US, Romania to sign $920 million defence loan agreement

BUCHAREST (Reuters) – The United States will sign a $920 million direct loan agreement with Romania on Wednesday to support its defence modernisation program, the Romanian government said.

The deal comes as Romania seeks to boost its defence purchasing plan following Russia’s invasion of Ukraine.

Romania, a member of NATO and the European Union, aims to spend 2.5% of its GDP on defence.

Romania shares a 650-km (400-mile) border with Ukraine and Russian drone fragments have repeatedly strayed into its territory over the past year. Some areas are also close to Ukraine’s Danube River ports which are frequently targeted by Russia.

Under the loan agreement, the defence ministry will directly access $700 million, while up to $220 million will go towards state-owned ROMARM, which controls 15 companies that manufacture weapons and ammunition ranging from gunpowder to guided missiles.

The loan, granted by the United States through its Foreign Military Sales (FMS) mechanism, has a 12-year repayment plan.

In August, the Romanian government allowed the country to tap a total of $4 billion in direct loan agreements through FMS, as well as up to $8 billion from the financial markets with U.S. government guarantees.