Lithuania submits a request to EU Council for more flexibility in defence funding
At the last meeting, the Government adopted a resolution on Lithuania’s medium-term fiscal-structural plan and annual progress report, which authorised the Ministry of Finance to address the Council of the European Union (EU) with a request for the activation of national escape clause under Council Regulation 2024/1263. Following the entry into force of the resolution, an official request from the Ministry of Finance reached the Council of the EU today.
“In a complex geopolitical situation, the Member States of the European Union, in response to the European Commission’s initiative to strengthen EU and national defence capabilities, address the Council in a coordinated manner in order to activate the escape clause. Once it is activated, Lithuania will be able to allocate more funds for ensuring the country’s defence and overall security than it could spend without applying the flexibility clause of the EU fiscal discipline rules,” Minister of Finance Rimantas Šadžius says.
Lithuania has addressed the Council of the EU regarding the activation of the national escape clause for 2025-2028 in the light of the European Commission's Communication on the assessment of defence spending, which, among other things, invites EU Member States to use the flexibility clause of EU rules in a coordinated manner. Under the EU Regulation, the Council of the EU may adopt a recommendation authorising a Member State to deviate from its net expenditure path defined by the Council, to the extent that it maintains the medium-term sustainability of general government finances, due to circumstances outside the control of the Member State, with a major impact on the public finances of the Member State concerned, provided that such deviation does not endanger fiscal sustainability over the medium term.
It should be noted that the escape clause will only be valid until 2028 and therefore, in order to maintain fiscal sustainability, we need to address the structural increase in defence spending already now. The tax amendments initiated this spring respond precisely to the European Commission's call for fiscal sustainability.
Last updated: 05-05-2025
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