2026-07-01
- There is no single indicator showing progress in modernisation. Although more than half of the national defence system’s annual appropriations are allocated to the modernisation of the armed forces, there is no single indicator that allows the progress of these investments to be assessed. Funding for modernisation is distributed across all nine programmes of the Strategic Action Plan, meaning that decision-makers do not have a single source of information on the results of modernisation.
- Strategic planning does not reflect the country’s changed security environment. 16 out of 23 Lithuanian Armed Forces capability development plans, which are used to determine the resource requirements for the armed forces’ capabilities, have not been updated for between 4 and 14 years; consequently, they do not fully reflect current defence priorities (such as the establishment of a national division or the hosting of a German brigade). Furthermore, no long-term strategic document at national level enshrines the continuity of funding beyond 2030, even though NATO member states have agreed to aim for funding of at least 5 percent of GDP by 2035.
- The need for digitalisation. Defence planning data is still managed manually by transferring information between Excel files, which are not even protected by basic document security features. The current financial management system (FinVIS) runs on outdated software from 2009, is unstable and does not provide the functionality required for modern planning and data analysis.
Between 2023 and 2025, funding for the national defence system increased by 73 percent. In 2025, 3.4 billion euros were allocated to national defence, representing 14.7 percent of the total state budget. More than half of this funding is allocated annually to the modernisation of the armed forces. The National Audit Office’s audit, “Financial management of the National Defence System”, revealed that the current system of financial management, planning and monitoring within the national defence system no longer keeps pace with the rapidly growing scale of funding and the changed geopolitical environment. There is no single indicator showing the results of modernisation; not all long-term strategic planning documents at national level reflect the new defence priorities; and there is a lack of a coherent data management system to support decision-making.
“Lithuania is investing more in national defence today than ever before. It is no longer enough simply to know how much money is being allocated. We need to see clearly what capabilities we are building with that money, what progress has been made, and what financial resources will be needed in the future. For this, strategic planning, financial management and data must function as a single system,” says Auditor General Irena Segalovičienė.
It is impossible to say whether the modernisation of the armed forces is proceeding according to plan
Around 2.3 billion euros is planned to be allocated to the modernisation of the armed forces in 2026 – more than double the amount compared to 2023. This accounts for more than half of the total funding for the national defence system. However, the state is still unable to answer a simple question: is the modernisation proceeding according to plan?
The audit revealed that there is no clear picture of how the modernisation of the armed forces is progressing. Progress is evident only in some parts of the Lithuanian Armed Forces, and there is no overall indicator that would allow the progress of the modernisation of the entire system to be assessed.
Funding allocated for modernisation is distributed across nine programmes within the Strategic Action Plan, and more than half of the objectives and indicators are duplicated across different programmes. As the programmes are structured according to military forces and units rather than in terms of the desired outcomes, responsibility for common objectives is spread across several programme coordinators. This makes it difficult to link priorities, funding and results, and decision-makers lack an overall picture of the capabilities being sought, how much they will cost and what progress has been made.
Furthermore, in the Programme for the Strengthening and Development of the National Defence System, the modernisation indicators and their target values have not been updated since 2023 (the values for eight indicators have not been increased), even though funding allocated to modernisation has increased significantly since then. It is planned that funding for the modernisation of the armed forces will amount to approximately 2.3 billion euros in 2026, i.e. 1.2 billion euros more than in 2023. As the current indicators were established when defence funding was planned to be considerably lower, they no longer reflect either the current scale of investment or the actual progress of modernisation.
Strategic planning is failing to keep pace with rising defence funding
Defence funding is growing faster than the strategic documents underpinning it are being updated. Although NATO member states have agreed to allocate at least 5 percent of GDP to defence by 2035, Lithuania’s strategic-level documents mainly plan long-term funding only up to 2030. What will happen after that remains unclear.
One example is the plans for the development of military capabilities. As many as 16 out of 23 plans, which set out the military capabilities that need to be developed, have not been updated for between 4 and 14 years. As a result, some of them no longer reflect the changed security situation and today’s defence priorities. The audit also revealed that top-level strategic planning documents do not define key priorities – such as the development of a national division or the hosting of a German brigade – with sufficient precision.
The audit also revealed that the current financial planning system is geared towards peacetime and is lengthy and complex. The budget preparation process comprises 19 stages. However, it has not yet been established how the financial management of the national defence system would operate in the event of war or a state of emergency, when decisions would need to be taken much more quickly.
Investments worth billions are still managed manually in Excel spreadsheets
Decision-makers need data that is readily accessible and reliable. However, the audit revealed that defence planning is still carried out using unlinked information systems and manual processes.
Defence planning documents are prepared in unlinked Excel files; these documents are manually transferred from one file to another, making it difficult to take decisions promptly. Inadequate traceability of data changes, and insufficient data security measures increase the risk of errors and data reliability.
In the auditors’ view, the financial resource management system FinVIS, which runs on a 2009 software version, does not fully meet current requirements. Due to incompatibility with updated operating systems, it operates unreliably, increasing the risk of malfunctions and service interruptions. During the audit, 7 out of 10 programme coordinators surveyed indicated that the system’s capabilities for financial management are insufficient.
What needs to be changed to ensure that investments worth billions are managed more efficiently?
The National Audit Office recommends reforming the strategic management of the national defence system so that defence priorities, the funding allocated to them and the results achieved are clearly linked:
- to enshrine long-term defence funding of no less than 5 percent of GDP by 2035 in strategic documents;
- update the armed forces’ capability development plans in line with the current geopolitical environment;
- optimise the structure of the programmes within the Strategic Action Plan;
- develop a unified defence planning information system;
- set out how the financial management of the national defence system would operate in the event of war or a state of emergency.
Once these changes have been implemented, it will be possible to see the overall progress of the armed forces’ modernisation and to monitor in real time whether the investments, worth billions, are delivering the expected results. Furthermore, decision-makers will be able to plan long-term funding more clearly, make decisions more quickly and ensure that financial management is prepared to operate even in the event of war or a state of emergency.