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Kyiv Eyes 16-Percent Hike In Defense Spending, As Peace Talks With Moscow Loom

By RFE/RL's Ukrainian Service September 15, 2019

As Kyiv seeks to meet Russia, Germany, and France by the end of the month for talks on the armed Donbas conflict, Ukraine's Prime Minister Oleksiy Honcharuk unveiled the first draft of next year's state budget that foresees a 16-percent spike in defense spending.

Speaking at a briefing with Finance Minister Oksana Makarova on September 15, Honcharuk said defense spending would reach $8.7 billion when taking into consideration the 2020 budget's currency exchange rate of 28.2 hryvnyas per U.S. dollar.

Kyiv has been embroiled in a war with Kremlin-backed separatists since April 2014 who have been often documented by monitors from the Organization for Security and Cooperation in Europe (OSCE) to be equipped with the latest Russian weaponry.

In August 2014, ex-President Petro Poroshenko's administration introduced a 1.5-percent automatic salary deduction from monthly salaries to contribute to the defense budget as Kyiv sought to upgrade its outdated Soviet-style army and confront a foe who was at times been better equipped during key battles in the easternmost Luhansk and Donetsk regions.

Current President Volodymyr Zelenskiy's administration has indicated that it wants to cancel the mandatory defense budget deductible. It's not clear whether the current draft of the budget includes such a provision.

Honcharuk said the budget has been registered with parliament and should be worked over by November 2.

"We're focusing on security and defense, infrastructure and quality road repairs, and put the individual at the front and center of the state's development – we need to finish reforming education and health care," Honcharuk said.

Ukraine has to service nearly $18 billion of debt next year and is looking to earn $200 million from the sale of state-owned assets.

Honcharuk will also revise economic forecasts in October before he expects parliament to vote on the budget in its second and final reading on November 2. Parliament will debate the budget in its first reading this upcoming week.

The International Monetary Fund is visiting Kyiv this month to assess the new government's policy intentions. Ukraine is seeking a longer-term lending program to replace the current $3.9-billion package that expires at the end of the year. Only $.1.4 billion has been disbursed in the current program.

With reporting by Novoye Vremya, Ukrayinska Pravda, and Bloomberg

Source: https://www.rferl.org/a/kyiv-eyes-16-percent -hike-in-defense-spending-as-peace-talks -with-moscow-loom/30165539.html

Copyright (c) 2019. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.