TRANSFORMATION OF THE EXPENDITURE STRUCTURE OF THE STATE BUDGET OF UKRAINE UNDER WARTIME CONDITIONS: ANALYSIS, RISKS, AND WAYS OF OPTIMIZATION

Abstract

The article examines the transformation of the expenditure structure of the State Budget of Ukraine under the conditions of full-scale armed aggression by the Russian Federation. The essence and scale of structural deformations in budget expenditures are revealed, characterized by an unprecedented increase in the share of defense spending and a relative reduction in funding for the social sector, education, healthcare, and infrastructure development. The dynamics of the functional structure of Ukraine's State Budget expenditures for the period 2021–2026 are analyzed, which made it possible to identify key trends in the redistribution of budget resources from a "welfare state" model to a "security state" model. It is established that the share of defense and security expenditures exceeds 50% in 2026. A comparative analysis of Ukraine's budget expenditure structure with corresponding indicators of NATO and EU countries is conducted. International experience of post-war budget reconversion is examined using the examples of countries that experienced prolonged armed conflicts. Long-term socio-economic risks associated with chronic underfunding of human capital, degradation of social infrastructure, and growing budget dependence on external assistance are identified. The necessity of developing a strategy for phased budget reconversion is substantiated, envisaging the gradual restoration of funding for social functions of the state while maintaining a sufficient level of defense and security expenditures after the end of the war. Ways to optimize the expenditure side of the budget system for post-war recovery are proposed, including: the use of program-based performance budgeting with integrated efficiency assessment; diversification of recovery funding sources through public-private partnership mechanisms; clear prioritization of budget expenditures with analysis of their efficiency and effectiveness; and strengthening the audit of budget spending to prevent misuse and inefficient allocation of funds. The proposed ways to optimize the expenditure side of Ukraine's budget system have practical value, and their implementation will contribute to the effective post-war recovery of the country.