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Ukraine’s Defense Minister Stepan Poltorak said that the budget of the Ministry in 2018 would become a “development budget.” The Defense Ministry considered that it would be good for them to get 5,4 billion USD in 2018, but in the draft State Budget allocated only 3.2 billion USD (2.56% of GDP). 112.ua has received this information from the Defense Ministry (in response to an official request).
"Ministry of Defense and the General Staff carried out calculations for 2018 and determined the needs in the amount of 5.2 billion USD," the letter said.
Is this really a “development budget,” after all, the ministry received almost half of what it wanted, but this is by 20.7% more than in 2017 (last year's defense budget was 2,65 billion USD).
The Draft State Budget of Ukraine for 2018 states that "expenses for the Ministry of Defense of Ukraine are provided in the amount of 3,2 million USD (including 3.1 million USD for the general fund)."
As explained by the ministry's financiers, the budget consists of a general fund and a special fund. All guaranteed payments (of a social nature) are provided at the expense of the general fund, in other words, they are living means, and we are absolutely sure that they are in the budget. Special fund is divided into several levels, both income and expenditure. In other words, these are the means that, perhaps, might be absent. For example, if I as a budget organization have the right to conduct economic activities (to provide any services), I plan my special fund, that is, the means that I can potentially earn or not earn. If they approve my target figures, and I earn this money, then I leave a part to myself (up to 20%), and give the rest of money to the ministry. I can spend my money on the needs of the unit. This is a special fund.
62,5 million USD in the budget for 2018 are identified as a special fund. Where will the money go? There is not enough money for all the army directions, therefore, the Ministry of Defense approved the distribution of target figures for 2018 and identified the following key funding priorities:
- Upkeep of the army: payment of cash, wages, grant for a family in case of death of a soldier, injury and disability payments, food for staff and the purchase of clothing. The state planned to spend 50.6 billion UAH (60.8%) for it. In 2017, this figure reached 1,66 billion USD (62.6%), that is, financing was increased by 17.1%.
Ukraine allocates much money for the maintenance of its troops. This does not mean much money, but in terms of percentage of the entire budget of the Ministry of Defense – these are 60.8%. World practice says that the maintenance of the troops is 50% of the budget of the structure and 30% is the development of weapons and military equipment (WME), and 20% belong to training of the Armed Forces.
The draft budget indicates that 109,5 million USD were allocated for training of military specialists in universities, advanced training and retraining. This is by 26,6 million USD more if compared to the last year.
- Armament and equipment. 631 million USD, or 19.6% of 2018 budget would be allocated for equipment of the troops with modern weapons and military equipment. For comparison: in 2017, 515 million USD (or 19.5% %) went for weapons and equipment. That is, the budget was increased by 21.6%.
"These expenses are supposed to be spent on the restoration of combat capability, maintenance and repair of weapons and military equipment, the purchase of new and modernized military equipment, weapons, automation and special equipment, as well as conducting research and development work on their development," as said in the draft budget.
Expenditures for the disposal of ammunition and ensuring survivability and explosive fire safety of arsenals, bases, and units of the Armed Forces of Ukraine were increased by 7,4 million USD in comparison with 2017. They will amount to 13 million USD.
- Infrastructure. This includes restoration of inviolable reserves, creation of a modern network of military bases and the restoration of infrastructure. 161,5 million USD (5.1%) are envisaged for it. In 2017, 115 million USD (4.4%) went for the same needs, and expenses increased by 46 million USD (or 39.5%).
The draft budget indicates that in 2018, 33 million USD have been allocated for the construction (acquisition) of housing for servicemen of the Armed Forces of Ukraine. Compared to 2017, the budget was increased by 4,1 million USD.
- Exploitation costs: purchase of fuels and lubricants, utilities, medical and sanatorium provision, and etc. 456 million USD (14.5%) are allocated for these needs. In 2017, this figure amounted to 361 million USD (13.5%), the budget increased by 107,7 billion USD (or 29.5%).
Expenses for medical treatment, rehabilitation of the Armed Forces of Ukraine, veterans of military service and their families, war veterans are increased by almost 19,2 million USD in comparison with 2017. The total amount is 92 million USD.
International assistance in the form of non-lethal weapons, humanitarian aid, and foreign instructors are icing on the cake.
White Papers of the Ministry of Defense for 2014 2016 have a conclusion about the budgeting of the army for a given year.
Year 2014: "Increase in the share of expenditures on armaments and military equipment (by 5.7%) was insufficient for proper provision of the Armed Forces. In the conditions of constant, long-term insufficient financing of the Armed Forces, the 2014 increase in the financial resource of the Ministry of Defense reserve fund for 458 million USD did not provide a tangible increase in the level of combat capability of the Armed Forces. Financing activities for the development of military hardware, the restoration of inviolable supplies, the provision of training systems for troops (forces) was at a minimum level. "
Year 2015: "The Armed Forces have begun to be rebuilt: for the first time in recent years, Ukraine has approached to the world practice of spending."
Year 2016: "... the amount of financing of the Ministry of Defense has been increased by 334 million USD (almost 1.2 times) compared to 2015, which has made it possible to meet the needs of the Armed Forces at the minimum necessary level."
Year 2017 has not ended yet, but this year we began to actively implement NATO standards, conduct experiments, and change the system.
We should not forget that Ukraine is carrying out its reforms in the conditions of war. War should not be viewed not as an excuse for slow reforming, but as an incentive to make everything faster. The defense system should not depend on individuals, but work completely by itself.
Obsolete technology, the slow pace of its repair and modernization, a weak level of training of junior commanders are the key challenges of the Ukrainian army. And the Armed Forces are not a competitive employer. A driver in large city receives a higher salary than infantry fighting vehicle driver.
And the most important thing. 5% of GDP is allocated not to the army, as people like to say about it, but to all law enforcement agencies. In fact, the Ukrainian Armed Forces receive about 2.5% of the gross domestic product.