ANALYSIS OF BUDGET FINANCING OF NATIONAL DEFENSE

Abstract

Government funding of national defense in Ukraine should be up to the mark, but the over-allocation of budget resources for social services caused the substantial underfunding forces in Ukraine. The escalation of hostilities in eastern Ukraine significantly complicated the country’s defense and led to change budget priorities – the emphasis focused on defense, despite the difficult economic situation in the country, which negatively affected the performance of budgetary performance. Given this, the Government has been adjusted fiscal policy in 2014-2016 gg., Decided that a number of the most pressing issues, including those related to state defense, which was manifested in the growth of budget spending for this sector. The most important indicators that reflect the desire of the state to provide the necessary conditions for the country’s defense is the amount and level of expenditure on defense. Expenditures for national defense of the state in economic terms are unproductive nature, since they do not contribute to GDP growth. Along with the defense of the country – one of the most important constitutional functions of the state, due to the need to ensure its sovereignty, independence and territorial integrity needs to protect its interests in the international community. Therefore, the absolute justification of expenditures on national defense, their structures are priority issues. Financing costs on defense in Ukraine is the principle of minimum sufficiency. Ukrainian legislation stipulates that the funding needs of national defense at the expense of resources of the State Budget of Ukraine and shall not be less than 3% of the planned GDP. Analysis of state spending on national defense during the period reflects a clear tendency to increase their total amount is more than 2.5 times from 14.8 billion UAH in 2013 to 52 billion UAH in 2015 and the most important they have achieved in 2015 primarily due to an increase by 35.5 bln. UAH., or 299.7% of expenditures on military defense. During the study period the state budget expenditures on defense increased by 350.4%, which allowed to significantly increase their share of the state budget expenditures in 2015 to 9.0%, against 3.07% in 2013, and their share in GDP to 2.63% against 1.02% in 2013. This tendency to outstripping growth during 2013-2015. expenditure on defense (350.4%) of the total expenditures of the state budget of Ukraine (143.0%) GDP (136.1%). The defining challenge in the financing of defense is that the country must simultaneously solve two problems: security and defense capability and economic growth. Funding of National Defence is currently at critically low levels and is not sufficient for full engagement potential of the domestic military-industrial complex needs to ensure the modernization of the Armed Forces of Ukraine. In terms of military aggression against Ukraine, these costs should be increased in all directions as the current needs of the army (in connection with the partial mobilization) and the technical modernization.