On Thursday, 26 March, the Saeima adopted in the final reading amendments to the Law on Financing National Defence, which provide for increasing national defence spending to 5% of the gross domestic product (GDP).

Anda Čakša, Chair of the Budget and Finance (Taxation) Committee, which was responsible for the amendments, emphasises that increasing funding for defence is the highest national priority. “This is a crucial decision for reinforcing our security and also a clear signal to our NATO allies of Latvia’s long-term commitment to investing in our defence. At the same time, investments in defence serve as a significant driver of economic development, promoting the growth of local industry, innovation, and infrastructure,” Anda Čakša notes.

The amendments set national defence funding at a minimum of 5% of the gross domestic product projected for the relevant year, thereby replacing the current regulation, which stipulates funding of no less than 3% of GDP.

These amendments are necessary given the changing security situation in the region and the need to strengthen national defence capabilities. Increasing defence funding is essential to ensure the development of the combat capabilities of the National Armed Forces, the hosting of allied forces in Latvia as well as the development of military infrastructure and the defence industry.

According to the budget plan adopted by the Saeima, defence spending is set to increase to 5% of GDP starting in 2027. The Ministry of Finance, in updating its economic growth forecasts, points to faster GDP growth than previously projected. Consequently, the previously planned share of defence spending in 2027 will amount to 4.81% of GDP, so additional funding will be required to achieve the 5% target.

Saeima Press Service