Slovenia - Military Spending

Slovenia managed to halt the decline in the proportion of GDP allocated to defence requirements, turn the trend around and secure a satisfactory financial framework sufficient to continue a serious and comprehensive reform of the defence system. Thus the share of GDP allocated to defence requirements has risen gradually from 1.21% in 2000 to 1.39% in 2001, 1.49% in 2002 and 1.52% in 2003.

For the further modernisation of the Slovenian armed forces in the period from 2002 to 2007, it would be necessary to provide additional resources of SIT 65 billion (295 million euros) at prices valid at the time of program adoption. These resources will enable completion of the equipping of reaction forces, and completion of the command and control, logistics and air defence systems. A number of programs, which started within the first phase of implementation of the Basic Development Programs, will therefore be continued and completed. Every year it will be necessary to provide resources for the regular activity of the Slovenian armed forces from the regular budget.

The Government of Slovenia (through the Prague Capabilities Commitment) long ago promised and has repeatedly reaffirmed its commitment to increasing the defense budget to 2% of GDP by 2008, with some plans proposing to reach the target by 2007. Slovenia's goal remained two percent of GDP by 2008, with a need to spend those funds carefully in order to maintain public support for Slovenia's gradually increasing defense budget. In March 2003 Slovenia undertook to allocate sufficient budget resources for the implementation of its commitments upon accession to the Alliance and to contribute to the Civil Budget, the Military Budget and the Security Investment Program of NATO on the basis of relevant modalities at a percentage contribution level of 0,26% and 0,3018% (the latter percentage applicable for activities to which France does not participate).

Initially Slovenia had a goal of reaching a 50/30/20 formula for defense expenditures, with 50 percent of the budget going for personnel costs, 30 percent for operations and maintenance, and 20 percent for modernization. Though the 50 percent for personnel seemed high, as of 2005 personnel costs consumed 64 percent of the Slovenian defense budget. Over the next six years, Slovenia planned to spend around 600 million euros on modernization, with a focus on achieving NATO Force Goals, including the development of infantry and NBC battalions; intelligence gathering capabilities; command and control; and strategic lift capabilities (both air and sea).

In 2006 MOD representatives predicted that Slovenian defense spending would reach the NATO goal of 2 percent of GDP by 2008. At that time the budget plans for 2007 and 2008 included a defense budget of 1.65% of Gross Domestic Product (GDP) for 2007 and 1.81% of GDP for 2008, instead of the 2% of GDP originally planned. While the MoD budget would continue to increase, this decision would delay the Government of Slovenia from hitting the NATO 2% of GDP target until 2009 or later. The move was based more on the need to trim its budget as a part of an economic and tax reform plan than on lack of political will to meet the 2% goal.

On 21 July 2006 the Government of Slovenia adopted a plan for supplemental expenditures for the budget years 2007 and 2008 (federal budgets in Slovenia are adopted for two years in advance and later supplemented) that include defense budgets of 1.65% of GDP for 2007 (653 million USD) and 1.81% of GDP for 2008 (765 million USD), instead of the nearly 2% of GDP that was planned (722 million USD for 2007 and 802 million USD for 2008). The defense budget could be further supplemented by a proposed law which would allow the MoD to take out special loans for weapons purchases in amounts of 107 million USD, up to 963 million USD. The government's budget plan calls for an overall budget of 10.5 billion USD in 2007 and 11 billion USD in 2008.

The budget proposal put forward by Finance Minister Andrej Bajuk was accepted with the understanding that the MoD could fulfill its goals and obligations (including those to NATO) with the proposed budget amount. Defense Minister Karl Erjavec has been cited in the media as saying that less funding does not mean that their goals would not be reached. The media speculates that maintenance and low priority weapon purchases would be the areas to suffer as a result of the reduced increases to the MoD budget.

By 2008 a high level of growth in Slovenian GDP had outpaced defense spending and resulted in the current rate of 1.7 percent of GDP on defense. The MoD hoped to spend 1.8 percent of GDP in 2009, 1.9 percent in 2010, and expects to reach 2 percent in 2011. The MoD's ability to keep up with substantial economic growth (5 percent in 2007 and 4 percent expected from 2008 to 2010) is a challenge, as is selling the argument for more spending to parliament.

The SAF's modernization and procurement objectives are focused on NATO interoperability. Procurement in FY 2005 was focused on equipping combat units and enhancing command and control capabilities; continuing the process of upgrading individual soldier combat gear and protective equipment; continuing the procurement of wheeled-vehicle transportation assets in order to upgrade SAF logistics support capabilities; investing in the upgrading of Cerklje airbase, the sole military airfield in Slovenia; and improving helicopter transport capabilities and determining fixed-wing transport needs for the future. The Office of Defense Cooperation (ODC) assisted the SAF by supporting some of its procurement objectives, specifically with funding in the areas of High Mobility Multi-Wheeled Vehicle (HMMWV) spare parts and Command, Control, Communications, Computer and Intelligence (C4I) systems.

The 2010 budget amounted to 1.54 % of GDP. The April 2012 supplementary budget cut Slovenia's defence funds by as much as 20%, according to Defence Minister Aleš Hojs. Practically all investments are to be stopped and the only activity that will be covered is basic training of troops, the minister told the press on Wednesday on the margins of NATO ministerial in Brussels. The funds initially earmarked for 2012 will be cut by EUR 93m. Slovenia's defence budget fell under EUR 400m for the first time in eight years, totalling some EUR 393m. This will be only the second time Slovenia's defence budget would fall under 1.25% of GDP.

Strategic Defence Review - May 2004

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