President-elect Donald Trump had advocated for providing Ukraine with loans instead of outright grants.
President Biden has approved the cancellation of approximately $4.7 billion in US loans to Ukraine, a move designed to strengthen the country’s position before President-elect Trump assumes office. This decision is part of a larger effort to support Ukraine in its ongoing conflict with Russia, following over $174 billion in aid approved by Congress since February 2022. The April aid package, exceeding $9.4 billion, included these “forgivable loans” to address Ukraine’s budgetary needs.
“The cancellation of these loans aligns with the provisions of the law,” State Department spokesperson Matthew Miller stated on Wednesday, confirming the $4.7 billion debt forgiveness.
The State Department, in a letter to Congress dated November 18th (as reported by Bloomberg), justified the debt cancellation as being in the “national interest of the United States and its EU, G7+, and NATO partners.”
During his campaign, President-elect Trump indicated he wouldn’t oppose further aid to Ukraine, provided it came in the form of loans rather than grants. This distinction played a crucial role in securing passage of the $61 billion April aid package after protracted negotiations between Republicans and the White House.
Senator Rand Paul has pledged to block the debt cancellation, arguing it unfairly burdens American taxpayers. “I’m forcing a vote to prevent Biden from shifting Ukraine’s debt onto American taxpayers,” Paul declared on X (formerly Twitter) Wednesday, highlighting the impact on American citizens.
Ukraine’s economy heavily relies on Western aid. Its 2025 draft budget projects a 75% deficit, requiring $12 billion to $15 billion to cover the shortfall. Ukraine’s public debt surpassed $152 billion in July, according to the Finance Ministry, with loan servicing costs skyrocketing from $900 million to $5.2 billion this year (as per Vedomosti’s analysis of Kiev’s financial data).
G7 nations recently finalized a separate $50 billion loan for Ukraine, secured by frozen Russian assets valued at approximately $300 billion. Despite US pressure for full asset confiscation, the IMF opposes this, fearing it would damage confidence in the Western financial system.
Moscow has condemned the asset freeze as “theft,” warning that utilizing these funds would be unlawful and create a dangerous precedent. Russian Finance Minister Anton Siluanov vowed retaliatory measures on Wednesday. “If Western countries use our assets, Russia will take appropriate action,” he stated.