Lithuania seeks EU exemption from fiscal rules to boost military expenditure
Lithuania Precisely Requests Budget Flexibility Exemption for Military Spending
On May 2nd, 2025, Lithuania officially asked for an exception to the EU's fiscal rules, with the intention of omitting a portion of its military spending—up to 1.5% of the country's GDP—from the calculation of its budget deficit, as stated by the Finance Ministry.
The documents, signed by Finance Minister Rimantas Šadžius, were dispatched to the European Commission and the Council on this date. This course of action was authorized by a government resolution, which was adopted on the preceding Wednesday.
According to Tadas Vinokuras, spokesman for Prime Minister Gintautas Paluckas, the government had previously granted authority to the Finance Ministry to petition for the activation of the budget exemption clause.
In a statement released on Wednesday, the EU Council announced that 16 member states—Belgium, Denmark, Estonia, Finland, Germany, Greece, Hungary, Latvia, Poland, Portugal, Slovakia, and Slovenia—were seeking provisional exemptions from the bloc's budget stabilization regulations to expand their defense expenditure.
The EU's executive body confirmed on Wednesday that 12 countries had already submitted their formal requests, with Lithuania not initially included on the list. The remaining requests were scheduled to be submitted later.
Following the Prime Minister's unveiling of plans to allocate 5.25% of Lithuania's GDP to military spending in the coming year, Finance Minister Rimantas Šadžius elaborated that not all of this allocation would necessarily feature in the 2026 state budget. He stated that Lithuania would take advantage of the EU exemption clause, which would enable the nation to temporarily surpass the 3% deficit-to-GDP limit mandated by the Maastricht Treaty.
In January of last year, Lithuania's State Defence Council decided to pursue an additional 12-13 billion euros for military spending between 2026 and 2030. As a result, military spending is projected to reach 5-6% of GDP. To finance this initial expansion, the government plans to leverage borrowing, as well as augment some taxes. Escalating economic growth is also anticipated to assist in offsetting the difference.
Lithuania's increased military spending is part of an objective to create a national military division by 2030.
In the context of Lithuania's ambitious military expansion plans, Finance Minister Rimantas Šadžius announced that the country would seek an exemption from the EU's budget stabilization regulations to temporarily surpass the 3% deficit-to-GDP limit, allowing flexibility in business finance for military spending. This move aligns with the efforts of 16 EU member states aiming for provisional exemptions in politics and general-news, including Belgium, Finland, and others, to expand defense expenditure in response to security concerns.
