The deal from 2018 until 2020 will mean 6.8 billion kronor ($841 million) goes to military defences and 1.3 billion kronor ($160 million) to civil defence, totalling 8.1 billion kronor ($1 billion) over three years.
"This is a good sign of political stability and vision. It's good for the Armed Forces, an important signal to the world, and good for Sweden," Defence Minister Peter Hultqvist said while presenting the deal at the Rosenbad government offices on Wednesday.
Along with junior coalition partner the Green Party, the Social Democrats were joined by the Moderates and the Centre Party in negotiating the deal.
"The starting point for me and the Moderates was what is best for Sweden, not what's best for the government or what's best for the Moderates," Moderate defence spokesperson Hans Wallmark explained.
Moderate leader Anna Kinberg Batra had hinted during her speech at the annual Almedalen politics week earlier in the summer that the party could leave the talks if they were unsatisfactory, and the Alliance coalition is split on the matter. The Christian Democrats ended their participation in the negotiations earlier this week, and the Liberals did not take part at all, as was the case last year.
Wallmark insisted however that leaving would have meant a worse deal:
"This means we get more money for the Armed Forces and in doing so strengthen their capacity. I also think it's an important signal to the world."
The money will be spent on among other things purchasing new vehicles and ammunition for the military, an increase in the number of positions available in officer education as well as basic training, and more soldiers.
Green Party defence spokesperson Anders Schröder thanked "the whole group for a constructive and good environment of cooperation". That despite the fact that Defence Minister Hultqvist is the subject of a planned no-confidence motion by the centre-right opposition.
Asked if that is good for cooperation, Moderate defence spokesperson Wallmark deflected:
"They're two completely different processes and today we’re presenting a defence agreement we're very happy with."
Swedish defence has been in sharp focus recently following an increase in military activity from Russia in the Baltic region. In June the Nordic nation summoned Russia's ambassador after a Russian SU-27 jet flew unusually close to a Swedish reconnaissance plane in international airspace above the Baltic Sea.
Conscription has even been brought back to strengthen the number of troops in the Swedish Armed Forces, after recruitment drives failed to fill numbers adequately.
READ ALSO: Why Sweden is bringing back the draft