Latvia evaluates the possibility of using SAFE loan to strengthen military capabilities / day

SAFE is a financial instrument proposed by the European Commission (EC) up to EUR 150 billion for strengthening European military capabilities, supporting the defense industry and creating an efficient joint procurement system.

Latvia SAFE loan could be used to strengthen its military capabilities and investments in areas such as artillery and distant missile systems, drone technologies, anti -aircraft protection, cyber defense and critical infrastructure protection.

At the European Union (EU) Economic and Financial Affairs Council (ECOFIN) meeting in Brussels on Tuesday, May 13, the MoF Secretary Baiba Bane and the ministry representatives discussed one of the most important EU initiatives at the current EU initiative.

SAFE is one of the pillars of the Rear plan and is based on joint borrowing in the capital markets, providing Member States with long -term loans guaranteed by the EU budget security reserve.

Bane said at the meeting of ECOFIN that Europe needs immediate and real action, a unified strategy and strong signals to the defense industry. Bane emphasized that the SAFE tool can be a turning point, but it should be simple, efficient and with the lowest possible administrative burden.

Latvia also emphasized the need to involve strategic NATO partners to expand the capacity of the industry and respond more effectively to the needs of Ukraine and other allies.

« In order to increase the industry base and respond to the needs of Ukraine and other allies, the SAFE instrument must also be opened to cooperation with NATO partners.

Currently, the EU Council is actively discussing the draft Safe Regulation. This provides that Member States will have to express interest in the loan within two months after the entry into force of the Regulation, but within six months – to submit an investment plan.

All payments will have to be made by the end of 2030, while the loan repayment term will be up to 45 years, with the possibility of delaying the principal for up to 10 years. The funds will be used for both joint and individual purchases if they are properly identified and agreed with the rules. The draft regulation is planned to be coordinated by the end of June this year.

The meeting also highlighted the economic and financial impact of Russian aggression against Ukraine. The EC and the Swedish Institute of Economics presented the current assessment of the situation, indicating the need to maintain a strong and uniform EU position, as well as to continue financial support for Ukraine. Particular attention was also paid to combating misinformation and the objective analysis of the actual state of the Russian economy.

At the meeting, Bane called for solutions to continue working to use the frozen assets of the Russian central bank for Ukraine, as well as to start negotiations on funding after 2026.

The meeting of ECOFIN also discussed current legislation proposals in the field of financial services, a look back at the G20 and the International Monetary Fund for spring meetings, as well as decisions of the Council’s implementation of the Recovery Fund.