Ukrainian defense industry seeking export permissions for surplus weapons amid record budget

On November 19, the Verkhovna Rada approved the State Budget for 2025, with a record expenditure of 3.94 trillion hryvnias ($95.8 billion). The expected revenue is 2.3 trillion hryvnias ($55.9 billion), and Ukraine aims to cover the budget deficit with partner assistance, amounting to $38.4 billion (approximately 1.6 trillion hryvnias at the current exchange rate).

"All taxes from citizens and businesses next year will be directed towards the defense and security of our country. The total resources allocated to the security and defense sector will amount to 2.23 trillion hryvnias ($54.2 billion)," said Prime Minister Denys Shmyhal.

Despite the increased funding, Ukrainian weapons manufacturers claim that these funds do not fully utilize their production capacities. A potential solution could be obtaining permission to export weapons during the war. Various government branches are already prepared for such a decision and are discussing the parameters of export and communication strategy.

Sectoral parameters

In 2025, the state plans to increase funding for defense needs by 2.2%, or 47.6 billion hryvnias ($1.2 billion) compared to 2024. Defense expenditures are expected to reach 26.3% of GDP. Specifically, spending on armaments and military equipment will increase by 4.8%, or 34.1 billion hryvnias ($829 million) compared to 2024.

"Record funds will be allocated for the production and procurement of weapons. We have allocated 739 billion hryvnias ($18 billion) for this purpose. There will be more funding for the modernization of our defense-industrial complex and the procurement of drones," explained the head of the government.

Additionally, expenditures for the Ministry of Strategic Industries will increase by 38% in 2025.

"Funding for the Ministry of Strategic Industries, which is responsible for modernizing the defense-industrial complex, will increase to 55.1 billion hryvnias ($1.3 billion). This is 15.3 billion hryvnias ($372 million) more than in 2024. These funds will be used for technological upgrades of production capacities, enhancing the country's defense capabilities," said Minister of Strategic Industries Herman Smetanin.