Lithuania plans to substantially increase its defense spending to 5.25% of GDP in 2026, up from the current 3.9%, Prime Minister Gintautas Paluckas announced during an LRT TV broadcast on Thursday.
The ambitious military budget expansion aligns with Lithuania's broader defense strategy, which includes establishing a domestic military division and preparing infrastructure to host a German brigade by 2030.
This decision follows the State Defence Council's January recommendation to maintain defense expenditure between 5-6% of GDP over the next five years, amounting to approximately €12 billion. Lithuania announced plans to increase its defense spending to an unprecedented 5-6% of GDP starting in 2026, becoming the first NATO member to commit to such high military expenditure levels amid growing concerns about Russian aggression.
The government intends to fund this increased military spending through a combination of economic growth, loans, and tax adjustments. Prime Minister Paluckas emphasized that private sector partnerships will play a major role in financing defense infrastructure projects, with state repayments spread over 10-20 years.
To accommodate the defense spending increase, ministries have been instructed to reduce their budgets. The precise funding distribution will become clear when the 2026 budget draft is presented.
The cabinet has approved a revised budget planning schedule for 2026-2028, moving negotiations to summer from autumn. The Finance Ministry will update economic forecasts by September 11, with the complete budget proposal due to the government by October 15.
This military spending increase reflects Lithuania's commitment to strengthening its defense capabilities in response to regional security challenges.