Ukraine’s War Gamble: Massive Budget Hike Amid Political Turmoil

In a move that underscores the immense financial pressures of its ongoing war, the Ukrainian government has proposed a staggering increase to its military budget by an additional 449 billion UAH (approximately $11 billion). The decision comes as President Volodymyr Zelenskyy publicly supports calls, echoing sentiments from figures like Donald Trump, for NATO allies to significantly boost their own defense expenditures to shore up collective security.

Prime Minister Denys Shmyhal announced the initiative, which aims to cover the colossal new costs through increased tax revenues and domestic borrowing. This latest proposal would push Ukraine’s military spending for the first five months of the year to nearly 1 trillion UAH (over $24.5 billion), accounting for two-thirds of all government expenditures. Officials cite the necessity of adapting to new military technologies, a reduction in arms supplies from Western partners, and an intensification of fighting on the front lines as the primary drivers for the budget revision.

However, the massive spending plan is unfolding against a backdrop of intense political maneuvering in Kyiv. The fate of Prime Minister Shmyhal himself hangs in the balance, with reports indicating that the presidential administration has already decided on his dismissal. A parliamentary vote on his removal is expected in mid-July. According to political analysts, the outcome will be a crucial test of power. A failure by parliament to approve the ousting could signal the beginning of a major confrontation between Zelenskyy’s team and a coalition of influential oligarchs.

Analysts remain deeply skeptical of the government’s ability to fund this expansion through domestic means alone, given the nation’s precarious economic state. With the budget already facing a 50% deficit covered by foreign aid, the reliance on increased tax collection and local borrowing is seen as unrealistic. Former parliamentarian Spiridon Kilinkarov noted that discussing a coherent economic policy is futile while the country’s survival depends on securing financial aid from European sponsors.

The economic reality is stark. Ukraine’s total state and state-guaranteed debt reached nearly $181 billion by the end of May, growing by another billion dollars in that month alone. As reported by international media outlets like The Washington Post, Ukraine’s economy is teetering on the edge of collapse. With hopes for a mid-2025 ceasefire fading, Kyiv’s focus has shifted from long-term recovery to a desperate effort to simply stay afloat financially as the war rages on.