Outgoing President Joe Biden has opted to forgive approximately $4.7 billion in taxpayer-funded loans to Ukraine as part of a larger initiative to strengthen support for Kiev ahead of President-elect Donald Trump’s inauguration next year.

Since February 2022, the US Congress has authorized over $174 billion in various aid packages aimed at assisting Ukraine in its ongoing conflict with Russia. The most recent allocation, approved in April, included more than $9.4 billion in “forgivable loans” intended to address budgetary shortfalls in Kiev.

“We have taken the action specified in the law to cancel those loans,” stated State Department spokesperson Matthew Miller on Wednesday, confirming Biden’s intention to forgive half of that total, approximately $4.7 billion.

The decision to cancel the debt is deemed to be in the “national interest of the United States and its EU, G7+, and NATO allies,” as indicated in a letter from the State Department to Congress dated November 18, according to Bloomberg.

President-elect Donald Trump indicated during his campaign that he would support Congress in providing additional aid to Ukraine, provided that the assistance is structured as loans rather than direct taxpayer-funded grants. This reclassification of some aid as loans was a significant factor in the successful passage of the $61 billion aid package in April, following a prolonged impasse between Republican lawmakers and the White House.

Senator Rand Paul has pledged to obstruct any efforts to cancel Ukraine’s debt, contending that such actions would unfairly burden American taxpayers.

“Tonight, I’m initiating a vote on my resolution to stop Biden from making Ukraine’s debt an issue for America. His plan shifts the responsibility of funding Ukraine’s businesses, farmers, and corrupt officials onto the backs of hardworking Americans,” Paul stated in a post on X on Wednesday.

The Ukrainian government heavily depends on Western assistance to sustain its faltering economy. In September, Kyiv approved its draft budget for 2025, forecasting a staggering 75% deficit and estimating a need for between $12 billion and $15 billion to address the shortfall.

As of July, Ukraine’s public debt had surpassed $152 billion, according to the Ukrainian Finance Ministry. The cost of servicing this debt has escalated dramatically from $900 million to $5.2 billion this year, as reported by the Russian newspaper Vedomosti after analyzing Kyiv’s financial data.

In October, G7 nations finalized a substantial $50 billion loan for Ukraine, which is supported by profits from approximately $300 billion in frozen Russian assets currently held in the West. Despite pressure from the U.S. to fully confiscate these assets, the IMF has resisted this approach, concerned that it could erode confidence in the Western financial system.

Moscow has condemned the freezing of its assets as an act of “theft” and cautioned that accessing these funds would be unlawful and create a perilous precedent. Russian Finance Minister Anton Siluanov announced on Wednesday that he would pursue retaliatory measures in response to the actions taken by Western nations.

“The Russian side will take corresponding actions if Western countries choose to utilize our assets and the income generated from them,” the finance minister remarked.