The US and Romania will sign a $920 million defense loan agreement By Reuters

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

The deal comes as Romania tries to ramp up its defense procurement plan following Russia’s invasion of Ukraine.

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

Romania shares a 650-km (400-mile) border with Ukraine, and fragments of Russian drones 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 Ministry of Defense will directly access $700 million, while up to $220 million will go to state-owned ROMARM, which controls 15 companies that make weapons and ammunition, 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, Romania’s government allowed the country to access a total of $4 billion in direct loan agreements through the FMS, as well as up to $8 billion from financial markets with US government guarantees.