The grant came from the U.S. through the Multi-Donor Trust Fund of the World Bank. It is the fifth such package the U.S. has provided to Ukraine under the Public Expenditures of Administrative Capacity Endurance in Ukraine (PEACE in Ukraine), a program designed to support Ukraine's social, governance and humanitarian expenditures during Russia's special military operation in the country. (Related: Pentagon report: Huge amount of U.S. military aid to Ukraine has been stolen by criminal organizations and arms traffickers.)
Along with providing for the wages and benefits of government employees, the Ukrainian Finance Ministry also claims that the funds will be used to cover the social assistance of internally displaced persons, people with disabilities, low-income families and other types of social and welfare costs.
The PEACE in Ukraine project was established in June 2022 by the World Bank, several months after the start of the Russian special military operation in Ukraine. The bank said the fund provides Ukraine with aid to support around 13 million beneficiaries, including 10 million pensioners, 500,000 education employees, 145,000 government employees, 56,000 emergency workers and over three million social assistance beneficiaries and displaced persons.
Data on the Ukrainian budget shows that the government in Kyiv is relying more and more on foreign aid to keep it propped up. Roksolana Pidlasa, chairperson of the budget committee of the Verkhovna Rada, the Ukrainian parliament, noted that the state budget had already received $25.3 billion from international partners in 2023, accounting for around 49 percent of all state budget revenues.
The Ukrainian Finance Ministry noted that it has received $8.45 billion in direct budget support grants from the U.S. this year alone. Since the beginning of the conflict in late February 2022, Washington has provided Kyiv with over $20.4 billion in grant funding. This does not include the amount of foreign aid the U.S. has provided in the form of military support.
"Irrevocable financial assistance from the United States is an extremely important element in supporting the state budget of Ukraine during the resistance to full-scale aggression of the Russian Federation," said Ukrainian Minister of Finance Serhiy Marchenko in a statement.
Marchenko added that this new grant will help the government in Kyiv to reimburse priority expenditures for social and humanitarian costs.
"We are extremely grateful to the government and taxpayers of the United States of America for their solidarity and unprecedented support for Ukraine in this defining period for our country," Marchenko concluded.
This $1.25 billion PEACE in Ukraine grant comes a little over a month after the World Bank announced a tranche of $1.75 billion for emergency assistance to Ukraine under the PEACE in Ukraine program. The package included a $500 million loan from the World Bank guaranteed by the U.K., a $1.25 billion grant from the U.S. and a $15 million grant from Finland.
Despite this massive amount of funding coming from outside Ukraine, Marchenko noted back in May that the country's budget has been running a deficit of about $5 billion a month since Russia's special military operation, with two-thirds of the money Kyiv is spending now coming from foreign loans and grants and three-quarters spent on military needs.
Learn more about the situation in Ukraine at UkraineWitness.com.
Watch this report noting how the morale of Ukrainian soldiers has plummeted, and many groups are surrendering to the Russian army.