US and Romania to Sign $920 Million Defense Loan Agreement, According to Reuters

BUCHAREST (Reuters) – The United States is set to sign a significant direct loan agreement worth $920 million with Romania on Wednesday, aimed at enhancing the country’s defense modernization efforts, as announced by the Romanian government.

This agreement emerges as Romania strives to strengthen its defense procurement in response to the security challenges posed by Russia’s invasion of Ukraine. As a member of both NATO and the European Union, Romania is committed to allocating 2.5% of its GDP for defense purposes.

With a 650-km (400-mile) border with Ukraine, Romania has experienced incursions of Russian drone fragments into its territory over the past year. Additionally, certain regions near the Danube River ports in Ukraine, commonly targeted by Russia, heighten the necessity for Romania to bolster its defense capabilities.

The proposed loan allows the Romanian defense ministry direct access to $700 million, while up to $220 million is designated for ROMARM, the state-owned entity overseeing 15 companies involved in manufacturing various military equipment, including gunpowder and guided missiles.

This loan, issued by the United States via its Foreign Military Sales (FMS) program, features a repayment schedule spanning 12 years. In August, the Romanian government approved a plan to utilize up to $4 billion in direct loan agreements through the FMS, along with the potential to secure an additional $8 billion from financial markets, backed by U.S. government guarantees.