Estonia has signed a SAFE funding agreement with the European Commission. This loan will allow Estonia to invest up to 2.34 billion euros in national defense.
The European security situation requires countries to increase their defense capabilities. Estonia directs over five percent of its GDP to national defense annually. This helps make investments faster and on a larger scale.
Using the SAFE loan is a reasonable way to strengthen defense capabilities. The European Union can borrow on more favorable terms than Estonia. This helps save on interest costs.
The loan term is 45 years. This means repayments will be made over a longer period. State Treasury Director Janno Luurmees says this will help make necessary investments and reduce the burden on the state budget.
SAFE is part of the European Union's ReArm Europe package. Its goal is to accelerate the strengthening of defense capabilities.
Deputy Chancellor of the Ministry of Defense Kadri Peeters says the rapidly changing security situation requires more protection and faster action. Estonia's decision to allocate over five percent of GDP to national defense, combined with the SAFE loan, will allow for faster and larger investments.
One condition of the SAFE mechanism is the organization of joint procurements. At least 65 percent of the final components of procured products must come from the European Union.
The Ministry of Defense will use the loan to strengthen air defense, acquire military vehicles, artillery shells, and other ammunition, and support Ukraine.
Estonia submitted the final application for the SAFE loan to the European Commission in November 2025. Procurements and deliveries must be completed by 2030 at the latest.
Estonia previously borrowed 230 million euros from the European Commission to mitigate the impact of the Covid-19 epidemic.