Kristupas Vaitiekūnas, Minister of Finance of Lithuania: ‘In today’s geopolitical environment, European security, resilience, and long-term stability begin on its eastern border’

Press release, 30 May 2026 (News ● Photos● Broadcasts and videos)

At the meeting of the NATO PA’s Economics and Security Committee during the Spring Session of the NATO Parliamentary Assembly at the Seimas, Kristupas Vaitiekūnas, Minister of Finance of Lithuania, spoke about security funding, emerging challenges, and possible solutions.

The Minister noted that Lithuania’s defence spending reached 5.4 % of GDP in 2026, one of the highest shares in the Alliance. The country’s GDP continues to grow above the EU average, with close to 3 % GDP growth expected this year. According to Mr Vaitiekūnas, investment is expected to grow by an average of 5 % this year and next year. ‘These are not minor footnotes — they are proof that a country can simultaneously strengthen its defences and maintain a dynamic, growing economy,’ he said. However, there is another side to increasing defence spending: ‘sustaining defence at 5.4 % of GDP for a longer term has consequences for public finance. Public debt-to-GDP ratio is expected to rise from 39.5 % in 2025 to 44.9 % in 2026 and further reach around 55 % of GDP by 2030.’

‘Rising debt limits our capacity to finance not only defence, but also other vital public goods: infrastructure, education, healthcare, and social cohesion. A society that neglects these pillars may win the military argument, yet lose the social contract. That is a risk no government can afford to ignore,’ Mr Vaitiekūnas said.

Referring to the decisions and instruments to boost defence investment, Mr Vaitiekūnas welcomed the historic agreement signed between Lithuania and the European Commission to secure almost 6.4 billion euros for Lithuania’s defence needs through the Security Action for Europe facility (SAFE). This is the Commission’s temporary Defence Enhancement Loan Facility, running until the end of 2030, with a total volume of 150 billion euros across the Union. Mr Vaitiekūnas also noted that SAFE loan commitments will weigh on Lithuania’s fiscal stance and on the debt trajectory.

The Minister of Finance of Lithuania made specific recommendations to members of the Assembly and allied governments:

·         European financial mechanisms should reflect the reality more explicitly through allocating substantial financing to European defence project of common interest;

·         The mix of European defence financing instruments should shift over time towards a higher proportion of grants relative to loans, particularly for frontline states;

·         The development of joint procurement mechanisms and shared capabilities needs to be accelerated. Efficiency gains from coordination reduce the per-unit cost of security and allow for greater capability for the same fiscal outlay;

·         Dual-use investment opportunities must be harnessed more systematically by developing infrastructure necessary for defence and security, while also serving civilian purposes — roads, rail, energy networks, and digital infrastructure;

·         The Parliaments of Allied countries must make the domestic political case for sustained defence investment. Numbers on a spreadsheet become real only when elected representatives explain to their citizens why security investment today prevents a far greater cost tomorrow.

With regard to maintaining increased defence budgets and addressing the associated economic consequences, Bart Kroon, General Rapporteur for NATO PA Economics and Security Committee, pointed out that although some progress had been made since the NATO Summit in The Hague, it was necessary to aim for countries to spend 5 % of their GDP on defence. This, he said, would ensure real deterrence and optimal military capabilities.

‘There will be discussions on how these costs will be financed by the states. Perhaps this will lead to more borrowing, or increased taxation, but it is most likely that these funds will be taken from other sectors. Programmatic sustainability is, therefore, crucial. These are difficult decisions because they will affect citizens and countries. Therefore, it is very important to communicate clearly about them –- we need to make our citizens and voters understand why defence spending is important, what the threat is, and how the increased defence spending will improve our defence capabilities and deterrence. And it is equally important for the public to understand and recognise that this investment will also allow the economy to develop,’ Mr Kroon said.

Dr Rebecca Harding, CEO of the Centre for Economic Security, stressed in her intervention that, instead of talking about economic growth, we need to talk about economic security, as ‘this helps people feel they are economically secure and have got a job tomorrow, and helps them stay confident that when they wake up in the morning they are going to be able to buy their groceries. And that is a critical question.’

According to Ms Harding, it is important to decide which defence funding mechanisms should be used: taxation, debt, or crowding in private finance. ‘This morning, we talked about defence as an investment vs defence as an expenditure. We need to see defence as an investment, not an expenditure. That is a critical issue. If we are investing, then there is a long-term growth dividend, a defence dividend that we can reap. Because it is a long-term framework that will help to create supply chains and create a sound financial ecosystem that means there is collaboration between the public and the private sector domains. If we use debt or taxation, then the impacts of the economic growth will be a lot lower,’ Ms Harding said.

The Economics and Security Committee also discussed critical raw materials and their impact on defence.

‘China is the world’s largest supplier of critical raw materials and rare earths and enjoys a monopoly over refining as the world’s largest producer of refined metals. China has demonstrated repeated willingness to impose export restrictions on these materials for economic and geopolitical purposes. Indeed, China’s willingness to use economic coercion and its ambition to control strategic materials is outlined in NATO’s 2022 Strategic Concept. If China were to restrict exports of rare earths and critical raw materials to our countries, the consequences would be severe. […] Therefore, we must do everything in our power to diversify our supply of critical raw materials and strengthen our supply chains. Of course, the scale of the challenge cannot be overcome by acting alone. Strengthening our supply chains will require close cooperation among NATO Allies and trusted partners also around the globe,’ said Annick Ponthier, Acting Rapporteur for the NATO PA Sub-Committee on Transition and Development.

Assembly members also heard a speech by Peter Handley, Senior Fellow at the European Initiative for Energy Security.