Lithuania's finmin sees no ways for additional defense borrowing next year

  • 2023-10-25

VILNIUS – Lithuanian Finance Minister Gintarė Skaiste says she sees no possibility of additional borrowing for national defense next year without violating the fiscal discipline requirements, adding that the inclusion of such a right into the law would not make any difference.

"Since the law also contains other safeguards, which means that the overall borrowing limit should not be exceeded and the overall government deficit should not be exceeded, which is currently set at 2.9 percent, I would say that the chances of making use of this right would be quite minimal," Skaiste said, commenting on the proposal approved by the parliamentary Committee on National Security and Defense earlier in the day.

"I would say this solution is more of a simulation of a solution than real national defense funding," she added.

Earlier in the day, the CNSD recommended that the government reconsider President Gitanas Nauseda's proposal to include a provision in next year's budget, "envisaging the right to borrow, without violating the fiscal discipline rules, additionally up to 0.29 percent of Lithuania's GDP for national defense to ensure the development of the capabilities of the Lithuanian Land Force's division and to ensure the increase of the NATO-allied forces in Lithuania to the size of a brigade".

Kestutis Budrys, the president's chief national security advisor, said during the committee's meeting last week that the draft 2024 budget failed to earmark funding for creating the division, even though members of the State Defense Council had agreed that this would require additional funds.

"Systematic and coherent solutions are needed if we really want to genuinely care about increasing national defense funding. It seems to me that a party agreement in this case would be a very welcome step in this direction," the finance minister told reporters on Wednesday.

The government proposes allocating 2.71 percent of GDP for defense next year, and it would include 2.52 percent of budget money and the rest would come from the temporary bank solidarity levy. The total planned defense spending is expected to reach 2.06 billion euros euros. 

The planned budget deficit will exceed this year's 2.9 percent of GDP, and the government debt will reach 39.8 percent of GDP.