Situation with financing defense sector will have negative consequences for industry and for Ukraine’s defense capability - Belbas
The situation with the financing of the defense sector, when manufacturers and suppliers are being blamed for the lack of funds, will have negative consequences for the industry and for Ukraine's defense capability.
Vladyslav Belbas, CEO of Ukrainian Armor LLC, writes about this in his column "The Price of Ukrainian Weapons: How the Government Shifts Budget Problems to Manufacturers" for Ukrainska Pravda, Censor.NET reports.
According to him, the situation with the erosion of working capital, underfunding and the deprivation of the possibility of revising the real exchange rate during the execution of contracts threatens both the fulfillment of many contracts and the survival and development of enterprises.
"Sooner or later, both state-owned and private companies will not be able to fulfill their contracts, they simply will not have enough safety margin," Belbas says.
He also noted that the Defense Procurement Agency is already creating artificial advantages for itself by cutting off other Ukrainian companies from supplying to it, using non-market mechanisms of regulation introduced into the regulatory framework.
"This is a direct way to destroy competition, create a monopoly position for the Agency and uncontrolled activities. And, as you know, a monopoly opens the way to corruption schemes and higher prices for products," warns the CEO of Ukrainian Armor.
According to Belbas, in the long run, this situation will necessarily lead to a decrease in the volume of imported products, and for manufacturers - a decrease in production due to lack of working capital, resulting in a decrease in budget revenues, loss of qualified specialists, lack of new innovations and development.
The director general of Ukrainian Armor emphasizes that defense companies, including the private sector, have shown tremendous growth during the war years without any government support and have made large contributions to the budget.
"No one is asking for support from the state, only fair rules are needed," Belbas states.
