Sweden Plans Major Military Boost with 300 Billion Kronor Loan

The defense is to be rapidly reinforced with loans that are estimated to amount to 300 billion kronor. It's urgent, says Prime Minister Ulf Kristersson (The Moderate Party).

» Published: March 26 2025

Sweden Plans Major Military Boost with 300 Billion Kronor Loan
Photo: Johan Nilsson/TT

The loans will finance the largest military buildup since the Cold War. And decisions must be made now so that Sweden's defense capabilities increase quickly enough, according to the Prime Minister.

The reason is the threat from Russia, while the USA is feared to decrease its engagement.

NATO is therefore expected to impose significantly higher demands on member countries' defense budgets at its summit in June.

Today, the minimum requirement is two percent of GDP. Sweden is at 2.4 percent, approximately 140 billion kronor, and is heading towards 2.6 percent by 2028.

The government expects NATO's new goal to be between three and four percent of GDP and believes it will land at 3.5 percent.

Not to crowd out welfare

The government and the Sweden Democrats agree that NATO's new goal must be reached by 2030. If the goal is 3.5 percent, it means that the defense budget will grow to 255 billion kronor by 2030. That is approximately 70 billion more than what is planned in the current defense decision for 2030.

USA's President Donald Trump has mentioned five percent, NATO's Secretary-General Mark Rutte has spoken of around 3.5 percent, while there are NATO countries that want to see lower goals.

We will stick to exactly the goal that NATO adopts, says Kristersson.

They also agree that the buildup during a transition period of ten years will be financed with loans.

The new military defense expenditures must not crowd out other important welfare needs or investments in internal Swedish security, says Kristersson.

To reach a defense budget of 3.5 percent of GDP by 2030, it is estimated that 300 billion kronor will need to be borrowed.

The Prime Minister expects there to be consensus on financing in the Riksdag.

The plan is to gradually replace loan financing with regular budget allocations and pay for it entirely from the state budget after 2035. The interest on the increased state borrowing will, however, burden the state budget during the ten-year period.

Kristersson states that a loan of 300 billion kronor means that the national debt will increase by two to three percentage points. Sweden is, however, far below the EU's ceiling.

NATO sets the tone

Already this year, the Swedish Armed Forces will be able to place orders for defense equipment worth an additional 25 billion kronor as part of the rapid buildup.

The direction of the buildup will be largely determined by NATO's requirements.

It's no secret that everything related to the Baltic Sea is very central to our part. Then NATO may have expectations that Sweden will grow in capacities that we don't have yet, says Kristersson.

The buildup that NATO demands will be paid for with loans during a transition period of ten years.

The government believes that NATO may demand defense budgets of around 3.5 percent of GDP.

It is estimated to require an additional 300 billion kronor for defense compared to what the Riksdag has decided.

The new percentage goal is what the government wants to achieve by 2030.

Loan financing will be replaced with budget allocations after 2035.

The Swedish Armed Forces will already this year be able to order defense equipment worth an additional 25 billion kronor.

Ukraine support is being brought forward by reallocating 15 billion kronor that was supposed to go to Ukraine in 2026 to this year.

96 million kronor is allocated this year to counter hybrid threats. Half goes to the Coast Guard.

Source: The Government

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By TTThis article has been altered and translated by Sweden Herald

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