Ukraine dedicates 60% of the 2025 budget to defence spending

Ukraine's Prime Minister, Denys Shmyhal, stated that the primary goal of the state budget is to safeguard the nation by increasing funding for security forces, purchasing weapons, and boosting the production of drones and military equipment. A substantial portion of the expenditures is dedicated to soldiers' salaries, underscoring the significance the authorities place on the defence sector.

President Volodymyr Zelensky signed a law to raise the war tax for residents to 5 percent starting in December and introduced it for private entrepreneurs. These measures aim to generate an additional €3 billion for the budget, which, as Finance Minister Serhiy Marchenko stresses, is essential for defence funding in 2025.

The new regulations also affect commercial banks, which will now be subject to a 50 per cent tax on profits. Other financial institutions will be required to pay 25 percent. This step is part of the broader effort to mobilise funds for the country's reconstruction and economic development, impacted by war and the mass emigration of citizens abroad.

The escalating conflict with Russia has had a devastating impact on the Ukrainian economy, destroying infrastructure and forcing millions of citizens to emigrate. In response to the increased threat, Russia plans a 30 per cent rise in military spending in the coming year following a previous 70 per cent increase in 2024.