German defense minister
German Defence Minister Ursula von der Leyen (R) talks to her Estonian counterpart Margus Tsahkna at Amari air base, Estonia, on 2 March 2017REUTERS/Ints Kalnins

Germany has rebuffed US President Donald Trump's claims that the country owed vast sums of money to Nato and Washington for defense purposes.

In a statement issued on Sunday (19 March) Germany's Defense Minister Ursula Von der Leyen said: "There is no debt account at NATO. Defense spending also goes into UN peacekeeping missions, into our European missions and into our contribution to the fight against IS terrorism."

She added that it was wrong to co-relate the alliance's aim of members spending 2% of GDP on defense by 2024 to Nato.

Germany will shoulder a fair share of the burden and for that to happen the alliance needed a "modern security concept", the defense minister said.

"That includes a modern NATO, but also a European defense union as well as investments into the United Nations," she pointed out.

On 17 March, Trump expressed "strong support for NATO as well as the need for our NATO allies to pay their fair share for the cost of defense", during a press conference along with Chancellor Angela Merkel.

"Many nations owe vast sums of money from past years and it is unfair to the United States. These nations must pay what they owe," Trump said on Twitter.

However, former US Ambassador to Nato Ivo Daalder dismissed the criticism a day later and said "that's not how NATO works".

"This is not a financial transaction, where NATO countries pay the U.S. to defend them. It is part of our treaty commitment.

"Those who currently don't spend 2 percent of their GDP on defense are now increasing their defense budgets. That's a good thing. But no funds will be paid to the U.S. They are meant to increase NATO's overall defense capabilities, given the growing Russian threat," he added.

Germany's expenditure on defense will rise by €1.4bn (£1.2bn) in 2018 which brings the total spending of the European country to €38.5bn. The amount represents 1.26% of its GDP, Finance Minister Wolfgang Schauble said.