Results of the financial audit of the set of accounts of the National Defence Fund for the year 2025

• An audit of the accounts of the National Defence Fund revealed that the Fund’s current operating model is inflexible—although there are funds available, current regulations prevent them from being used in a timely manner.
• At the end of 2025, EUR 36 million remained unused in the National Defence Fund, even though some institutions lacked funds for defence projects. Of the planned EUR 25 million for civil protection, only EUR 2.48 million was used, and at the end of the year and the beginning of the next, municipalities were unable to receive funding for work already completed.
• The accounts lack clear information on what specific results were achieved by spending nearly EUR 297.5 million.

The National Defence Fund (hereinafter referred to as the Fund) is intended to contribute to the financing of urgent projects aimed at strengthening national defence and civil protection—ranging from the procurement of weapons, equipment, and ammunition to military infrastructure, the hosting of a NATO brigade, military mobility projects, and the strengthening of civil protection. The National Audit Office, having audited the Fund’s 2025 set of accounts, identified significant deficiencies in financial management and accountability.
  
In 2025, the Fund’s inflexible model hindered the financing of defence and civil protection projects
  
The audit revealed that the Fund’s current operating model is inflexible and cannot serve as a sustainable source of funding for defence and civil protection projects. Although the Fund had funds available, complex regulations prevented institutions from using them when funds were needed for military infrastructure, mobility, or civil protection projects. This led to a paradoxical situation: by the end of 2025, EUR 36 million remained unspent in the Fund, even though some institutions were short of funds for projects at the time and had to revise their program budgets, and in some cases, borrow to continue projects. The situation is further complicated by the fact that unused Fund money cannot automatically be used for ongoing projects the following year. Unlike regular state budget appropriations, this money can only be used if it is pre-planned in the following year’s budget.
  
“If the state has millions in unused funds at hand, yet institutions are forced to borrow for defence projects, then the problem is not a lack of money, but the funding model itself,” says Auditor General Irena Segalovičienė.
  
Millions of euros earmarked for civil protection projects have remained unused
  
This problem was particularly evident in the area of civil protection. In 2025, EUR 25 million was allocated for the strengthening and development of civil protection, but only EUR 2.48 million was actually spent. Of that amount, EUR 1.34 million went towards shelter infrastructure, EUR 1.15 million towards improving preparedness, and not a single euro was spent on enhancing the resilience of the healthcare system.
  
The chosen model for financing civil protection is also a cause for concern. Civil protection funds were allocated to municipalities through a competitive bidding process, but no mechanisms were established to ensure that funding would first reach the municipalities with the greatest shortage of shelters. This is particularly relevant because a preliminary study conducted by the National Audit Office in 2025 showed that some municipalities still do not have enough shelters, and existing collective protection structures do not always meet the established requirements.
  
The accounts lack clearer information on the results achieved using the Fund's resources
  
The audit showed that it is impossible to objectively assess the cost of implementing some of the Fund’s objectives. Activities related to different objectives overlap: for example, while implementing NATO brigade infrastructure and military mobility projects, similar work was also funded at the Rūdninkai training area. This makes it difficult to accurately determine the cost of a specific project, which creates conditions for subjective allocation of funds and complicates the evaluation of results.
  
The audit also revealed a lack of clear information regarding the results of the Fund’s utilization. Although the reports indicate that nearly EUR 297.5 million have been spent, they do not specify what specific equipment was acquired, what facilities were built, or what capabilities were strengthened.
  
What does the National Audit Office recommend?
  
In the opinion of the National Audit Office, the resource fund established in practice, which operates as a separate public sector entity, and its financing model do not contribute to the optimal management of the state’s financial resources. Therefore, a recommendation was made to the Ministry of National Defence to change the Fund’s financing model so that projects would be financed on time and their implementation would not depend on fluctuations in monthly tax collection.