Germany is going to halve military aid to Ukraine
17 July 2024 13:38
The German government plans to significantly reduce military aid to Ukraine in 2025, reports "Komersant Ukrainian" reports citing Reuters.
According to the draft budget to be approved on Wednesday, funding for military support to Ukraine will be reduced to €4 billion, halving the €8 billion allocated in 2024.
This decision is part of wider budgetary austerity measures that the German government is forced to implement due to financial difficulties. Germany’s coalition cabinet is facing a €17 billion gap between planned expenditures and revenues for 2025.
The reduction in aid to Ukraine comes amid the general financial challenges faced by the German government. In particular, in 2028, a deficit of €39 billion is expected in the regular budget, of which €28 billion is needed to meet NATO’s defence spending targets after the special fund for the armed forces is exhausted.
German Finance Minister Christian Lindner insists on the need for fiscal consolidation after the increased spending during the COVID-19 pandemic and the energy crisis. In addition, new European Union rules further restrict Germany’s fiscal space, requiring stricter adjustments than under national regulations.
This decision comes a year before the German federal elections and is a serious test for the coalition government, which is often accused of internal divisions.
Ukraine Facility
In February, the EU approved the Ukraine Facility, the main EU funding mechanism for Ukraine, in the amount of €50 billion for the period 2024-2027. The programme consists of €17 billion in grants and €33 billion in loans. The mechanism provides not only for financing budgetary areas in Ukraine during the war, but also for programmes aimed at implementing the reforms on which Ukraine’s accession to the EU depends.
The resolution emphasises that EU support should be directed in three areas:
- Financial support for Ukraine to implement reforms and investments, and to maintain the country’s macro-financial stability, as envisaged in the Ukraine Plan to be developed by the Ukrainian government.
- Ukraine’s investment framework to mobilise investment and increase access to finance.
- Assistance on the path to European integration to mobilise technical expertise and build capacity.
