Warsaw managed to secure 29% of the entire €150 billion SAFE lending program. Still, the question of who will repay this loan remains unresolved, especially since the defense ministry has already purchased over €55 billion worth of weapons, also on credit.
The Polish government cannot agree on who exactly should pay the unprecedented €43.7 billion in loans taken under the European Union's SAFE defense program. A dispute has arisen between the Ministry of Finance and the agencies that will receive it the Ministries of Defense, Internal Affairs, and Infrastructure.
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The Polish Ministry of Finance believes that funds to repay this loan should be paid by those who manage it, specifically the Ministry of Defense. Military officials insist that the source of repayment for these loans should not be the defense budget, as the defense ministry does not have such funds.
Additional financial obligations will exacerbate the existing problem and, as a result, lead to spending all funds available to the defence ministry on re-equipping the armed forces, which ultimately means halting the execution of all current obligations, Defence24 quotes the military's position.
How exactly the Polish government will resolve this problem is currently unknown, but a solution must be formulated in an appropriate legislative act that allows the use of credit funds. At the same time, repayment of these funds will definitely be a problem not for the current government, but for its successors.
The SAFE loan is calculated over 45 years, and the first repayment tranche is due only in 10 years. As the publication writes, the annual interest repayment on the loan should amount to over €1.3 billion, not including principal.
Defense Express notes that this is not the first time the financial obligations of Poland's Ministry of Defense have become a problem for the Ministry of Finance. Over the past four years, Warsaw has concluded a whole series of major defense procurements totaling over $66 billion (approximately €55 billion). And these procurements already threaten Poland’s Defense Ministry with bankruptcy, as supported by now-former Polish Defense Minister Mariusz Błaszczak.
Previous weapons procurements, particularly from Korea including K2 tanks, K9 self-propelled howitzers, K239 Chunmoo rocket systems, as well as FA-50 trainer-combat aircraft were also made on credit. The U.S. has also actively provided Poland with credit, which has enabled Poland to purchase 500 HIMARS, 100 Apaches, and other acquisitions.
The start of repayment for these specific funds is approaching faster than the longer-term loans under the SAFE program already in 2027.
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