Poland presents a significant example of adapting to security threats. Following Russia’s incursion into Ukraine, Warsaw needed to rapidly expand its military capabilities. Traditional funding was inadequate, so the government created the Armed Forces Support Fund, managed by Bank Gospodarstwa Krajowego (BGK), Poland’s development bank.
BGK combined state guarantees with international debt instruments to efficiently secure large-scale funding for defense contracts. By mid-2025, over 172 billion złoty (approximately €40 billion) had been raised for contracts with suppliers from countries including the United States, South Korea, the United Kingdom, Sweden, and Norway.
Integrating market-based financing for defense required collaboration with the State Treasury and proactive investor engagement. BGK, working with the Ministry of Finance, developed strategies for bond issuance and investor relations, including roadshows and regular investor engagement. Establishing yield curves in multiple currencies through liquid benchmark securities, BGK improved its capacity to use bond markets for defense funding.
The fund’s design is a valuable model for Europe, blending flexibility, government backing, and transparency while leveraging global markets. BGK utilized export credit agencies to align financing with Poland’s contract structures. This facilitated swift equipment delivery and enabled negotiations for offsets, incorporating production and technology into Poland. Financing was achieved at competitive rates, previously considered unachievable by any bank.
Recent agreements highlight the model’s impact. In July 2025, BGK formed a framework with the Export-Import Bank of Korea and Korea Trade Insurance Corporation to finance Poland’s acquisition of Korean heavy equipment. These agreements go beyond purchases, including direct financing, credit guarantees, and technology transfer, localizing supply chain elements in Poland. This enhances defense autonomy for Poland and the EU, while establishing South Korea as a key industrial partner.
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