My Bad: How An Accounting Error Is Giving The US Government $6 Billion In Extra Ukraine Aid

The U.S. government just gained over $6.2 billion that it can now use to send military aid to Ukraine. That's due to an accounting error, by which the Pentagon overestimated the value of lethal aid sent to Kyiv since the outbreak of the war with Russia in February 2022.

In May, it was made public by a Senate aide and a defense official that the cost of the ammunition, missiles, vehicles and other equipment sent to Ukraine had been overestimated.

Ukraine Aid Accounting: The U.S. sends existing weapons from its stockpiles to the Ukrainian front, which it then replaces with purchases from manufacturers in an effort to respond urgently and reduce otherwise lengthy production times.

So far, the U.S has sent impressive amounts of military equipment to Ukraine. These include 20 Mi-17 helicopters, 2,000 Humvees, hundreds of other tactical vehicles, over 200 tanks and more than 700 armed vehicles, more than 11,000 air-to-ground missiles, hundreds of satellites as well as surveillance drones, attack drones and hundreds of other pieces of artillery and coastal defense systems, as per the Council on Foreign Relations.

Previous accounts put the accounting error at about $3 billion, but a new announcement by the Pentagon's deputy press secretary Sabrina Singh confirmed the actual value is more than double that amount, reported The Hill.

The excess money is "just going to go back into the pot of money that we have allocated" for future deliveries of military stocks, Singh said. This essentially means the Pentagon received an injection of an otherwise unaccounted for $6.2 billion in equipment that it can now draw as new aid for Ukraine.

According to the Ukraine Support Tracker by the Kiel Institute For The World Economy, the U.S. has already sent more than $75 billion in lethal, financial and humanitarian aid to Ukraine, between decisions from the Congress and the Biden administration. Thirty-one percent of that, or $23.5 billion, consisted of weapons and equipment from the Defense Department stocks provided through presidential drawdowns.

So far, the U.S. government has approved $113 billion in aid for Ukraine. A recently approved Congressional arms package of $2.1 billion has weapons manufacturers Lockheed Martin LMT and Raytheon Technologies RTX strategically poised to benefit. Shares of both companies were trading higher Wednesday at the time of writing.

The U.S. has been, by far, the largest donor to the Ukrainian cause, more than doubling the amount sent by EU institutions, which stand second in line. Sixty-one percent of U.S. help has consisted of military aid. 

Ukraine is in critical financial strain due to the Russian invasion, with GDP down 29% and inflation running high at 27%. Rebuilding Ukraine during the next decade could cost $400 billion, according to recent estimates by the World Bank.

Aerospace and defense ETFs had a day in the green:

• SPDR S&P Aerospace & Defense ETF XAR is up 1% on Wednesday at the time of writing.
• Invesco Aerospace & Defense ETF PPA is up 0.9%.
• iShares US Aerospace & Defense ETF ITA is up 1.3%.

Russia, Ukraine, China, US flags Photo by Serega_tm on Shutterstock.