Lithuanian govt mulls borrowing for meeting NATO’s 2 pct defense funding target

The country plans to use funds borrowed by the Finance Ministry to avoid a more complicated procedure of budget redistribution.

The Finance Ministry has drafted and is submitting an amendment allowing it to use borrowed funds to finance NATO-related financial commitments. The government will discuss the proposed amendment on Wednesday.

It was claimed during the planning of the 2018 budget that Lithuania’s defense spending would reach 2.006 percent GDP but due to the country’s faster-than-expected growth, that rate might be smaller.

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Based on NATO projections published in early July, Lithuania’s defense budget should stand at 1.96 percent GDP this year but the Lithuanian government pledged to reach the 2-percent target.

Lithuania’s Finance Ministry and the European Organization for Economic Co-operation and Development will update their forecasts for Lithuania in the fall and they will be taken into account when making decisions on using borrowed funds to finance defense commitments.

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