Government to Prioritize Defense and Social Spending Amid Tight Public Finances

Ukraine's government, under Prime Minister Serhii Koretskyi, has set a priority order for state expenditures amid the country's ongoing war. The government will focus on funding defense, pensions, social payments, and salaries for public-sector employees, while postponing nonessential spending. This decision comes as public finances remain strained during year five of the conflict.

President Volodymyr Zelensky confirmed the government's task to secure defense financing, stating that international funding not yet received due to unfulfilled obligations to partners must be addressed by the end of the year. Koretskyi expects decisive backing from lawmakers, with parliament required to follow a clear schedule to meet this deadline.

The government has also extended a program covering full tuition costs for veterans' children in the 2026-27 academic year. However, less urgent projects such as construction, reconstruction, and public amenities will be put on hold. Koretskyi emphasized the need to prioritize critical areas and urged local self-government bodies to adopt similar priorities in their budgets.

The defense budget shortfall of $27 billion is expected to be covered by a strict austerity regime, with the government planning to secure about $7 billion through internal optimization and reallocation of funds. The remaining $20 billion is anticipated to come from international partners and Western mechanisms.