U.S. Supports Romania with $920 Million Loan for Defence Modernisation

The United States is signing a $920 million direct loan agreement with Romania to support its defence modernisation. This move follows Russia's invasion of Ukraine, prompting Romania to boost its defence spending. The loan, part of a larger financial strategy, will fund both the defence ministry and state-owned weapon manufacturers.

The United States will sign a $920 million direct loan agreement with Romania on Wednesday, as confirmed by the Romanian government. This financial support aims to bolster Romania's defence modernisation program in the wake of Russia's invasion of Ukraine.

Romania, a NATO and European Union member, plans to allocate 2.5% of its GDP to defence. The country shares a 650-km (400-mile) border with Ukraine, and over the past year, pieces of Russian drones have repeatedly entered Romanian territory. Some regions are near Ukraine's Danube River ports, which are frequently targeted by Russia.

Under the loan agreement, Romania's defence ministry will have direct access to $700 million, and up to $220 million will be allocated to state-owned arms manufacturer ROMARM. This loan, facilitated through the U.S. Foreign Military Sales (FMS) mechanism, includes a 12-year repayment plan.

In August, the Romanian government approved the use of up to $4 billion in direct loan agreements through the FMS, along with an additional $8 billion from financial markets guaranteed by the U.S. government.

(With inputs from agencies.)