Preferential leasing for defense industry: Ukraine launches new support program for arms makers

The Cabinet of Ministers has approved a resolution introducing state financial support for defense industry enterprises through a preferential financial leasing mechanism.

That is according to the Ukrainian Defense Ministry's press service, Ukrinform reports.

The ministry said the program provides for the reduction of the lessor's remuneration. As a result, enterprises designated as critically important for the functioning of the economy during a special period in the defense industry will gain access to transport and equipment at reduced rates. This will significantly ease 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% annual interest under financial leasing agreements, with the state compensating the remaining financing cost. This will enable enterprises to invest in expanding production, modernizing equipment, and more rapidly meeting the needs of the military. This mechanism will complement the affordable lending program for arms manufacturers launched in November last year," said Deputy Minister of Defense Hanna Hvozdiar.

The ministry specified that state support will be provided through authorized lessors – banks and leasing companies that meet the criteria set out in the resolution.

Preferential leasing may be used to finance the development, production, repair, modernization, and disposal of weapons, military and special equipment, and ammunition. This includes the purchase and modernization of equipment, vehicles for production and commercial needs, as well as non-residential real estate for business operations.

According to the resolution, the maximum financing amount under a single agreement is up to UAH 500 million, with a term of up to five years. The base remuneration of the lessor may not exceed 23% per annum, and the one-time commission fee is capped at 0.75% of the financing amount.

On December 23, following a motion from the Ministry of Defense, the government approved a package of decisions aimed at strengthening Ukraine's defense industry, including new conditions for the relocation and rapid restoration of production facilities of Ukrainian arms manufacturers.

Photo: Ukrainian Defense Ministry