Bulgaria weighs long defence debt

There is an awkward question sitting beneath Bulgaria's latest defence move: how much should a state borrow for its army when the bill will still be landing long after today's ministers, MPs and officials have left the stage?

On July 15, Bulgaria's cabinet sent parliament a €3.26 billion loan agreement signed under SAFE, the EU's new Security Action for Europe credit line for defence spending (24 Chasa). On paper, the terms are attractive. Sofia can wait up to ten years before repaying the principal, with the debt stretched over 45 years (Sofia Globe). That is the sort of finance national treasuries rarely get on their own. But cheap money is still borrowed money. Final repayments could run until 2071, and MPs are being asked to approve the package before most of the projects it will pay for have been made public.

How SAFE Works

SAFE works by letting the European Commission borrow on capital markets using the EU's collective credit rating, then lend that money on to member states for defence purchases (CER). The overall pot is €150 billion. Its rules are designed to keep much of the work inside Europe and Ukraine, with at least 65% of component costs required to remain within the EU, the EEA or Ukraine (European Commission).

The legal route was as political as the money. EU governments, acting through the Council, adopted SAFE through an emergency procedure that left the European Parliament out of the process. Parliament has challenged that at the EU's Court of Justice, arguing that the shortcut was unlawful (European Parliament, EU Law Live). The case is still open, but the money has already begun to move. Poland has received an initial €6.56 billion, while Croatia has drawn down a first €255 million tranche (European Commission, Brussels Times).

The same EU instrument is producing different national arguments. In Romania, the fight has centred on which government had the constitutional authority to borrow (Gândul). In Poland, it has triggered a public clash between the defence minister and the president over the signing of the law (TVN24). Bulgaria's dispute is quieter, but the point is just as serious: what can parliament properly scrutinise before it votes?

Nine Projects, One Public

Bulgaria's loan is meant to cover nine Armed Forces projects under a Defence Investment Programme running to 2032 (Actualno). So far, only one has been disclosed: a €320 million radar purchase under a framework agreement with France (24 Chasa). The other eight have no published contract values, no identified suppliers, no delivery timetables, and no indication of how much work Bulgarian firms might receive (Actualno, 24 Chasa).

Some of that may be defensible. Defence procurement can involve commercial sensitivity, classified capability gaps and security judgments that cannot be laid out line by line. Still, the balance here is hard to ignore. MPs are being asked to sign off on repayment obligations lasting decades for projects they can only partly assess.

The budgetary backdrop adds weight to the question. Bulgaria's parliament recently raised the state-debt ceiling to allow €3.8 billion in new borrowing, partly to meet budget liquidity needs, while the country still does not have a finalised 2026 budget (Forbes Bulgaria). The government's argument is that SAFE funding will be folded into annual defence budgets, spreading the cost over time. That works only if future governments keep faith with a commitment that stretches across almost half a century.

The Real Ratification Test

Bulgaria is not short of access to money in this case. SAFE is probably the cheapest defence credit available to a country in Sofia's position. The difficulty is democratic and fiscal: parliament is being asked to approve long-term debt without seeing most of the projects, suppliers, delivery schedules or domestic industrial gains attached to it.

The agreement would give Bulgaria access to the EU's strongest defence borrowing instrument. Whether the €3.26 billion turns into real military capacity, or into decades of servicing debt on imported equipment, depends on answers Bulgarian MPs should have before they vote.