The precise sums, however, hinge on how quickly Estonia can acquire the additional ammunition needed.

Other considerations include the dividing lines between defense spend on national defense proper, on internal security, and on aid to Ukraine.

Even as defense spending as a percentage of GDP may slightly fall next year, the minister noted that a sharper increase is expected by 2026.

This year's state budget allocates over €1.3 billion on defense, or 3.22 percent of this year's GDP. According to Pevkur, given

Since the coalition agreement includes a goal to procure additional ammunition, defense spending should continue to rise, Pevkur added. The key question remains the rate of this increase.

He said: "The main issue is still with 2025."

"Depending on whether we can procure some of the ammunition next year, the percentage [of defense spend of GDP] could vary between 3.14 percent and 3.35 percent."

"And from there moving forward, we will real hike defense spending to between 3.5 percent and 3.7 percent of GDP," Pevkur went on.

Pevkur confirmed that the 2025 state budget bill, which will be submitted to the Riigikogu in a month, is to include a specific allocation for national defense.

He said hopes to receive a detailed overview from the Defense Investments Center (RKIK) in the coming weeks, in order to determine how many additional millions can be allocated for ammunition procurement next year.

"We know there are delays in ammunition production, and much of the ammunition we want, it is not possible to procure," the minister said.

Pevkur outlined that whereas the defense budget will be slightly smaller next year, it will be correspondingly larger in 2026.

Despite this, he said he is confident that the absolute sum in euro terms will rise next year as well.

Next year's state budget will be the tightest

The procurement capacity outlined by the defense minister aligns with the state budget realities, it is reported.

On Tuesday, the Ministry of Finance presented an economic forecast in tandem with a scenario which takes into consideration the planned tax hikes and spending cuts outlined in the coalition agreement.

From there it can be read that if all agreed tax and spending plans are implemented, next year's budget deficit will be 2.8 percent of GDP.

Considering that the government aims to keep the deficit within the 3-percent range, per EU regulations, this means will be about €85 million available for additional spend.

In 2026, however, there will be more — over €400 million.

"This provides a bit more breathing space for national defense," said Pevkur. "However, from the perspective of ammunition procurement, the additional funds in 2026 and 2027 are more crucial than those for 2025," he added.

Coalition-agreed decision of €200-€300 million in additional funding to be assigned to internal security

Earlier this summer, the ministry's permanent secretary, Kusti Salm, stressed the need for additional funding for national defense. At the time, it was stated that Estonia needs additional ammunition worth €1.6 billion.

This week marks Salm's last in the post.

The exact sum of this additional need that will be covered by funding remains still somewhat unclear. Minister Pevkur said that a significant portion of the national defense tax, in reality a suite of tax hikes whose revenues will be directed to this goal, will cover the already planned hike in the defense budget.

This increase will be from 2 percent to 3 percent of GDP.

"And a second, large portion, of roughly €1.1 billion over the entire period, can be vectored towards broad-based security in the form of direct investments," Pevkur said.

 "We must make a separate cabinet decision on how much of this will go towards internal security and how much directly on ammunition. I estimate that the additional amount for ammunition will range between €800 million and €900 million."

This need for additional ammunition is related both to NATO's revised methodologies in calculating ammunition needs, and to a rethought approach which includes the military doctrine of neutralizing an enemy before it reaches or breaches Estonia's borders, compared with the thinking prior to the 2022 Madrid Summit.

Alternatives sought for proportion of EDF-requested ATACMS

A significant proportion of the additional ammunition stated needs consists of nearly 400-800 of the famous MGM-140 Army Tactical Missile System (ATACMS) long-range missiles, which can be launched by the equally high-profile  M142 High Mobility Artillery Rocket System (HIMARS).

The ATACMS missiles, weighing 1.5 tonnes each, have a range of 165 to 300 kilometers; while they have proven themselves on the battlefield in Ukraine, that effectiveness comes with a significant price tag: Of €1-2 million per missile.

On this, Pevkur said: "My task for the defense forces and the Ministry of Defense was to have a precise agreement in place by mid-September on what we will procure and how much we can acquire, depending on the additional funds available."

Pevkur stressed that the goal is to achieve the desired effect on the battlefield, not necessarily to acquire any specific weapon system over another. "Oftentimes we might want to find more solutions which are not based on a specific weapon system. For instance, can we achieve the same effect of impacting on the enemy at 300 kilometers with another weapon system or missile?"

"We are currently exploring and working on this as the goal is to achieve military capability, not to acquire any particular product," he added.

Pevkur also further noted that the capability of U.S. firm Lockheed Martin to produce ATACMS rapidly is crucial.

In any case, regardless of price and delivery times, Estonia will acquire more ATACMS missiles than was previously planned, Pevkur said.

"Our task is as quickly and as strongly as possible to achieve a good effect. Consequently, for us all options have to remain open," the minister said.

Kaljulaid: Defense budget needs to be more transparent

For at least five consecutive years, budget negotiations have inevitably included the question of how and at what pace defense spending will change.

The opposition has criticized the government variously for reducing the defense budget, or for not increasing it enough, often based on how defense spending changes as a percentage of GDP per annum.

Often in the public discussion, two messages have emerged, with some claiming that more money should be allocated to national defense, while others argue that there is actually less to allocate.

Social Democrat MP Raimond Kaljulaid, a member of the Riigikogu's defense committee, said he hopes for a more transparent state budget for 2025.

"Since this moment when Estonia transitioned to the new state budget calculation method, it has been quite difficult for the Riigikogu and for the National Defense Committee to fully grasp what is happening in the defense sector," Kaljulaid said.

The MP did however acknowledge that the committee has received working documents from the Ministry of Defense which have clarified the situation.

€100 million earmarked for Ukraine to be entered in defense spend budget line

When Pevkur appeared before the National Defense Committee in June, Kaljulaid said he stressed that the state budget should clearly include the funds specifically in support of Ukraine, noting that the full-scale war is now in its third year and decisions of this kind should involve the Riigikogu.

Kaljulaid said at the time: "Will it be the case that the Riigikogu allocates money to the Estonian Defense Forces, but then the Estonian Defense Forces then say that everything is critical, nothing is available, there is no ammunition, and quietly move it to Ukraine via the back door, and then say all over again that all the ammunition is gone, and we are short again?

"Shouldn't the Riigikogu be proactively involved in these processes?" he went on.

In a subsequent interview, the MP also emphasized that all members of the National Defense Committee support aid to Ukraine. "However, the Riigikogu must have a clear understanding of where taxpayer money is going."

"If we have committed to supporting Ukraine until 2027 with at least 0.25 percent of GDP, then of course this obligation must be reflected in the state budget, the state budget strategy, and all documents reflecting the Ministry of Defense budget," Kaljulaid said.

According to Hanno Pevkur, the line entry in the budget is a technicality. "It is not something of importance for me," he said.

However Pevkur was certain that support promised to Ukraine will be counted as part of defense spending.

This means that if next year's budget will allocate 3.25 percent of GDP to defense, 3 percent will go on domestic defense capabilities, and 0.25 percent as aid to Ukraine.

"Ukraine's victory is also our war and it is indirectly defending us, and every Russian tank destroyed is one less tank at our borders," the minister said. "So this support serves the same purpose, namely to enhance Estonia's security."

In relative terms Estonia has been alliance-leading in its defense spending in recent years, exceeding the 2.5-percent of GDP-mark, and well exceeding the NATO minimum of 2 percent.

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