"We're determined to defend Swedish territory, defend Gotland, and show our capability to do so," Löfven told Swedish Radio, shortly after arriving on the island of Gotland earlier this week, on a flight escorted by two Gripen fighter planes.
"It's important for us to show our capabilities and show our determination to potential aggressors (that an attack) will prove very costly," he added.
During the visit, Löfven met the two Gripen pilots and sat in the cockpit of one of the aircraft. He later took the controls of a Swedish tank.
Sweden's military, along with its police and security services, were allocated an extra SEK 1.2 billion in the government's spring budget proposal announced on Wednesday.
Sweden recently announced plans to re-introduce mandatory military service, after having phased it out in the 2000s.
Though Sweden is not a member of NATO, it has been seeking to improve its defense capabilities following a series of incidents believed to involve Russian forces.