Finland Makes 70% Defense Spending Increase in Shadow of War

(Bloomberg) -- Finland's five-party government agreed to add more than 2 billion euros ($2.2 billion) in defense spending after its neighbor Russia launched an invasion of Ukraine.

The one-time boost in expenditure represents about a 70% increase from the Nordic country's regular 2022 military budget of about 2.8 billion euros.

The country of 5.5 million people, which has the European Union's longest border with Russia, is joining similar initiatives elsewhere in Europe. Its neighbor Sweden, which also isn't part of the NATO alliance, aims to reach the defense bloc's target of military spending of 2% of gross domestic product “as soon as possible,” while Denmark seeks to reach NATO's target by 2033.

Finland's outlays include 1.74 billion euros on materials, such as weapons, and 163 million euros on surveillance aircraft for the border guard, Finance Minister Annika Saarikko said at a press conference in Helsinki on Tuesday. The government also decided that any unavoidable defense, border security and cyber security needs will be met even if that spending isn't mapped out in the budget framework, she said.

Talks originally scheduled to run over two days wrapped up in hours as ministers agreed on the spending plan for the next four years. The framework sees Finland's public finances running a deficit of about 7 billion euros each year through 2026.

The defense forces will get about 200 million euros this spring and 130 million to 200 million euros each year through 2026 for operative expenses, including more training.

In addition to the military expenditures decided on Tuesday, the government of Prime Minister Sanna Marin is implementing a 10 billion-euro procurement of a fleet of 64 Lockheed Martin Corp. F-35 multi-role fighter jets to replacing aging F/A-18 Hornet combat aircraft. The jet purchase is pushing Finnish military spending to more than 2% of its gross domestic product.