US to send $4.5 billion more to Ukraine for budget needs

The United States will provide an additional $4.5 billion to Ukraine's government, bringing its total budgetary support since Russia's February invasion to $8.5bn, the US Agency for International Development said on Monday (8 August).

The funding, co-ordinated with the US Treasury Department through the World Bank, will go to the Ukraine government in tranches, beginning with a $3bn disbursement in August, USAID, the Agency for International Development, said.

It follows previous transfers of $1.7bn in July and $1.3bn in June, USAID said. Washington has also provided billions of dollars in military and security support. The Pentagon announced a $1bn arms aid package on Monday.

Overall, the United States has contributed more than $18bn to Ukraine this year.

The new budgetary funds are to help the Ukrainian government maintain essential functions, including social and financial assistance for the growing poor population, children with disabilities, and millions of internally displaced persons, as the war drags on.

Ukrainian officials estimate the country faces a $5 bn-a-month fiscal shortfall - or 2.5% of pre-war gross domestic product - due to the cost of the war and declining tax revenues. Economists say that will swell Ukraine's annual deficit to 25% of GDP, compared with 3.5% before the conflict.

The World Bank estimates that 55% of Ukrainians will be living in poverty by the end of 2023 as a result of the war and the large numbers of displaced persons, compared with 2.5% before the start of the war.

USAID said US budget support has enabled the Ukrainian government to keep gas and electricity flowing to hospitals, schools and other critical infrastructure and deliver urgently needed humanitarian supplies to citizens.

The funds have also paid for health-care workers, teachers and other civil servants.

USAID said robust safeguards had been put in place by the World Bank, along with USAID-funded, third-party watchdogs embedded within the Ukrainian government to make sure the funds are directed where they are meant to go.

“This economic assistance is critical in supporting the Ukrainian people as they defend their democracy against Russia’s unprovoked war of aggression," US Treasury Secretary Janet Yellen said in a statement.

The injection of fresh cash for Ukraine comes as the war, which Russia calls "a special military operation," stretches into a sixth month, with millions of Ukrainians displaced and authorities warning of likely gas shortages in winter.