Germany has been blasted for its “absurd” decision to drop its commitment to reach Nato’s spending pledge.
Olaf Scholz’s Government is instead planning to present interest payment as part of its defence expenses.
Berlin abandoned Nato’s legally binding commitment to spend two per cent of GDP defence on Wednesday.
Germany’s Green Party took exception to the pact’s clause.
An image of Nato leaders at a recent summit
The Greens hold significant power in Berlin as environmentalist MPs were called in Scholz’s coalition after the last general election.
The developments came as Germany’s Bild newspaper reported that the country’s defence ministry had been instructed to include debt-servicing payments as military spending for next year.
Germany is forecast to fall €14billion short of its spending commitment in 2024.
Berlin is trying to avoid the humiliating news by adding around €9billion debt servicing to its official expenditure.
Germany's Chancellor Olaf Scholz (right) arrives at the the Harpa concert hall where a Council of Europe summit will take place in Reykjavik, Iceland
Scholz’s Government is also looking to include €4billion of military assistance provided to Ukraine in its defence figures.
The decision has been criticised by an MP from the opposition centre-right CDU party.
Info Gadechens said: “The idea of categorising interest payments as defence expenses is outright absurd.
“While soldiers can protect our nation, interest rates certainly cannot.”
A stock image of soldiers' boots
Germany has been criticised for failing to meet Nato’s spending commitments for several years.
Only 11 out of Nato’s 31 member states spend two per cent of GDP on defence spending in 2023.
The United Kingdom, United States, Poland, Greece, Estonia, Lithuania, Finland, Romania, Hungary, Latvia and Slovakia all spent the required amount.
A spokesperson from Germany’s defence ministry told The Telegraph: “In addition to the entire defence budget… defence expenditure according to Nato criteria can sometimes also include expenditure on other individual plans.”