Saeima sets Latvia’s defence spending at minimum 5% of GDP from 2027 / Article

Latvia’s parliament, the Saeima, has approved amendments to the National Defence Financing Law, mandating that national defence spending equal at least 5% of the country’s gross domestic product (GDP) annually, beginning next year.

Increased Defence Spending Approved

Anda Čakša, chairwoman of the Budget and Finance (Tax) Committee, emphasized the importance of increased national defense funding, stating it is the highest state priority. “This decision is essential both for strengthening our security and as a clear signal to our NATO allies about Latvia’s commitment to investing in defense in the long term. At the same time, defense investments serve as a significant driver of economic development, promoting the development of local industry, innovation, and infrastructure,” Čakša said.

Defence spending is currently projected at 4.9% of GDP for this year and could exceed the 5% threshold even before it becomes compulsory if economic growth remains weak, a trend previously observed.

A decade ago, Latvia allocated just 1% of its GDP to defence. The subsequent increase to 2% by 2020 was considered a significant step, but recent events have prompted further adjustments.

The Ministry of Finance forecasts faster GDP growth than previously anticipated. However, these forecasts do not account for potential economic disruption caused by the ongoing conflict in Iran and the Middle East.

The new law establishes a minimum of 5% of the forecasted GDP for national defence funding, replacing the previous regulation which required at least 3% of GDP.

According to a Saeima release, the amendments are necessary due to the changing security situation in the region and the need to strengthen the country’s defence capabilities, including the development of combat capabilities, hosting of allied forces, and growth of the military infrastructure and defence industry.

The Saeima also noted the importance of oversight regarding the use of these additional funds, citing concerns over expenditures such as the costly installation of a surplus armoured vehicle as a “sculpture,” which contributes nothing to national defensive capabilities.