Lithuania receives first disbursement of almost EUR 1 billion under SAFE
The first disbursement of EUR 956 million under the SAFE (Security Action for Europe) Regulation reached Lithuania. This advance payment represents 15% of the country's total loan of EUR 6.375 billion.
SAFE preferential loans are intended to strengthen resilience and defence of the countries. This financial instrument will help Lithuania implement about half of the development needs of the national division.
"Lithuania was one of the first countries to implement bureaucratic processes and sign SAFE agreements. This is a particularly important instrument, especially for the countries of the eastern flank of the European Union. These funds help to accelerate the strengthening of our defence capabilities and to accelerate the achievement of the goal of forming a division equipped with state-of-the-art weapons by 2030. In addition, SAFE is also important for Europe as a whole – it strengthens defence industrial cooperation, helps integrate national suppliers into European supply chains and contributes to building a stronger and more coordinated European defence", Minister of Finance Kristupas Vaitiekūnas states.
The SAFE Regulation provides for particularly favourable borrowing conditions. The duration of the loan is as long as 45 years and the interest rate is the same as that borrowed by the European Commission itself. In addition, the SAFE loan is subject to a 10-year deferral, which means that first Lithuania will only pay interest and only after 10 years will start repaying the loan.
Lithuania plans to allocate SAFE funds to equip the Land Forces Division with combat, support, and logistics systems, as well as the necessary ammunition reserves; to provide the Baltic Defence Line with counter-mobility measures and mines; and to maintain and develop other capabilities of the Lithuanian Armed Forces.
SAFE is the European Commission’s temporary defence enhancement loan facility, running until the end of 2030. The total volume of SAFE is EUR 150 billion. The instrument allows EU Member States to jointly procure defence in priority areas, from ammunition and land-based capabilities to air defence, maritime capabilities, cyber, space technology and artificial intelligence.
Additional information:
The SAFE loan acts as an alternative source of financing, allowing the investments already planned in the budget to be implemented on more favourable terms and the cost of servicing the debt to be optimised. It allows diversifying the sources of borrowing and taking advantage of the extremely favourable borrowing conditions of the European Commission, thus reducing the overall cost of financing in the long term.
The Ministry of Finance will periodically submit payment requests to the European Commission. They will provide information on the indicators achieved so that Lithuania can receive a partial disbursement of the loan. These indicators relate to the implementation of the project, e.g. public procurement announced, contract signed, advance paid to the manufacturer, part of the equipment received, final amount paid, total equipment received, etc.