Ministry: Latvia will need extra 92 million euros for defence next year

To ensure an increase in defence spending to 5% of gross domestic product (GDP), significant additional state budget funding will be required in the coming years, according to the Ministry of Finance’s opinion submitted to the Saeima Budget and Finance (Tax) Committee in response to the amendment to the State Defence Financing Law proposed by President Edgars Rinkēvičs.

The LETA news agency reports that at the Finance Ministry's meeting on May 13, 2025, the Cabinet of Ministers decided to move toward spending 5% of GDP on national defence, NATO capability targets, and security needs, as well as military support for Ukraine. Consequently, the 2026 Budget Law already provides for additional funding for defense within the framework of funds to be reallocated during the annual state budget execution process.

According to the GDP forecasts approved by the Fiscal Discipline Council in February 2026, following the reallocation of funds to the Ministry of Defence, the defence budget will amount to 4.81% of GDP in 2027, 4.64% in 2028, and 4.52% in 2029.

To reach the 5% funding level set in the draft law, an additional 92.1 million euros would be needed in 2027, 181.1 million euros in 2028, 258 million euros in 2029, and more than 1.12 billion euros in 2030.

It has already been reported that Rinkēvičs submitted amendments to the State Defence Financing Law to the Saeima, proposing to increase mandatory funding from the current 3% to 5% of GDP starting in 2027 and requesting urgent consideration of the bill.

The explanatory memorandum to the bill emphasises that the threat posed by Russia following its invasion of Ukraine has significantly altered the security situation, making the previous 3% target no longer sufficient. The bill also aligns with NATO’s target of investing at least 5% of GDP in defence by 2035.

The Ministry of Finance has previously indicated that this year’s budget allocates 2.2 billion euros for defence, or 12.2% of government spending, as well as an additional 650 million euros in reallocated funds to strengthen national defence capabilities.