(Reuters) - Romania will raise the defence ministry's 2014 budget by 700 million lei ($217.41 million), or 0.2 percent of national output, Prime Minister Victor Ponta said on Monday.
The announcement comes as tensions continue to build in neighbouring Ukraine after Russia's annexation of Crimea.
Romania has agreed a fiscal budget deficit target of 2.2 percent of gross domestic product this year under the terms of a 4 billion euros aid deal led by the International Monetary Fund.
Higher defence spending would raise the ceiling, as would government plans to slash employer taxes to the social insurance budget. An IMF mission is expected in Bucharest later this year.
"We will supplement this year's defence ministry budget ... by roughly 700 million lei, or 0.2 percent of GDP," Ponta told reporters. He added troops will get better technical equipment, with upgrades done mostly in Romanian defence plants.
The European Union state's defence budget is currently at a little over 1 percent of GDP.
Romania's leftist government approved a plan last year to buy second-hand F-16 fighter jets from Portugal to bring its air force up to NATO standards.
Along with neighbouring Bulgaria, Romania joined NATO in 2004 and has been part of Washington's military operations in Iraq and Afghanistan. It is in the process of phasing out its outdated Soviet-made MiG-21s. ($1 = 3.2197 Romanian lei) (Reporting by Luiza Ilie Editing by Jeremy Gaunt.)