I.Šimonytė: defense bonds would increase the state debt

“Defense bonds are the same debt, so it seems to me that anyone who proposes to borrow more for defense, they’re just being clever, because it’s self-deception. (…) If we increase the percentage we allocate to defense without increasing the percentage of income we collect in the budget, then we are simply increasing our debt,” I. Šimonytė told Žinių radio on Thursday.

Previously, the faction of the opposition Lithuanian Social Democratic Party in the Seimas appealed to the Government to consider the creation of a new source of income, defense bonds. According to party representatives, the defense budget is currently clearly insufficient, so it is necessary to urgently look for alternative sources of funding.

I. Šimonytė says that with the growing debt, the costs of servicing it would also increase, which could be used to finance the same defense.

“Whether it’s bonds, or something else, or a bank loan, it doesn’t matter here at all – it’s a debt that costs interest, and that interest cost is a pretty unpleasant thing. (…) Already in 2025, we will need to set aside a couple of hundred million euros for debt service in addition to what we will set aside in 2024. We would find a couple of hundred million euros to spend on, to add funding to the same defense,” said I.Šimonytė.

The state cannot afford to rapidly increase its debt, said the Head of the Government: “Lithuania’s debt is not the largest in the European Union yet, but it has such a very bad feature that it starts to grow very quickly once it catches the hook, and we really cannot afford this.” And the other thing is that you have to pay interest on the debt, and the interest squeezes out our national spending, and that’s always frustrating when you’re budgeting.”

The total planned national defense expenses for next year will reach 2 billion. 60 million euros.

According to the data of the Ministry of National Defense, it is planned that the total defense budget in 2024 will reach 2.71 percent. of the gross domestic product (GDP), of which 2.52 percent GDP is budget funds, the rest is the money of temporary bank solidarity contribution.