Drone and EW equipment manufacturers are now allowed by the government to incorporate loan-related expenses into contract values

Domestic manufacturers of unmanned systems and electronic warfare equipment have been granted the right to include loan-related expenses in the price of government contracts. The Cabinet of Ministers of Ukraine adopted this decision at the initiative of the Ministry of Defence.

Pursuant to the new regulations, contractors are permitted to factor in commissions and interest on loans or borrowings when determining the contract price, provided these do not exceed 10% of the total cost of goods, services, and works. Contractors are required to substantiate the inclusion of these expenses.

“This new financial mechanism will enable Ukrainian manufacturers to produce weapons and technologies in greater quantities, more quickly, and more efficiently. We are scaling up our defense sector and mobilizing additional resources. The outcome will be millions of Ukrainian drones deployed at the frontline,” emphasized Minister of Defence of Ukraine Denys Shmyhal.

This decision is intended to stimulate production and minimize the risk of disruption in arms supplies to the Armed Forces of Ukraine. Additionally, the new measure takes into account the specifics of the defense sector: the lengthy production cycles of drones and EW equipment require government contractors to secure credit financing.

Amendments have been introduced to the Procedure for Procuring Unmanned Systems, Tactical Electronic Warfare (EW) Equipment of Domestic Production, and Their Components, as approved by Resolution No. 1275 of the Cabinet of Ministers of Ukraine dated November 11, 2022.