Lithuania secures €6.4 billion in long-term SAFE loans for defence

Lithuania has signed a €6.375 billion loan agreement under the European Security Action Plan (SAFE) to bolster its long-term defence capabilities, state broadcaster LRT reports. The first advance payment is expected within three months.

Funds will be allocated to expanding the national division, stockpiling ammunition, enhancing counter-mobility measures, and other military needs. Prime Minister Ingrida Ruginienė has previously indicated that air defence will receive the largest share of funding. A portion will also support Ukraine, including joint procurements with Kyiv and purchases of Ukrainian-made military equipment.

The agreement was signed in Vilnius by Finance Minister Kristupas Vaitiekūnas, Defence Minister Robertas Kaunas, and European Commissioners Andrius Kubilius (defence and space) and Piotr Serafin (budget, anti-fraud, and public administration). Kubilius emphasised that SAFE encourages EU member states to collaborate on defence procurement, ensuring speed, scale, and efficiency while signalling demand to European industry.

Under SAFE regulations, the loan term extends to 45 years, with interest rates matching those of the European Commission’s own borrowing. Lithuania benefits from a 10-year grace period, paying only interest initially before beginning principal repayment after a decade. Interest rates will vary based on market conditions at the time of disbursement.

The European Commission first announced Lithuania’s planned €6.3 billion allocation from the €150 billion EU defence support package in September last year. The SAFE programme, approved by the European Council in May 2023, provides low-cost, long-term loans to help member states acquire urgently needed defence capabilities. Poland became the first country to sign a SAFE loan agreement on Thursday. Nineteen EU members have submitted plans to utilise the mechanism.

Lithuania’s 2026 defence budget stands at approximately €4.8 billion, or 5.38% of GDP.