Poland and Lithuania Lead Baltic Sea Region Defense Spending in 2025, Followed by Latvia and Estonia

Photo: Jens Büttner/dpa/picture-alliance

13th January 2025, 00:49

Poland and Lithuania lead Baltic Sea nations in projected 2025 defense spending, approaching 5% and 4% of GDP, followed by Latvia (3.45%) and Estonia (3.3%). With Denmark's recent boost, Germany remains the only country in the region that struggles to fulfill 2% minimum.

The new Lithuanian government of Gintautas Paluckas decided in December to raise its 2025 defense budget to 3.9% of GDP, a decision lauded by President Gitanas Nausėda, who according to the Baltic News Service (BNS) stated on December 19 that the previous government had talked a lot about security but even planned to cut the defense budget. "We love our country through actions, not words, and I believe we're heading in the right direction," he added.

It remains to be seen, whether Lithuanian Ministry of Defense (MOD) will be able to absorb such an influx of extraordinaroy funding. The press office of the Lithuanian MoD said in a January 7 comment to The Baltic Sentinel, that regarding the additional EUR 800 million, "the Budget Law of the Republic of Lithuania increased the State's borrowing capacity by this amount at the time of its adoption" while the base defense budget for 2025 without this additional loan boost amounts to 2,4 billion euros, representing 2.95% of GDP.

Lithuania's President, Gitanas Nausėda, has been increasingly assertive in urging the nation’s politicians to take decisive action in strengthening the country's defense posture, ensuring it aligns with the heightened security threats. Photo: PETRAS MALUKAS/AFP

Lithuania can draw from Poland's example. Polish defense expenditure is expected to reach a record 4.7% this year. Since the start of the full-scale war in Ukraine, their armed forces have been undergoing a massive multi-year rearmament project. Additionally, since 2021, Poland has faced immigration attacks organized by Belarus and Russia. These attacks only have prompted the Polish government to spend 2,4 billion euros on border fortifications. "Eastern Shield" project aims to robustly deter potential cross-border military threats by 2028.

Poland is the only country nearing Donald Trump's desired level of defense spending—5%. Even the U.S. does not meet the demands of the incoming U.S. president, as it spent 3.4 percent of its GDP on defense last year. On January 12, the Financial Times reported that Poland is supporting Trump's call for a 5% minimum military spending target for NATO allies. While the 5% goal might seem ambitious, it highlights the past mismanagement of defense investments by NATO member states.

Lithuanian President Gitanas Nausėda also stated on December 25, according to BNS, that even after the latest budget boost country's defense remains underfunded and that Lithuania would require 5.5 percent of its GDP to fully implement its defense development program by 2030.

Latvia's Ministry of Defense is projected to allocate 3.45% of GDP to defense spending this year. If Lithuania successfully integrates its additional €800 million defense budget, Estonia—despite its 3.3% expenditure—will rank third among the Baltic states for the first time in recent years.

Latvia and Lithuania have expanded their defense budgets with considerably less public controversy than Estonia, where a political scandal erupted in the summer of 2024, when the Permanent Secretary of the Ministry of Defense, Kusti Salm, unexpectedly resigned, citing stagnation in military defense development under Prime Minister Kaja Kallas's government.

Partly in response to criticism, Kallas's successor, Kristen Michal, pledged to allocate an additional €1.6 billion between 2025 and 2030 to replenish ammunition stocks. However, the current government's mandate expires with the next parliamentary elections in 2027, leaving the full implementation of this program contingent on the priorities of future administrations.

Defense News reported on December 27, that Finland’s conservative-led government has unveiled a broad plan to lift defense spending from $6.8 billion in 2025 to $11.5 billion in 2032. According to the information provided by the Finnish Ministry of Defense the Finnish defense budget for the year 2025 is €6.5 billion, or about 2.5% of the GDP.

Finnish soldiers of the Finnish-Swedish Division ride the Leopard 2A6 during a demonstration of border crossing by Swedish and Finnish troops as part of the NATO Nordic Response 24 military exercise on March 9, 2024. Photo: JONATHAN NACKSTRAND

The communication specialist of the Finnish Ministry of Defense, Ronni Läpinen, said in a comment to The Baltic Sentinel that the increase in defense expenditure reported by Defense News "is being reviewed, but there are no government-level decisions on the matter at the moment."

Adam Schellin, deputy press secretary to the Minister for Defence Pål Jonson, told The Baltic Sentinel that in 2025, Sweden will spend approximately SEK 138 billion (or 11,8 billion euros) and 2.4% of GDP, on military defense. "It represents a 10% increase from the 2024 budget," Schellin noted, referring to the long-term plan for Swedish defense spending, which aims to reach a 2.6% level in 2026 and maintain it thereafter.

In October last year, the Norwegian government proposed to increase the defense budget for 2025 by NOK 19.2 billion (approximately 1,65 billion euros), up to a total of NOK 110.1 billion (9,46 billion euros). The proposal exceeds NATO's target of its members spending 2.16 percent of their gross national product (GDP) on defense.

Denmark had long lagged behind other Baltic Sea nations in defense spending. However, in April 2024, Prime Minister Mette Frederiksen's government decided to accelerate its original plan to reach NATO's 2% defense spending target by 2030. With an extraordinary funding injection, Denmark achieved this milestone in 2024, with defense spending estimated at 2.4% of GDP last year.

Following recent remarks by incoming U.S. President Donald Trump, suggesting that the United States might consider seizing Greenland due to Denmark's reluctance to adequately address its defense responsibilities—thereby posing risks to U.S. security—Prime Minister Frederiksen pledged to review the April 2024 agreement and allocate additional funds to defense. As a result, Denmark is expected to reach new heights in defense spending much sooner than planned last year.

President-elect Donald Trump’s strikingly expansionist rhetoric regarding Greenland has prompted Denmark to respond with a commitment to increase its defense spending. Photo: IMAGO/Kristian Tuxen Ladegaard Berg/IMAGO/Kristian Tuxen Ladegaard Berg

Denmark's recent commitment has left Germany as the only Baltic Sea nation without a decision on reaching the 2% defense spending minimum by 2025. A spokesperson for the German Ministry of Defense stated in a response to The Baltic Sentinel on January 7 that the Federal Government remains committed to NATO's two-percent target, as outlined in the Federal Government's security strategy adopted in June 2023. "I ask for your understanding that we are currently unable to provide any information on Germany's official defense budget for 2025, as the necessary parliamentary procedure has not yet been completed."

Germany is scheduled to hold federal elections on February 23, 2025, following the collapse of Chancellor Olaf Scholz's coalition government and a subsequent vote of no confidence.

Current polls indicate that the CDU, led by Friedrich Merz, is leading, positioning Merz as the frontrunner to become the next chancellor. Regarding defense spending, Merz has expressed intentions to increase Germany's defense budget.