Ukraine’s Accounting Chamber has warned that allocating 73% of Ukraine’s budget for defense carries risk.

Auditors identified several risks to economic stability, including a decline in the number of individual entrepreneurs, volatility in the foreign exchange market, and inflationary pressures. Olga Pishchanska, Head of the Accounting Chamber, stated that executing the budget remains difficult due to the war, citing challenges like logistics problems, population displacement, and infrastructure damage.

For January to March, real GDP growth was just 0.5%, significantly lower than the annual 2.7% forecast, raising concerns about meeting budget revenue targets. Key factors behind this decline include an 8.7% decrease in exports, particularly in food and iron ore. However, the share of products with high added value rose to 15.2%.

In the first quarter, state budget expenditures reached ₴1.2T, reflecting a 38.5% increase from the previous year. A significant 73.5% of these funds was allocated to the defense and security sector. Additionally, total state debt grew by 2%, amounting to ₴7.1T. One-sixth of total state budget revenue was spent on servicing this debt, though these expenditures were 15% lower than anticipated.