The Cabinet of Ministers of Ukraine has adopted a resolution developed by the Ministry of Defense of Ukraine that introduces state financial support for defense industry enterprises under financial leasing agreements.

The Ministry of Defense of Ukraine reported this on December 26.

The program provides for reducing the lessor’s remuneration. As a result, enterprises deemed critically important for the functioning of the economy during a special period in the defense industry sector gain access to transport and equipment at reduced rates.

Objectives

This will significantly reduce the financial burden on businesses working to meet the needs of the military.

“We are creating a mechanism under which arms manufacturers will effectively pay only 5% annually under financial leasing agreements. The remaining cost of financing will be compensated by the state.

This will allow enterprises to invest in expanding production, modernizing equipment, and more promptly meeting the needs of the military.

This mechanism will complement the affordable lending program for arms manufacturers that was introduced in November last year”, — said Hanna Hvozdiar, Deputy Minister of Defense of Ukraine.

How it will be provided

State financial support through the reduction of leasing payments will be provided via authorized lessors (banks and leasing companies) that meet the criteria established by the resolution, after such lessors implement the necessary internal products. The Ministry of Defense will separately announce the specific institutions that will provide leasing services to arms manufacturers on preferential terms in accordance with the approved resolution.

Support will be provided to finance objectives related to the development, manufacture, repair, modernization, and disposal of weapons, military and special equipment, and ammunition, for the purpose of:

  • acquiring and modernizing enterprises’ fixed assets, including equipment, dual-use technology, and technological machinery;
  • acquiring vehicles for production and commercial needs;
  • acquiring non-residential real estate for business operations.

Conditions

Financial leasing agreements eligible for state support must meet the following conditions:

  • maximum financing amount per agreement — up to UAH 500 million (or the equivalent in foreign currency);
  • maximum contract term — up to 5 years;
  • maximum base remuneration of the lessor — no more than 23% annually;
  • one-time commission for providing leasing services — up to 0.75% of the financing amount.

The Ministry of Defense of Ukraine will continue working on the implementation and scaling of financial instruments that strengthen the capacity of the defense industry.