from the military will be redirected from local budgets to a special fund within the state budget. The funds will be allocated as follows:

  • UAH 43.3 billion for the production and acquisition of marine drones;
  • and UAVs, and UAH 51 billion for implementing innovative technologies in the defense industry and for weapon manufacturing.

The 2024 budget will have expenditures totaling UAH 3.355 trillion. In total, the defense sector will spend $60.3 billion on security, which represents 22.1% of the country's GDP.

According to Prime Minister of Ukraine, Denys Shmyhal, the budget prioritizes the use of internal resources to withstand and defeat the enemy.

Nearly half of the expenses will be allocated to the defense and security of Ukraine. "We'll have increased weapons and equipment, drones, ammunition, and missiles. Every taxpayer's dollar will support the army," he stated.

The law governing military personnel income tax

On November 8, the Ukrainian Parliament approved a law that redirects military income tax from local budgets to the state budget until the end of the war.

By 2024, the revenue from military personal income tax (totaling UAH 96.3 billion) will be allocated to a special fund within the state budget for specific purposes.

45% of these funds will be set aside for the production and purchase of specialized equipment and machinery, such as drones and marine drones. These purchases will be made by the State Service for Special Communications and Information Protection of Ukraine.

45% will be allocated to the Ministry of Strategic Industry for implementing reform and development programs in the defense industry, introducing new technologies, and manufacturing defense products.

The remaining 10% will be automatically distributed to military units in proportion to their military personal income tax contributions, managed by security and defense sector administrators.

Budget of the Department of Defense

According to the Defense Ministry's press service, their expenses are projected to reach a total of UAH 1.164 trillion, with UAH 862 billion being allocated for the maintenance of both the Armed Forces and the State Special Transport Service. These funds will be utilized towards salary and wage compensation, food, uniforms, ammunition, and personal protective equipment.

UAH 265.4 billion will cover the purchase of weapons, equipment, UAVs, and ammunition, as well as the repair of damaged equipment sustained during the fighting.

UAH 36 billion will be allocated for operating expenses and restoration of the infrastructure of the Armed Forces.

Drone production in Ukraine

The Cabinet of Ministers has allocated $1.5 billion this year to invest in Ukrainian drone manufacturers.

During an interview with RBC-Ukraine, Vice Prime Minister for Innovations, Development of Education, Science & Technologies, Mykhailo Fedorov, stated that Ukraine has increased drone production and the number of drones by more than 100 times compared to last year.

It is worth noting that the Armed Forces of Ukraine currently have over 20 new types of locally-made drones in operation.

In particular, the state-owned company Ukroboronprom has commenced mass production of a novel long-distance attack unmanned aerial vehicle. The drone in question can fly for approximately 1,000 kilometers and is already being produced en masse, with foreign partners also joining in.

Herman Smetanin, the head of the Ukroboronprom state company, stated that Ukraine possesses an equivalent to the Shahed barrage munition and more robust editions with an enhanced combat range.