After the President’s Office suggested that Lithuania could borrow in order to increase its defence spending, Prime Minister Ingrida Šimonytė says it is impossible under EU rules.
“The planned budget deficit is already close to the limits of the Maastricht criterion,” Šimonytė told the radio Žinių Radijas on Thursday, referring the rule that euro zone countries must keep their budget deficits within 3 percent of GDP.
Last year, the rule was suspended due to the coronavirus pandemic, Šimonytė added, “and the state was basically able to plan a deficit it considered necessary in the current circumstances”.
“Now we have a formal restriction that comes back into play from 2024, so I am afraid we won’t have such possibility in next year’s budget,” she added.
Irena Segalovičienė, an adviser to President Gitanas Nausėda, told BNS on Monday that the president would propose keeping the possibility of borrowing in order to have military spending at 3 percent of the GDP. Some of the money is needed to carry out plans of establishing a military division in the Lithuanian armed force.
“We had the right to borrow up to 3 percent of GDP for defence in the 2023 budget, and we have not foreseen it in 2024. With that in mind, we won’t have even a theoretical possibility to take some further step towards the establishment of a national division,” she said.
Under next year’s government spending bill, defence funding is expected to reach around 2.06 billion euros or 2.71 percent of GDP. The lion’s share of around 1.93 billion euros, or 2.52 percent of GDP, will come from budget appropriations. The rest will come from the temporary tax on banking windfall profits, but the money can only be used for infrastructure.
NATO experts
Lithuania’s Defence Ministry says it has been urged by NATO experts to maintain the military budget growth.
The ministry and the country’s military leadership discussed the issue with NATO defence planning experts who visited Lithuania, the ministry said in a statement on Thursday.
“One of the main things the NATO representatives focused on was the importance of Lithuania’s growing defence budget for the implementation of the national plans and commitments. The defence budget should continue to grow in order to fully meet Lithuania’s commitments to the alliance and to ensure Lithuania’s national aspirations,” Defence Vice Minister Žilvinas Tomkus said.
“Experts also underline the importance of upgrading. Our army meets NATO’s high standards as the acquisition of modern weapons provides the army with capabilities it did not have before and they are also important for the alliance as a whole,” he added.
According to the ministry, the NATO representatives stressed the importance of increasing combat capability, firepower, manoeuvre and troop protection on today’s battlefield, adding that it is also important to develop enabling combat support and supply units, in particular air defence, intelligence, military engineering, and logistics capabilities.
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