Ukraine announces funding package to boost defence manufacturing

The Government of Ukraine has revealed a new package of investments to boost the country’s manufacturing capacity and acquire new defence materiel. 

A total of UAH10.84 billion (GBP183 million) is being made available from a Special State Budget Fund established in 2025 to finance the package, according to a government announcement on 28 May. 

Of this funding, UAH1.79 billion is being allocated for technology implementation, expanded manufacturing capacity, and “sector reform”, while the remainder is for undisclosed weapons purchases. 

The Ukrainian Ministry of Defence (MoD) says that this will help to lay “a solid foundation for the long-term development of domestic defence production.”  

Beyond the initial benefits of localised defence production – cutting timelines and reducing reliance on external sources – the push to develop domestic manufacturing capacity is in line with policies like the “Made in Ukraine” programme, designed to boost the country’s economy.  

Prime Minister of Ukraine, Yulia Svyrydenko, said in a Telegram post that the funding was accumulated from income tax and fees on the gambling sector to bolster the country’s war effort. 

She emphasised that the government is directing “all internal resources” to support its defence forces.  

Ukraine’s MoD has not responded to DSEI Gateway’s request for comment on what weapons would be acquired or what “sector reforms” are planned, at the time of publication. 

An ongoing effort 

This latest announcement comes amid an ongoing push in Ukraine to ensure reduced reliance on imports, through a bolstered defence industrial base. 

Ukraine’s government set a target in July 2025 for the country to produce 50% of its defence materiel needs domestically within six months. 

That particular target was met in early 2026, with domestic production capacity having increased “50-fold” since the start of the full-scale war in February 2022. 

Other efforts to bolster Ukraine’s industrial capabilities include: 

• The “Build with Ukraine” initiative, launched in 2025, promoting the creation of joint ventures, particularly with European companies 
• The country’s defence export approach, unveiled in April 2026, aiming to strengthen Ukraine’s industry by allowing companies to grow through exports 

Despite these efforts, Ukraine has an ongoing external requirement for more US-made Patriot missiles because of their ability to defend against ballistic attacks. 

Much of Ukraine’s supply of Patriot systems is being acquired on its behalf via supporting countries, but the missiles are also in high demand in the Gulf region amid the conflict with Iran. In an effort to mitigate this, Ukraine recently announced that it is working on its own ballistic missile interceptor programme.