Outgoing US President Joe Biden has decided to write off about $4.7 billion in taxpayer-funded loans to Ukraine as part of a broader effort to bolster Kiev before President-elect Donald Trump takes office next year.
Since February 2022, the US Congress has approved more than $174 billion in aid packages to support Ukraine in its conflict with Russia. The latest tranche, approved in April, included over $9.4 billion in “forgivable loans” to help fill the gap in Kiev’s budget.
“We have taken the step that was outlined in the law to cancel those loans,” State Department spokesperson Matthew Miller said on Wednesday, confirming that Biden seeks to write off half of that amount, or roughly $4.7 billion.
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.
Moscow has denounced the asset freeze as “theft” and warned that tapping into these funds would be illegal and set a dangerous precedent. Russian Finance Minister Anton Siluanov promised on Wednesday to initiate retaliatory measures mirroring the West’s actions.
“If Western countries have decided to use our assets and income from our assets, the Russian side will also implement appropriate actions,” the finance minister stated.