Romania's SAFE loan program to revamp defence sector amid S&P rating scrutiny

Romania will receive up to €16.68 billion from the EU's SAFE loan programme, with more than half of the financing staying in the country. The loans carry a 3 % interest rate, a ten‑year grace period and a 45‑year repayment term, far cheaper than commercial borrowing rates of around 7 %. Minister Irineu Darău said the funds will support defence‑industry reconstruction, dual‑training programmes, new skilled jobs, technology and licence transfers, aiming to re‑industrialise the sector by 2030. He stressed the programme will not turn Romania into a "assembly country" but will create broader industrial benefits.

Separately, S&P Global Ratings reaffirmed a negative outlook for Romania’s sovereign debt, maintaining its BBB‑/A‑3 rating. The agency cited a recent government crisis—the collapse of the ruling coalition—as the trigger for the out‑of‑schedule review and warned that a prolonged stalemate could lead to a downgrade. S&P expects Romania’s GDP to stagnate this year and grow 2.5 % next year, with a projected 6.25 % of GDP fiscal deficit in 2026, the highest among similarly rated economies. Access to EU funding, amounting to about 3.5 % of GDP this year, is deemed crucial to avoid a recession and to fund state investment.