Rick Gates said Tuesday that his former boss Paul Manafort’s income streams had dried up after his friends in the Ukrainian government lost power, creating financial difficulties for the former Trump campaign chairman.

“It substantially decreased in terms of income he was accustomed to receiving in prior years,” Mr. Gates said while testifying in the tax and bank fraud trial of Mr. Manafort.

Prosecutors have alleged that after Mr. Manafort’s income dropped, he turned to hiding his money in overseas accounts to evade the IRS.

When asked if Mr. Manafort had a hard time paying bills, Mr. Gates responded, “Yes, he did.”

Mr. Manafort worked as a consultant and strategist for the Party of Regents, a Ukrainian political party. Members, including former President Viktor Yanukovych, were voted out of power in 2015.

In an effort to develop new business in Ukraine, Mr. Manafort helped create a party know as Oppposition Bloc, Mr. Gates said. They only had limited success, winning a handful of parliament seats.

Opposition Bloc’s lack of success impaired its ability to pay bills sent from Mr. Manafort as his dire financial situation worsened, according to Mr. Gates.

The contract was never paid in full despite pleas from Mr. Manafort.

Mr. Gates also testified that Mr. Manafort stashed as much as $5.8 million in offshore accounts in Cyprus in 2012 and 2014.

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