Lithuanian Prime Minister announced that the country’s government intends to allocate 5.25% of the nation's GDP to military spending in the upcoming year.
Speaking on LRT TV on Thursday, Gintautas Paluckas expressed optimism about meeting this target, stating, “The goal is to earmark 5.25 percent [of GDP for defence] in the 2026 budget proposal. And I believe we’ll achieve this target”.
“I’m confident that this government, this coalition, and this Seimas will reach this goal,” he added.
The increased funding is part of Lithuania’s strategy to create a domestic military division and gear up to accommodate a German brigade by 2030.
In mid-January, the State Defence Council agreed that defense expenditures should range between 5 and 6% of GDP - approximately €12 billion - over the next half-decade.
The Lithuanian government plans to finance the spending by drawing from economic expansion, loans, and higher taxes. Paluckas said that borrowing, done in partnership with private enterprises, will account for the bulk of the additional military budget.
“It’s not the state borrowing, but companies investing in large defence infrastructure projects that do, with the state repaying them over 10 to 20 years. It’s a mixed model,” he said.
He noted that the precise mix of funding sources will become evident once the 2026 budget draft is unveiled.
On Wednesday, the cabinet gave the greenlight for the budget planning timeline for 2026–2028, shifting negotiations to the summer instead of autumn. Ministries have also been directed to trim their budgets to redirect resources toward defense.
The Finance Ministry is set to revise its economic and fiscal forecasts for 2025–2028 by September 11 and deliver the 2026–2028 budget draft to the government by October 15.
