Biden administration rushing to waive $4.6 bn of Ukraine's debt ahead of Trump presidency

The Biden administration informed Congress of its plan to cancel $4.65 billion in debt owed by Ukraine, according to Bloomberg News. The move is the latest effort to bolster Kyiv before President-elect Donald Trump takes office.

The cancellation covers half of a $9 billion loan provided to Ukraine through a $60 billion supplemental package approved in April.

The loan, initially proposed by Trump during his campaign, was later included in the legislation by House Republican leaders. The administration had previously indicated that a portion of the loan would likely be forgiven.

In the letter to Congress dated November 18, the State Department stated the debt cancellation serves US national interests and aligns with the goals of the European Union, Nato, and G7+ partners to support Ukraine in its conflict with Russia, Bloomberg reported.

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Rushing aid to Ukraine

President Joe Biden’s administration has expedited aid to Ukraine, a part of its strategy to reinforce Kyiv’s position before Trump’s return to the White House in January. Kyiv’s allies fear Trump may reduce aid to Ukraine in pursuit of such talks.

Earlier this week, Biden authorised Ukraine to use US-provided long-range missiles against targets inside Russia. On Wednesday, the administration unveiled a new $275 million security package, which includes anti-personnel land mines.

During a visit to Brussels to reassure allies after the election, Secretary of State Antony Blinken said the Biden administration is committed to ensuring Ukraine receives “every dollar we have at our disposal.”

The cancelled debt is separate from nearly $9 billion remaining in weapons assistance, which the administration aims to allocate by the end of Biden’s term.

The remaining funds are intended for defence production contracts, which would deliver equipment directly to Ukraine once completed.

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The incoming Trump administration could choose to cancel some contracts, potentially incurring costs.

Can Republicans block the debt cancellation?

Republican opposition to the debt cancellation plan emerged swiftly. Sen. Rand Paul, R-Ky., said in a social media post that he would seek a Senate vote to block the measure, arguing it unfairly shifts Ukraine’s debt burden onto American taxpayers.

However, his resolution is unlikely to pass in the Democratic-controlled Senate, and Biden could veto it if necessary. Administration officials maintain that the president has the authority to forgive 50% of the loan.

The State Department did not immediately respond to requests for comment.