The Nordic country drastically slashed its defence spending after the Cold War ended, but reversed course following Moscow's 2014 annexation of Crimea.

The aim was to increase defence spending to 3.5 percent of GDP by 2030, up from the 2.4 percent the country currently spends.

"We have a completely new security situation... and uncertainties will remain for a long time," Prime Minister Ulf Kristersson told reporters, adding it marks Sweden's "biggest rearmament since the Cold War".

The Nordic country dropped two centuries of military non-alignment and applied for membership in NATO in the wake of Russia's invasion of Ukraine -- becoming the 32nd member in March 2024.

Sweden has already decided on investments that are expected to put defence spending at 2.6 percent of GDP in a few years, Kristersson said while noting this already put it well above NATO's two percent spending target.

"That is not enough," Kristersson said. "Our assessment is that NATO and especially European NATO countries need to take major steps in the coming years."

Kristersson said that his country expected that NATO would decide to increase the spending target at an upcoming NATO summit in June and were aiming toward what they believed the new target would be.

In March 2022, after Russia's full-fledged invasion of Ukraine, Stockholm announced it would increase spending, aiming to dedicate two percent of GDP to defence "as soon as possible".

While previous defence spending increased have been financed through the country's regular budget, Kristersson said that in order to rearm in such short time it was necessary to "borrow" funds defence during a "transitional period."