Šimonytė says lower defence spending share was expected

Former prime minister Ingrida Šimonytė said she was not surprised that Lithuania plans to spend a smaller share of its gross domestic product on defence next year, LRT reported. Prime Minister Mindaugas Sinkevičius said the government intends to allocate €4.8 billion, or slightly more than 5% of GDP.

The planned allocation is €36 million more than this year’s, but economic growth means defence spending will make up a smaller share of GDP. Šimonytė said the government’s strategic planning document set a target of 5.5% of GDP for defence, a level that was not reached this year: the allocation was 5.38%.

She said projections for the three-year budget had indicated that the government would keep defence funding at roughly the same level, causing its share of GDP to fall as the economy grew. She said the proposed approach had been apparent since last autumn.

According to Ministry of National Defence figures cited in the report, defence spending was just over 3% of GDP in 2024, more than 4% in 2025 and 5.38% in 2026.

Šimonytė also said the European Commission’s allowance for increased borrowing for defence had made the higher spending possible without breaching fiscal rules. She pointed to next year’s projected budget deficit of 3.8%, saying it could reach about 4% in practice. She questioned whether at least €200 million in projected revenue from improved tax administration would be collected, saying it was not reflected in macroeconomic indicators.

She said the government would need to explain how it planned to fund defence needs after the current exception ends in 2029. Šimonytė also warned that debt-servicing costs would rise substantially. State Auditor Irena Segalovičienė told parliament earlier this week that those costs could approach €2 billion in three years.