Lithuania must find new sources of revenue to sustain defence spending after a temporary clause allowing higher expenditures expires in 2028, the National Audit Office warned Thursday. Without additional funding, the defence budget could face cuts by 2029, the agency said.
The Audit Office emphasised that legislation aligning national and European Union fiscal rules must be adopted by the end of this year. Failure to do so would mean the 2026 draft budget could violate existing national fiscal discipline laws.
“As long as the defence clause is in force, the draft budget complies with EU rules,” Auditor General Irena Segalovičienė said in a statement. “However, before it expires, it is essential to secure sustainable sources of funding for defence and other key areas.”
Segalovičienė noted that Lithuania is currently adhering to the medium-term expenditure plan approved by the European Council, which allows for a temporary deviation of up to 1.5 percent of GDP under the defence spending clause.
“The country will make full use of this clause by 2028,” she said. “If we do not take timely decisions on sustainable defence funding after 2028, we will have to rapidly reduce the deficit. This would mean either new sources of revenue or reduced spending.”
She urged policymakers to act before the clause expires. “If we do not want to reduce defence funding in 2029, the issue of additional revenue must be resolved before 2028,” Segalovičienė said.
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