Bulgaria to request loan of up to 3B euro under EU’s SAFE instrument to boost defence industry

Sofia: Bulgaria intends to request a loan of 2.7 billion to just over 3 billion euro under the Safeguards for Europe (SAFE) instrument by strengthening the European defence industry, the government information service said after a Cabinet meeting on July 23.

According to the Council of the EU, SAFE, set up in May 2025, is a new EU financial instrument that will support those member states that wish to invest in defence industrial production through common procurement, focusing on priority capabilities.

The Council of the EU said that SAFE will finance urgent and large-scale investments in the European defence technological and industrial base.

“The aim is to boost production capacity, making sure defence equipment is available when needed, and to address existing capability gaps – ultimately strengthening the EU’s overall defence readiness,” the Council of the EU said in its May statement.

The financial assistance requested by Bulgaria in the form of a loan is intended to financially secure the implementation of priority military capabilities necessary to guarantee national and Union security in the context of Bulgaria’s participation in the Nato collective defence system and the Common Security and Defence Policy (CSDP) of the European Union, the government information service said.

A significant advantage of the SAFE instrument is the exemption from VAT of supplies related to the implementation of projects financed with borrowed funds, the statement said.

Along with these advantages, a SAFE loan will enable a gradual increase in national defence spending in implementation of the decision of the Nato Heads of State and Government, taken during their meeting in The Hague on June 24-25 this year, within the framework of the fiscal rules and restrictions under the Public Finance Act.

The Cabinet decision authorises the Minister of Defence to sign and submit on behalf of Bulgaria to the European Commission the application for interest for a request for financial assistance in the form of a loan under the SAFE instrument by July 29 2025. The request is not legally binding.