Lithuanian FinMin defends deficit budget: there was pressure to cut defence spending

There was considerable pressure, including from coalition partners, to sharply reduce defence spending while preparing next year’s government spending bill, Finance Minister Taurimas Valys said, defending the 2026 budget proposal that includes a sizable deficit.

“There were many temptations, including from some coalition partners, to make drastic cuts. Or to resort to certain tricks that might have been ill-considered and not coordinated with our defence partners,” Valys told LRT.lt in an interview.

“There were many proposals to look at other NATO countries and tie ourselves to the minimum required by our main partners, the Americans. But we stood firm. We created expectations among our partners and, by setting an example, are already seeing certain dividends,” he said.

Valys added that the government had also faced considerable pressure from the opposition.

According to the minister, Lithuania’s decision to allocate more than 5% of its GDP to defence is already paying off.

“We are no longer treated as a war zone. We are seen as resilient and determined, investing in defence and capable of attracting the attention of the world’s biggest market players,” he said.

Lithuania has committed to maintaining defence spending at a level in excess of 5% of GDP.

Valys also said that next year’s pension increases could potentially be financed using the surplus in the State Social Insurance Fund’s (Sodra) reserve, rather than drawing on the reserve itself.

“That question remains open,” he said.