FILE PHOTO: Swedish armoured personnel carriers are seen in Visby harbour, island of Gotland, Sweden September 14, 2016. TT News Agency/ Soren Andersson/ via REUTERS

STOCKHOLM (Reuters) - Sweden’s armed forces will get an extra 8.1 billion crowns ($1 billion) over the coming three years to boost defense capabilities in the face of increased tension with Russia in the Baltics, the center-left minority government said on Wednesday.

The 2.7 billion crown-a-year increase in the military budget follows an agreement between the ruling coalition of the Social Democrats and Greens with two center-right opposition parties and is higher than the 6 billion crowns reported earlier by Swedish radio.

“We are seeing increased military and intelligence activity in our region,” Defence Minister Peter Hultqvist told reporters. “This (extra money) ... sends an important signal to the world around us and is good for Sweden.”

Sweden’s military has said it needs the money to rebuild its strength after years of under investment and greater demands on its operational capabilities.

The armed forces called for 9 billion crowns in extra spending during 2017-2020 period.

Sweden has reintroduced conscription and restored troops to the strategically key Baltic island of Gotland as it looks to bolster its defenses.

It has also been drawing closer to NATO, although the government has ruled out becoming a member of the alliance.

Swedes will vote in a general election next year with neither the center-left nor the center-right blocs likely to get a majority.

($1 = 8.0989 Swedish crowns)