Canada sends almost $300 mln to Ukraine’s state budget in latest financial tranche

Canada has sent a tranche of 400 million Canadian dollars (equivalent to almost 300 million USD) to Ukraine's state budget.

The Ministry of Finance's press service reported that.

Ukraine has received its first tranche from Western countries since August. The government received a record-breaking $8.5 billion, with $4.6 billion from the European Union and $3.9 billion from the United States.

Thus, since the beginning of 2024, Ukraine has received $24.8 billion in budget support from the EU, IMF, and Western countries.

Kyiv expects that the aid will amount to 38 billion dollars annually.

Canada has offered a loan with favorable conditions: the repayment period is ten years, and the annual interest rate is 1.5%. Upon receiving the funds, there will be a grace period of 4.5 years.

"Canada is one of the top five providers of budgetary support to Ukraine since February 2022. Thanks to the funds involved, we can continue to maintain financial stability in Ukraine and ensure priority expenditures of the state budget," the Minister of Finance of Ukraine, Serhii Marchenko, said.

Since the beginning of the full-scale war, direct budget support from Canada has reached $5.4 billion. In 2024, Canada has already provided $1.9 billion in loans.

The Cabinet of Ministers generally forecasts financing the state budget deficit in 2025 at the expense of international aid by 36.9 billion dollars. The risks of a reduction in assistance are assessed as medium.

By 2025, external borrowing is projected to reach 1.658 trillion hryvnias, with domestic lending at 579 billion hryvnias (equivalent to 36.9 billion dollars at the exchange rate of 45 hryvnias to the dollar).

The weighted average interest rate for internal debt instruments is approximately 16% per year, while that for external debt instruments is around 5% per year. Ukraine is expected to receive:

• $2.7 billion from the IMF,
• $11.9 billion from the European Union,
• and $3.1 billion from the International Bank for Reconstruction and Development (i.e., the USA).

Ukraine plans to attract $19.1 billion from "other creditors." Specific sources are not indicated.

For reference:

Ukraine's budget deficit currently stands at 500 billion hryvnias. Most of these funds are allocated to the Defense Forces, specifically for military personnel salaries. This year, an extra 12 billion dollars, or roughly 500 billion hryvnias, is required for the Defense Forces budget.

As reported, the Cabinet of Ministers approved changes to the state budget 2024, according to which defense expenditures will increase by 495.3 billion hryvnias. That is, taxes may increase.