The agreement for the Cooperative Financial Mechanism (CFM) was signed between EDA chief Jorge Domecq and EIB vice-president Alexander Stubb.
CFM is aimed at creating funding support for budget-constrained member states participating in multinational defence programmes.
The arrangement will help countries that intend to join the multilateral projects but postpone their joining due to lack of budget allocation at the time of consideration.
It will seek to address the budget problems faced by collaborative projects due to ‘unsynchronised defence budgets’ of the participating countries.
Jorge Domecq said: “The CFM adds a very powerful instrument to our toolbox in the context of an enhanced momentum for defence cooperation fostered by the EU defence initiatives.
“In future, mismatching budgetary cycles or provisional gaps in funding should no longer exclude member states from participating in multinational programmes.”
France, the Netherlands, Spain, Belgium, Cyprus, Greece, Bulgaria, Hungary, Portugal, and Lithuania have already given their assent to join the CFM arrangement.
The EDA expects more countries to join the agreement in the coming weeks.
Alexander Stubb said: “A lack of access to suitable financing solutions allowing to better synchronise joint resources is seen as one of the major impediments to the launch or implementation of defence related cooperative projects.
“Via the CFM, the EIB can strengthen its lending in support of public sector projects, with, inter alia, potential investments in the fields of dual-use RDI of defence or cybersecurity technologies, including projects envisaged under the EU’s Permanent Structured Cooperation PESCO.”
The lending programme will come into force after all interested members sign up.