The United States is set to finalize a 920 million dollar direct loan agreement with Romania on Wednesday to bolster the country's defense modernization efforts, according to the Romanian government.

This agreement comes as Romania aims to enhance its defense procurement plans in response to the ongoing threat posed by Russia following its invasion of Ukraine. As a member of NATO and the European Union, Romania is committed to allocating 2.5% of its GDP toward defense spending.

Romania shares a 650-km border with Ukraine, and over the past year, fragments of Russian drones have repeatedly entered Romanian territory. Additionally, several regions are situated near Ukraine's Danube River ports, which are often targeted by Russian forces.

Under the terms of the loan agreement, Romania's defense ministry will have direct access to 700 million dollars, while up to 220 million dollars will be allocated to state-owned ROMARM. This company oversees 15 entities that manufacture a variety of defense products, from gunpowder to guided missiles.

The loan, facilitated by the United States through its Foreign Military Sales (FMS) program, will be repayable over a 12-year period. In August, the Romanian government authorized the country to pursue a total of 4 billion dollars in direct loan agreements through FMS, in addition to seeking up to 8 billion dollars from financial markets with US government guarantees.