The amount, a "record figure", will be included in the government's 2026 budget, Ruginiene told reporters at the announcement of the spending plan, which is to be submitted to parliament.

The increase has been driven by the deteriorating security situation on NATO's eastern flank, following Russia's invasion of Ukraine in 2022.

For this year, the Baltic country allocated 4.05 percent of its gross domestic product, or 3.34 billion euros ($3.88 billion), to defence.

"We are moving at the same pace as our neighbours and strategic partners, as everyone understands that our region... must today pay great attention to defence," the prime minister added.

She stressed this did not involve just military spending, but also investments in infrastructure, including roads leading to army training camps.

Neighbouring Estonia has agreed to meet the North Atlantic Treaty Organization's five-percent target next year, while Latvia has allocated 4.9 percent of GDP, according to the 2026 budget proposal.

Poland, the largest country on NATO's eastern flank, will also increase its defence spending next year, to 4.8 percent of GDP.

In June, the 32-nation alliance agreed to massively boost defence spending to five percent of GDP over the next decade under pressure from Trump.

However, they reached a compromise in which that total can include security-related spending such as critical infrastructure.

More than a quarter of NATO countries remained below the previous target of two percent in 2024, according to the alliance's latest estimates.