2023
20.09.2023 09:30
Defence budget for 2024 invests in strengthening defence capability, membership in NATO and supporting Ukraine
The 2024 draft budget for the Ministry of Defence’s administrative branch is EUR 6.2 billion, representing 2.3 per cent of the GDP forecast for 2024.- The world around Finland is becoming increasingly dangerous and therefore, despite the difficult economic situation, defence must be prioritised. With the budget proposal, we will make additional investments in Finland's defence capability, strengthen our activities as a NATO country and take into account support for Ukraine, says Minister of Defence Antti Häkkänen.
The draft budget allocates EUR 259 million to the Defence Forces to reimburse for the capabilities that have been handed over to Ukraine. As a whole, approximately EUR 1.5 billion will be allocated to defence materiel procurement in 2024. Changes in the military operating environment require an increase in defence materiel procurement, which is estimated to be approximately EUR 323 million lower in 2024 compared to 2023.
To improve the logistics system performance and the Navy's clearance capacity and underwater surveillance, the budget proposal for 2024 includes a new procurement authorisation of EUR 117 million. In addition, a new procurement authorisation of EUR 146 million is included to procure spare parts for the Defence Forces, and for system maintenance and maintenance contracts. The costs of new procurement authorisations are scheduled for 2024-2028.
In the spending limits period 2024-2027, the appropriation level of the Ministry of Defence's administrative branch will be EUR 6.2 billion in 2024 and 2025. It will decrease to EUR 5.8 billion in 2026 and 2027. The share of defence expenditure of the projected annual GDP will remain at two per cent during the spending limits period. The change is largely explained by annual fluctuations in financing the procurement of multi-role fighters. The plan for the spending limits period includes the financing of NATO-related direct costs and the purchases replacing the materiel support delivered to Ukraine.
Supplementary budget to replace capabilities handed over to Ukraine
In addition, it is proposed in a separate supplementary budget for 2023 that appropriations for the Ministry of Defence's administrative branch be increased by a total of about EUR 213 million this year.The defence materiel handed over to Ukraine will be replaced with new procurements so that there will not be shortage of military capabilities in the Defence Forces. The supplementary budget proposal includes a total of EUR 579 million for replacing the released material from 2024 onwards. Previously, EUR 776 million has been granted for such procurements. The above-mentioned funding packages will be budgeted for 2023-2028, to be included in the procurement authorisation for Ukraine's materiel support in 2023. This amounts to about EUR 1.36 billion.
Additional funding of EUR 1.925 million will be allocated to the Defence Forces in the 2023 budget to cover the costs of a damaged Hawk jet training aircraft that crashed in Central Finland in May 2023.
In accordance with the established index development in the supplementary budget, amounting to EUR 131 million for 2022, a cost level assessment will be made to the Defence Forces' operating expenditure, defence materiel procurement and military crisis management equipment and administrative expenditure.
In addition, it is put forward in the supplementary budget proposal that the funding granted to the Squadron 2020 project for 2020-2022 be cancelled and re-budgeted for its original purpose in the project by EUR 230 million. The overall funding of the Squadron 2020 project will remain unchanged.
However, based on the revised payment schedule of value-added tax expenditure in procuring multi-role fighters, the estimate of VAT expenditure in the Ministry of Defence's administrative branch will be reduced by EUR 240 million. The supplementary budget proposal also includes changes to the payments of ongoing procurements and technical allocations of appropriations.
Inquiries: Kristiina Olsson, Director of Finance, Ministry of Defence, tel. +358 295 140 220.