Arms makers in Ukraine sign first 26 deals in program that lets them lease equipment for 5% of cost, with state paying other 95%

Ukraine's defense manufacturers have entered into the first 26 deals under a leasing program that allows them to rent new equipment with the option to purchase, while the state covers a majority of the expenses. The preferential leasing scheme has thus far allocated approximately $2 million, with producers paying just 5% of the leasing fee and the state covering the remaining 95%.

Deputy Defense Minister Hanna Hvozdiar stated that the bottleneck for many Ukrainian arms manufacturers is not orders but the funds to expand rapidly to meet these demands, and the program serves as the state's response. Producers can lease various equipment, machinery, automation, transportation, and even factory space, paying 5% annually with the state subsidizing the rest, up to $11 million per contract over five years.

The state caps the borrower's rate at 5%, and lease payments can be deferred for up to a year, alleviating the financial burden. Only companies labeled as "critically important" in the defense sector by the state, deemed essential to the war effort, are eligible to participate. The 26 deals are merely the initial phase, with the program still accepting new applications.

The three banks authorized to run the leasing are Ukreximbank, PUMB, and MTB Bank. The Defense Ministry launched the program in April, naming these banks as the first authorized lessors. In August, the ministry detailed the range of leased equipment, encompassing machines, mobile production platforms, technological gear, and non-residential real estate required for plant operations.

The leasing program is part of a larger initiative to inject funds into Ukraine's defense industry to enable faster and increased production. The government has been implementing financing tools targeted at the sector, including a venture fund expansion proposed by former Defense Minister Mykhailo Fedorov.