Poland’s tens of billions in debt for defence invites tough questions on priorities

Poland’s request for nearly €44 billion from the EU’s SAFE defence loan programme is being framed in Warsaw as a strategic breakthrough. Prime Minister Donald Tusk presents it as long-term capital that can modernise the military without immediate pressure on the state budget. On paper, this is technically correct: loans come with up to 45-year maturities and a ten-year grace period before repayment of principal begins.

SAFE (Security Action for Europe) is the EU’s new financial instrument offering member states long-term loans for urgent defence investments and to strengthen Europe’s defence industry, particularly in areas where critical capabilities are lacking.

But beyond these appealing terms lies a harder reality. SAFE is not free money. It is debt. And debt, even at moderate interest rates, limits government flexibility for decades.

The scale is striking. Poland’s €43.7 billion request makes it the largest single applicant in the EU’s €150 billion envelope. Repayments could stretch into the 2070s. Even with interest near 3 per cent, total servicing costs over the coming decades are huge. This burden doesn’t vanish with electoral cycles — it is structural.

SAFE also comes with strings attached. Funds are earmarked strictly for military equipment, ammunition, and defence-industry development. They cannot be used for healthcare, housing, infrastructure, or education. In effect, Poland is borrowing tens of billions for one sector alone, on top of already high defence spending exceeding 4 per cent of GDP — among the highest in NATO.

Financing choices remain political. Poland could still issue sovereign bonds or use existing national funds for defence expansion. SAFE adds procurement conditions: A large share of components must come from the EU, EEA, or Ukraine. This limits sourcing flexibility and ties Poland more tightly to EU-defined supply chains.

There is also an intergenerational dimension. A 45-year loan shifts repayment to citizens who have no say in today’s decisions. While long maturities ease short-term pressure, they prolong exposure to interest-rate changes and constrain future budgets. With public debt expected to reach or exceed 60 per cent of GDP in the near future, piling on long-term liabilities increases structural vulnerability.

Defence spending must also be assessed alongside commitments to Ukraine. Since 2022, Poland’s support — including military aid, financial assistance, and refugee-related costs — has reached roughly 4.9 percent of GDP. When combined with annual defence spending above 4 per cent of GDP, total resources devoted to security and war-related expenditures approach 9 per cent of national output. That is a heavy fiscal load, and one that tightens space for other public priorities.

Poland’s broader fiscal picture adds to the concern. Economic growth has been solid over the past 20 years, fuelled by exports, EU transfers, and foreign capital. Yet growth has coincided with rising public debt and household borrowing. Government deficits have widened, and debt servicing is already taking up a growing slice of the budget.

For ordinary citizens, this growth has not always meant more financial comfort. Living costs are rising, housing pressures are intense, and private debt levels are high. Everyday households feel the squeeze, even as headline GDP numbers look strong. Against this backdrop, committing tens of billions in new long-term borrowing exclusively for military hardware invites tough questions about priorities, trade-offs, and generational fairness.

None of this denies the need for credible defence capabilities. NATO membership remains central to Poland’s security. But real security also depends on economic stability. Overextension — fiscal as much as military — carries risks.

SAFE provides liquidity and structured repayment, but that does not automatically make it a sound choice. Long maturities and deferred repayment can create the impression of affordability while locking in obligations for decades. Presenting the programme as an unqualified success overlooks the long-term consequences. Delayed repayment is not lower cost — it is postponed obligation.

Borrowing for nearly half a century is a generational decision. Prudence will not be measured by how quickly tanks or missiles arrive in the next five years, but by whether Poland can maintain defence strength without eroding fiscal stability, economic resilience, and social cohesion in the decades ahead.

The real test is for citizens and policymakers alike. How will everyday families navigate rising costs and household debt while public finances are increasingly committed to military and war-related expenditures? Can future governments respond to economic shocks or social priorities when a substantial slice of the budget is already locked into decades-long debt service? Fiscal and social resilience matter as much as armoured vehicles and missiles. SAFE may solve liquidity today, but its shadow will shape Poland’s economic choices for generations.