As of 2012 the Defence budget or the Ministry of Defence’s governing minimum amount is 2% of the gross domestic product. This supports a military national defence with a balanced and sustainable development as well as meeting NATO recommended military expenditures.
2% GDP supports a sustainable and balanced development of national defence
As of 2012 there has been an agreement between the political parties of the government to support and maintain the defence budget at a 2% GDP expenditure. Military expenditures represent approximately 4.5% of the total state budget. This is one of the smallest items in the budget. This guarantees the defence expenditure to be maintained at 2% of the gross domestic product supporting a sustainable and balanced development of national defence.
The opportunity to support military exercises and up to date equipment for individuals
Maintaining a defence expenditure of 2% GDP allows to keep personnel,- activities- and investments at an approximate equal level and within the defence budget.
Development of capabilities supports stable funding
2% GDP allows long term and constant planning of Defence Forces development.
New military capabilities, armaments and sustainable planning of Defence Forces development requires longer perspectives than a one year budget. The defence
sector must be able to have long term commitments, often several year undertakings, consequently assurance of the size of the defence budget must be agreed upon. Previous investments can become senseless if programs are suddenly ended due to a reduction in resources. The 2% GDP expenditure for national defence allows for planning on a long term basis as well as efficient use of taxpayers’ money.
Estonian defence budget 2018
The total 2018 budget for the area of government of the Ministry of Defence is EUR 523.6 million and accounts for approximately 2.14% of GDP (if necessary, an additional EUR 10 million will be added for the acquisition of ammunition). In comparison with 2017, the amount has increased significantly: last year’s defence budget, including the additional resources allocated for hosting our allies, was EUR 479.2 million.
In simpler terms, the defence budget can be divided into three types of expenditures: procurement and investment expenditures, personnel expenditures, and logistical and other expenditures. The defence budget is considered to be well balanced, as the level of personnel, operation and maintenance expenditures within it are not disproportionately large, and developments promoting defence capability can be implemented within the limits of the defence budget. Labour costs account for 23%, infrastructure and procurement costs 45% and all other spending 32% of 2018 defence expenditures.
Estonia’s 2018 defence budget remains one of the most balanced in Europe. According to NATO defence budget methodology, which differs somewhat from the national methodology, personnel expenditures account for 30%, procurement and investments 27%, and other costs 43% of defence expenditures.
An additional EUR 15 million is added to Estonia’s 2018 defence budget from the NATO Security Investment Programme (NSIP), the majority of which is intended for the training of the NATO Very High Readiness Joint Task Force (VJTF) at the central training area and the hosting of units during a period of crisis.
Therefore, a total of more than EUR 538 million is available for spending this year within the area of government of the Ministry of Defence.
Using the 2018 defence budget
The development of military capability takes place in great part through the acquisition of necessary equipment. The main emphasis in 2018 is on procurements related to the mechanisation of the Scouts Battalion and the acquisition of various types of ammunition; however, armaments, for example, hand-held firearms, are also being procured, along with communications, clothing and IT equipment, individual special equipment and personal protective equipment. The outfitting of prepared Defence League territorial defence units will continue. The planned procurements will, mainly through the significant increase in means of communication and means of transportation, raise the reaction speed and command capability of the Defence Forces, including territorial defence. Equipment will be acquired for intelligence, early warning and special operations units. At the same time, the upgrading of the lifecycles of Navy minehunters will continue.
A large portion of infrastructure costs will go to supporting armoured manoeuvring capability, as well as modernising training conditions. The development of training grounds will continue. Shelters will be constructed at Tapa for armoured combat support vehicles, maintenance and training garages, repair shops and shelters for armoured combat vehicles, barracks for housing conscripts and our Allies, an athletic building, and the necessary communications associated with the infrastructure. Moreover, the infrastructure needed by the Defence League will be built and the development of training grounds, including a central training area, will continue.
Labour costs include the payment of remuneration to active servicemen and officials and pensions to retired servicemen. Among other things the competitive remuneration of active servicemen is guaranteed along with an annual increase in personnel of 50 people.
Other costs are comprised of expenditures which are associated with ensuring the everyday activities and training of the Defence Forces, such as conscript service related costs, maintenance of armed forces campuses, carrying out of training, the large-scale training exercise Siil 2018, which is focused on military territorial defence, and so on. This also includes membership dues for NATO and other international organisations, the Foreign Intelligence Service budget and the costs of the Defence League as an organisation.The upper limit for defence expenditures will be agreed upon within the framework of the state budget strategy. The state budget strategy for the period 2019-2022 is expected to be approved in April 2018.