Government to Prioritize Defense, Social Spending Amid Tight Public Finances

Ukraine’s government, led by Prime Minister Serhii Koretskyi, announced that it adopted a decision setting the priority order for state expenditures, as public finances remain under strain during the country’s fifth year of war. In a statement published on Monday, Sept. 28, Koretskyi said that the government will fund mainly defense, pensions, social payments and public-sector salaries, while postponing nonessential spending.JOIN US ON TELEGRAMFollow our coverage of the war on the @Kyivpost_official. “Under these conditions, we continue to adopt strict anti-crisis measures to ensure the most important priorities – defense needs and the welfare of our people,” Koretskyi said. According to him, part of the planned international funding had not yet arrived due to unfulfilled obligations to international partners. The task is clear, Zelensky says President Volodymyr Zelensky confirmed the meeting with the prime minister and Ukraine’s broader diplomatic team shortly after. The government, Presidential Office, and the Ministry of Foreign Affairs were presented with a clear task; to cover Ukraine’s existing defense financing needs. “Everything that can be done together with partners, using partner funds – primarily concerning defense procurement – must be completed 100% by the end of the year,” Zelensky said, adding that full financing must be ensured. He said he expects decisive backing from lawmakers, adding that if the government meets its commitments by Oct. 15 to secure the financing Ukraine requires, parliament must adhere to an equally clear schedule. Other Topics of Interest Russia Reportedly Offers $20M to Locate ‘Madyar’ Soldiers told The Wall Street Journal that Russia is using criminal networks to track Robert Brovdi. New construction and repairs remain on hold The announcement comes as Ukraine already increased the teachers’ salaries by another 20% starting Sept. 1, following a 30% increase earlier this year. For teachers holding in-person classes in frontline areas, an additional payment of Hr. 2,600 ($58) will be retained. Koretskyi said on Aug. 31 that Ukraine will move away from the Unified Tariff Scale – the standardized public-sector pay system – and adopt a model that sets base salaries according to an educator’s position and a benchmark tied to Ukraine’s average wage. The government has also extended a program covering full tuition cost for veterans’ children in the 2026-27 academic year on Sept. 8. However, spending deemed less urgent will now be put on hold, including new construction, reconstruction and major repairs that are not critically important, as well as public amenities such as parks, squares, fountains and street repaving.ž Koretskyi said the projects will be carried out later, but resources must now go to critical areas. “It is time, finally, to stop spending money on non-priority items,” he said, urging local self-government bodies to set similar priorities in their own budgets and to cut spending that is not currently essential. $27B defense shortfall During an interview for the “Yedini Novyny” national telethon on Sunday, Sept. 27, Koretskyi reiterated that Ukraine’s defense budget is short of $27 billion. The government plans to cover about $7 billion of that gap through a strict austerity regime, including expenditure optimization and reallocation of funds. Military pay and support for soldiers’ families will be provided in full. The remaining $20 billion is expected to come from international partners and Western mechanisms. “These funds are critically needed to equip the Defense Forces with drones, missiles, vehicles and other means,” Koretskyi said. Despite the budget deficit, pensions and salaries for doctors and teachers must be paid on time and in full, he said, adding that Ukraine has no other option. Koretskyi pledged that by Oct. 15 the government will adopt all decisions required to receive the international aid partners have promised. He again called on lawmakers, regardless of political affiliation, to pass the bills on which external financing directly depends, saying each step should be judged by whether it “leads to the survival of the state, the nation, our sovereignty.” Interceptor production As one of the key tasks, Koretskyi named scaling up production of interceptors to counter Russian jet-powered drones, which Moscow increasingly relies on to strike Ukraine nationwide. The jets are significantly harder to intercept due to their high speed, which can reach up to 400-600 kilometers per hour (230-270 miles per hour). To speed up production, the government is easing conditions for manufacturers, cutting red tape and expanding financial support through credit instruments, Koretskyi said. As of Sept. 19, Ukrainian forces have developed and successfully deployed a new interceptor drone to destroy Russian jet-powered Shahed strike drones. Meanwhile, US President Donald Trump said he made a “final decision” to grant Ukraine the licenses to domestically produce Patriot interceptors it urgently needs to protect itself against Russian ballistic missiles. On Sept. 8, Ukraine announced that it was signing contracts with partners for the supply of about 1,000 Patriot missiles ahead of the winter. Around the same time, Germany announced it would urgently transfer the PAC-2 missiles to Ukraine from its own Bundeswehr (German military) stocks. Bracing for winter Ukraine is entering its fifth winter significantly better prepared than last year. According to Koretskyi, the country has built more generating capacity, provided more critical facilities with backup power, increased protection for critical infrastructure and expanded its reserves of equipment, spare parts, repair crews and machinery. However, Russia has also adapted, Koretskyi said, pointing to jet-powered Shaheds and the stockpiling of ballistic missiles and rockets. “It will not be easy, but we have no option other than to hold out,” he concluded. Beyond the Patriots, Koretskyi urged European partners to deploy their emergency services, including equipment and personnel. On Sept. 27, European Commission President Ursula von der Leyen announced almost €710 million ($809 million) in EU support for displaced people and crisis relief worldwide, €52 million ($59 million) of which will be allocated to Ukraine ahead of winter. Less than 10 days earlier, European Pravda reported that an EU-proposed €100 billion ($115 billion) funding package for Ukraine remains largely undisputed in negotiations on the bloc’s upcoming seven-year budget, spanning from 2027-34. Around the same time, the EU disbursed €3.3 billion (roughly $3.7 billion) to Ukraine for the procurement of missiles and drones. Separately, the EU approved a €6.1 billion ($7 billion) defense package for Ukraine on Sept. 11, allowing Kyiv to purchase the PAC-3 Patriot interceptors. According to von der Leyen, the EU has already mobilised nearly €15 billion (approximately $17 billion) to Ukraine in 2026 alone.