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 2019
In simpler terms, defence expenditures can be divided into three types: procurement and investment expenditures, personnel related expenditures, and management costs and other expenditures. The distribution of defence expenditures is considered to be well balanced, in which the level of personnel and maintenance expenditures are not proportionately too large, and defence promoting capability developments can be implemented. Based on the State Budget Act, labour costs will account for 23% of defence expenditures in 2019, with infrastructure investments and procurement costs accounting for 46% and all other spending 31%.
Estonia’s expenditure on defence in 2019 continues to be one of the most balanced in Europe. The distribution of defence expenditures under the NATO method differs somewhat from the national method. In 2019 personnel related costs will comprise 34%, procurement and investment costs 24% and other costs 42% of defence costs.
The primary task of the Defence Forces is to ensure preparedness for the military defence of the country. In 2019 the last contractual payment for CV90 infantry fighting vehicles will be made and the modernisation of Navy minehunters will be completed. The equipment and armaments of the Defence Forces and the Defence League are being upgraded – new firearms, communications and IT equipment, clothing, flak jackets and bulletproof vests are being procured. The procurement of various types of ammunition will continue, with financing in the amount of EUR 30 million coming from the Defence Investments Programme established by the Government of the Republic.
In order to ensure the necessary training environment and modern living conditions for servicemen and our allies, investments in the development of national defence infrastructure, armed forces campuses and training grounds will continue. Based on the needs of the Defence Forces a brigade logistics building will be built in the Tapa armed forces campus and the construction of additional barracks at Jõhvi will commence, allowing for an increase in the number of conscripts in the near future and the development of the Mine Harbour’s infrastructure.
In terms of labour costs, the wages of active servicemen and officials, and the pensions of retired servicemen will be paid. Defence expenditures for 2019 include an increase in the average wage for active servicemen, exceeding the average wage in Estonia by 30%, in addition there are funds for adding 50 active servicemen.
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 carrying out of large-scale training exercises, such as Kevadtorm (Spring Storm) 2019, etc. This also includes membership dues for NATO and other international organisations, the cost of the Foreign Intelligence Service and the Defence League as an organisation.
In addition, there is over EUR 29 million in foreign aid within the budget for the area of government of the Ministry of Defence. In 2019, Estonia will receive additional funds for developing national defence from the NATO Security Investment Programme (NSIP). A total of EUR 14 million is earmarked for improving staging facilities at Tapa, and EUR 9 million for increasing training opportunities at the central training area. In total, the Ministry of Defence has at its disposal (including foreign aid) EUR 614.7 million within its area of government.