2026-06-17
- A historically high level of funding is being allocated to national defence, but strategic planning must also reflect the changed security situation and new national defence priorities.
- NATO member states have agreed to allocate at least 5 percent of GDP to defence by 2035, but at the national strategic level, Lithuania has only planned its defence capabilities and the necessary funding until 2030.
- There is a lack of a consolidated picture of the implementation of the national defence system priorities.
Over the past three years, funding for the national defence system has increased by 73 percent and is projected to reach 5.38 percent of GDP in 2026. However, the National Audit Office’s audit, “Financial Management of the National Defence System”, shows that the state does not yet have a planning system adapted to this level of funding. Some of the key documents have not been updated for more than a decade, and the state still lacks a unified system that would allow it to link defence priorities, the funding allocated to them, and the results achieved.
“Lithuania has made a strategic decision to significantly increase investment in defence. However, increased funding alone is not enough. If we are embarking on a decade-long journey, it is not enough to know how much fuel we have today—we need to understand the entire route, future needs, and potential obstacles along the way. The more money is allocated to national defence, the more important it is to have a clear long-term plan, a unified system for monitoring priorities, and data that show how these investments strengthen the state’s defence capabilities,” says Auditor General Irena Segalovičienė.
Defence funding has increased, but strategic decisions do not reflect the new reality
NATO member states have agreed to allocate at least 5 percent of GDP to defence by 2035. However, at the national strategic level, Lithuania has only planned its defence capabilities, the resources required for them, and its funding needs until 2030.
Lithuania has decided to develop a national division, host a German brigade, and thereby strengthen its armed forces more rapidly; however, some of the strategic decisions used to assess future needs and plan investments still do not reflect these objectives. The strategic continuity of funding beyond 2030 must be clearly enshrined in national legislation to ensure the sustainability of development and the trust of partners.
In the auditors’ view, when billions of euros are to be allocated to defence not just for a single year, but for ten or more years, decisions must be based on reliable data that make it possible to assess what capabilities will be needed in the future, how much they will cost, and what financial resources will be required.
A unified system is essential for long-term planning of defence funding
The audit revealed that the national defence system lacks links between priorities, funding, and results. As a result, it is difficult to assess how many resources are allocated to the key defence priorities and what progress has been made in implementing them. Information on needs, appropriations, and results achieved is stored in different systems. Some priority needs are planned based on data that is not linked to one another, so decision-makers are unable to monitor progress in implementing priorities in real time.
The evenness of fund utilization needs to be improved. With just one quarter of the year remaining, one-third of the total defence budget remains unspent. This poses a direct risk of rushed purchases at the end of the year. According to the National Audit Office, long-term planning of defence funding requires a unified system that would allow for linking priorities, funding, and results, as well as for promptly monitoring progress in their implementation.
It must be clear who is responsible for the outcome and what progress has been made
The audit revealed that more than half (59 percent) of the national defence system's objectives and indicators are duplicated across different programs. Since programs are structured around military forces and units rather than desired outcomes, responsibility for common goals is fragmented. For example, the objective of staffing the armed forces is implemented through several programs, so it is unclear who is responsible for the final result, and information must be gathered from the coordinators of several programs. This structure leads to internal bureaucracy. Last year alone, the system had to make budget reallocations totalling EUR 440.9 million to ensure that funds were not lost at the end of the year.
A financial indicator - money spent - does not in itself defend the state or guarantee national security. Therefore, it is important for decision-makers to see, in real time, not just invoices, but the capabilities being built and the progress made. Currently, there is no single indicator that provides an overview of the total funding allocated to modernisation and its results. As investment in national defence increases, it is essential to ensure that the structure of the programs clearly reflects responsibilities and the progress achieved.
Financial management in national defence must be based on more flexible scenarios
The audit showed that there is currently no flexible model for the financial management of the national defence system in the event of war or a state of emergency. This means that, in the event of war or a state of emergency, the same procedures would be followed as under normal circumstances.
The current financial planning and accounting procedures consist of 19 stages. In the auditors’ assessment, such lengthy and multi-stage processes are appropriate in peacetime; however, under exceptional circumstances, it is important for the state to have a clear procedure in place in advance for how the financial resources necessary for national defence are to be planned, allocated, and managed.
The National Audit Office recommended that the Ministry of National Defence establish procedures for how the financial management of the national defence system would operate during wartime or a state of emergency, in order to ensure prompt and smooth decision-making.
Army staffing is improving
The audit showed that military staffing is improving. The staffing rate for professional military personnel increased from 91.1 to 94.5 percent over two years, while that for cadets rose from 70.7 to 78.6 percent.
According to the auditors, long-term personnel and financial planning is hampered by the fact that there is no established target for the number of junior officers (captains, captain lieutenants, first lieutenants, and lieutenants) required. As a result, it is not clearly defined how many officers in this rank group the armed forces will need in the future, and personnel and financial planning lacks greater detail and consistency.
In the National Audit Office’s assessment, in order to ensure long-term, data-driven personnel planning and consistent officer training, it is important to establish the projected need for junior officers.
The National Audit Office recommends improving the strategic management of the national defence system
The National Audit Office has made recommendations to the Ministry of National Defence aimed at strengthening the strategic management, financial planning, control, and monitoring of the national defence system. Once implemented, these recommendations would provide a clearer picture of the capabilities Lithuania is seeking to develop, how much they will cost, what financial resources will be required, and what progress has been made in building them.
It is expected that the implementation of these recommendations will have a complex impact on the entire national defence system:
- A percentage of GDP for long-term funding will be established, and capacity development plans will be updated to reflect the current threat environment;
- Processes will be established to ensure the financial management of the national defence system during wartime or a state of emergency;
- An optimised number of programs within the strategic action plan will enable efficient financial management, appropriate allocation of responsibilities, and monitoring of the overall results achieved by the national defence system;
- Automated data exchange will increase the efficiency, accuracy, and speed of defence planning processes;
- Established and implemented control procedures will help prevent potentially hasty and irrational decisions regarding the use of appropriations at the end of the year.