73% of Ukraine’s state budget in 2025 allocated to defense: economic risks

The Accounting Chamber of Ukraine has released a report on the execution of the state budget for the first quarter of 2025, highlighting significant economic risks. Auditors noted negative trends, including a decrease in the number of individual entrepreneurs, fluctuations in the currency market, and persistent inflationary pressure.

This is reported by AgroReview

Challenges for the state budget

According to the head of the Accounting Chamber, Olha Pishchanska, budget execution is complicated by the ongoing war. Among the main issues are disruptions in logistics chains, population migration, and infrastructure destruction.

“Budget execution remains complicated due to the war: logistics problems, population migration, destroyed infrastructure.”

The real gross domestic product in January-March 2025 was only 0.5% against an annual forecast of 2.7%. This trend may lead to a shortfall in budget revenues. The main reasons were an 8.7% decrease in exports, which particularly affected food supplies and iron ore.

Expenditure structure and state debt

State budget expenditures in the first quarter reached 1.2 trillion hryvnias, which is 38.5% higher compared to the same period last year. The largest share of these funds—73.5%—was allocated to the defense and security of the country.

At the same time, Ukraine’s total state debt increased by 2%, reaching 7.1 trillion hryvnias by the end of the first quarter of 2025. One-sixth of all state budget revenues was used to service the state debt, although these expenses turned out to be 15% lower than planned.

Despite the challenging conditions, the share of high value-added products in the export structure increased to 15.2%. This indicates a gradual development of certain sectors, even during the crisis.