If U.S. Cuts Aid to Ukraine, the Country Will Tumble into Bankruptcy

Richard Freeman November 12, 2024 EST

If President Donald Trump, after Jan. 20, 2025, should cut off U.S. funding flows to Ukraine, it might not only push Ukraine to the peace table, but it could also push Ukraine into financial bankruptcy.

In a Nov. 12 article, “Plan B: Ukraine Makes Ominous Announcement of Aid,” Russia’s RIA Novosti reports that “Verkhovna Rada Budget Committee member Pavlo Frotov previously stated that Ukraine has the largest budget deficit in the world, with its expenditures twice as large as its revenues amid the fighting. In March, the head of the Verkhovna Rada Budget Committee Roksolana Pidlasa reported that Ukraine had allocated almost half of its $87 billion annual budget to defense spending, but its domestic revenues were only $46 billion.” That leaves a gaping hole of a budget deficit of $41 billion.

Within the last few days, Deputy Nina Yuzhanina in Ukraine’s unicameral Verkhovna Rada told RIA Novosti, in the agency’s words: “the state budget plan of Ukraine assumes that all civil expenses will be covered by financial assistance from Western countries, and if funding stops, the government will abandon those expenses.” She continued, “I think there is a ‘Plan B,’ absolutely: stop all payments except the military,” answering a direct question about whether there is a backup plan if aid is cut off. Most of the aid to cover Ukraine’s budget deficit comes from United States funding.

While Yuzhanina may have exaggerated her response, the reality is that Ukraine’s budget cannot be covered. In 2022, Ukraine produced 22 million tons of steel per year. Today, its steel production is down to 6 million tons. Should the town of Pokrovsk fall, which seems imminent, which would cost Ukraine its nearby only coal mine to produce coking coal for steel making, Ukraine’s capacity of steel production would fall to 3 million tons per year. And Ukraine has no real economy whose output could be taxed to support its budget.