Security Action for Europe – SAFE: Commission proposal for a new EU financial instrument to be financed by EU borrowing

EU borrowing for the financing of the new programme will enable competitively priced and attractively structured long-duration loans to requesting Member States. The terms of these loans benefit from the EU's strong credit rating and high market demand for and liquidity of EU issuances.

A full Q&A on the proposal can be found here: Questions and answers on  ReArm Europe Plan/Readiness 2030, but below are the key highlights from a funding perspective:

• Borrowing operations under the new programme will amount to up to €150 billion and will be integrated in the EU’s existing unified funding approach, alongside the sizable rollover operations for the management of EU’s existing debt.
• Member States will be able to request these loans until end-2030, with the Commission able to issue new debt for this policy during this period.
• Funds will be raised through the issuance of single branded “EU-Bonds” and “EU Bills” – there will be no issuance of “defence labelled” bonds.
• The issuances will be backed by the EU budget through the permanent headroom.
• Loans will be repaid by the borrowing Member States - similarly to other loan programmes financed by EU borrowing.  
• Disbursements under the new programme will be demand driven on the basis of national European Defence Industry Investment Plans, with up to 15% pre-financing and subsequent disbursements subject to 6-monthly progress reports from Member States. Given preliminary steps required to finalise programme and access the loans, the new programme will not impact the Commission’s communicated funding planning of €90 billion of EU-Bonds for the first half of 2025
• Actual funding needs arising from the new programme will be integrated in the Commission's overall bi-annual funding planning.
• Flexible use of short-term and long-term funding across the yield curve will be mobilized as needed to limit changes to the envisaged €160 billion annual EU-Bond issuances through 2025 and 2026.

In line with established practice the Commission will announce its funding planning for H2 2025 by end June.