Trump administration wants to expand FMF loans

By Tony Bertuca / March 11, 2019 at 1:33 PM

The Trump administration's fiscal year 2020 budget proposes expanding authority to provide foreign military financing loans to boost the sales of U.S. weapons abroad.

“New for 2020, the budget requests interest rate flexibility for the FMF direct loan program to make U.S. defense equipment a more competitive and more affordable option for partner countries,” according to a summary released today by the White House Office of Management and Budget.

The budget also requests authority to provide partial U.S. government-backed loan guarantees to “incentivize the private sector to fill the defense financing gap, reducing the risk to U.S. taxpayers,” according to OMB.

The expanded FMF loan program would “complement” the budget's request for $5.4 billion in FMF grant assistance “so that America can still be the defense supplier of choice for partner countries for which loans are not the best option,” OMB states.

Lt. Gen. Charles Hooper, director of the Defense Security Cooperation Agency, said in October 2018 the government was “exploring flexible financing options” for U.S. allies seeking to procure weapon systems “at a much more economical price.”

U.S. arms sales, meanwhile, have been on a decidedly upward swing. In FY-18, the government secured $55.6 billion in sales, a 33 percent increase above the $41.9 billion secured in FY-17, which was a 25 percent increase above the FY-16 total.