Budget earmarks almost $3 billion in loans, grants for Ukraine
The new federal budget sets aside $2.72 billion in loans and donations for Ukraine in the current fiscal year, most of which is aimed at helping President Volodymyr Zelenskyy’s government keep the embattled country’s finances afloat.
And a lot of that money is already out the door.
The Canadian government delivered $2 billion in loan assistance for Ukraine to the International Monetary Fund in late March.
The 2024 federal budget also sets aside $320 million this year for “the provision of lethal and non-lethal military aid” to Ukraine — part of the bilateral security assistance package signed by Zelenskyy and Prime Minister Justin Trudeau in Kyiv in February.
“This multi-year commitment will provide predictability to Ukraine as well as to Canada’s defence industry,” the budget document says.
Overall, the federal government is earmarking $1.6 billion for military aid to Ukraine over the next five years. That’s a drop in the bucket compared with Ukraine’s biggest backer, the United States, which is still struggling to pass a $60 billion aid package.
Finance Minister Chrystia Freeland recently said Washington appears “unable to step up” on aid to the eastern European country, which has been holding back a full-scale Russian invasion for over two years.
The federal budget also commits to setting aside $216 million over five years, starting next year, for contributions to the European Bank for Reconstruction and Development (EBRD) rebuilding program.
Turning Russian assets into Ukrainian aid
The federal government is also committing to working with allies to find a legal mechanism to turn seized Russian assets over to Ukraine.
More than $280 billion US in Russian assets has been seized by allied nations since the full-scale invasion began in February 2022.
“Canada believes that now is the time to use these resources actively to support Ukraine in its existential fight,” the budget document says.
“It is Canada’s position that these assets can be redirected to benefit Ukraine, consistent with international law.”
The federal government says it believes there is “a lawful basis to repurpose these assets.” It points to the European Union’s Windfall Profits mechanism as the sort of mechanism that could be used for Ukraine.
Earlier this year, the European Union began drafting a law to apply a windfall tax to the profits generated by frozen Russian central bank assets. It opted not to seize the immobilized money outright. The proceeds from the tax are to be sent to Ukraine.
“Canada is committed to work with allies to explore all possible legal mechanisms to make full use of the assets currently immobilized in our jurisdictions, including for the purpose of increasing support for Ukraine in the short term,” the budget document says.
