Outgoing US President Joe Biden is planning to write off around $4.7 billion in taxpayer-funded loans to Ukraine as part of an effort to boost Kiev’s war effort before President-elect Donald Trump takes office in January.
Trump has previously demanded that only loans, not gifts, be provided to Kiev
US Congress has approved over $174 billion in aid packages to support Ukraine in its conflict with Russia.
The latest tranche which was pproved in April, included over $9.4 billion in “forgivable loans” to help fill the gap in Kiev’s budget.
Confirming that Biden is planning to write off half of that amount, or roughly $4.7 billion, State Department spokesperson Matthew Miller said:“ We have taken the step that was outlined in the law to cancel those loans“.
RT reports: Cancelling the debt is in the “national interest of the United States and its EU, G7+, and NATO partners,” the State Department claimed in a letter to Congress dated November 18, according to Bloomberg.
President-elect Donald Trump stated on the campaign trail that he would not oppose Congress approving more aid to Ukraine as long as the assistance is given in the form of loans rather than taxpayer-funded gifts.
Rebranding some of the aid as loans was one of the key adjustments that helped push through the $61 billion April package after a months-long standoff between Republicans and the White House.
Senator Rand Paul has vowed to block the cancellation of the debt, arguing that it places an unfair burden on American taxpayers.
“Tonight, I’m forcing a vote on my resolution to prevent Biden from turning Ukraine’s debt into America’s problem. His proposal places the burden of funding Ukraine’s businesses, farmers, and corrupt bureaucrats on the shoulders of hardworking Americans,” Paul wrote in a statement on X on Wednesday.
The Ukrainian government is almost entirely reliant on Western aid to keep its economy afloat. In September, Kiev adopted its draft budget for 2025, predicting a deficit of 75% and estimating it will need between $12 billion and $15 billion to cover the shortfall.
Ukraine’s public debt exceeded $152 billion as of July, according to the Finance Ministry. The cost of servicing the loans has surged from $900 million to $5.2 billion this year, as calculated by the Russian newspaper Vedomosti after reviewing Kiev’s financial data.
In October, G7 states finalized a separate $50 billion loan for Ukraine, backed by profits accrued from approximately $300 billion in Russian assets currently frozen in the West. Despite US pressure to confiscate the assets entirely, the International Monetary Fund has so far opposed this course of action, fearing it could undermine trust in the Western financial system.