Germany’s pledge of four billion euros ($4.3 billion) to Ukraine will be fulfilled even if the 2025 budget is not approved on time.
The funds are largely committed appropriations.
Disbursement Of Funds
They and can therefore be disbursed under provisional budget management if the budget is not passed, sources said.
Draft Of 2025 Budget
Germany’s aid to Ukraine was cut to four billion euros in 2025 from around eight billion euros in 2024, according to the 2025 budget draft.
Germany hoped Ukraine would be able to meet the bulk of its military needs with the $50 billion in loans from the proceeds of frozen Russian assets approved by the Group of Seven industrialised nations.
Trump’s Return
However, Republican Donald Trump’s return to the White House raises concerns in Europe that U.S. support for Kyiv could diminish.
Germany’s coalition government collapsed hours after Trump’s victory became clear on Wednesday.
Chancellor Olaf Scholz fired his Finance Minister, Christian Lindner.
Turmoil In The German Government
“Politically, the turmoil in the German government is the first sign, the first reaction to Trump’s re-election,” said.
Gilles Guibout, head of European equity strategies at AXA Investment Managers in Paris.
Likely Delay In Next Year’s Budget
A likely delay in next year’s budget means no spending on new projects.
At the same time, some outlays such as more aid for Ukraine could still pass.
Requirement For Launching New Funding Programmes
“Launching new funding programmes would require a decision from the budget committee or the Bundestag,” Economy Minister Robert Habeck said.
“Thus, there is a certain limitation on new programmes, but everything already in place can continue as planned.”
Agreement By The Cabinet
The Cabinet agreed on the budget in the summer .
It was due for parliamentary approval before year-end, but this now could get pushed back until mid-2025.
Collapse Of The Government
The collapse of the government increases uncertainty of the budget for 2025, said Danske Bank’s analyst Rune Thyge Johansen.
Provisional Budget Management
“However, Germany will not face a government shutdown like in the U.S. as a provisional budget management will be in place,” he said.
Government sources said Scholz wanted to increase a Ukraine support package by three billion euros ($3.22 billion) to 15 billion euros.
He wanted to finance it by suspending the debt brake.
Lindner said the chancellor had tried to strong-arm him into breaking the spending limit.
Lindner’s Refusal
A fiscal hawk, Lindner refused to support it.
“Especially today, one day after such an important event as the U.S. elections, this kind of selfishness is utterly incomprehensible,” Scholz said.
