Poland Increases Defence Spending - Additional USD 1.6 Billion to Fund Modernization

21 października 2021, 14:46
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Image Credit: pvt. Mariusz Moczarski

Andrzej Duda, President of Poland, has signed a budgetary act amendment for the year 2021. The amendment envisages that extra funds (in an amount exceeding PLN 6.3 bn or approx. USD 1.6 bn.) would be allocated to modernization efforts pursued by the military, and another several hundred million would be allocated to other budgetary items.

As the President's Staff recalled, the government proposed the budget to be amended, acknowledging the better than expected economic situation. The Act signed by President Duda assumes that the GDP increase in 2021 would reach the level of 4.9%. The budgetary income is expected at the level exceeding PLN 482.9 bn, with expenditure exceeding PLN 523.4 bn. This translates into a PLN 40.5 bn. deficit.

The original expenditure level planned was set at PLN 486.8 bn. zlotys, with an income of PLN 404.5 bn., translating into 82.3 bn. zlotys of deficit. The defence budget is one of the primary beneficiaries of the amendment, as an increase in an amount exceeding PLN 6.9 bn. is expected - from the level of PLN 51.18 bn. (Section/Part 29 of the budget - national defence - is characterized by the expenditure of around 51.8 bn. zlotys), to more than 58.14 bn. zlotys (in the national defence section). The above means that it may be expected that the defence spending in 2021 would exceed 2.4% of GDP.

6.3 billion zlotys would be allocated to the Armed Forces Modernization Fund. This amount is relatively speaking, the highest. The above means that the money could be spent somewhat freely, as there is no imposed necessity to use it up by the end of the fiscal year. They would remain available within the state special-purpose fund - the Armed Forces Modernization Fund. This is a base principle applicable in the case of all special-purpose funds, according to the legal regulations in force.

The Senate demanded the allocation of extra 6.3 bn. to be abandoned, with the money to be allocated to healthcare. However, the amendment was rejected during a vote at the Parliament.

During the discussion at the Senate, Senator Kazimierz Klejna, rapporteur and chairman of the Budget and Public Finance Committee (KO) said the following: "These funds would be allocated to the modernization of the Armed Forces, specifically to the procurement of the Abrams MBTs. The Ministry of Finances indicated that the extra funds included in the budget amendment are defined as pro-development spending. Meanwhile, the procurement of this armament does not contribute to better dynamics in the economy, as those funds would be directed abroad. Today, the healthcare shall be the priority".

Some other items within the defence budget would be increased as well. For instance, the current expenditure in the Land Forces section would be increased by 200 million zlotys. The Air Force would receive an extra PLN 90 million, while extra 35 million zlotys would be allocated to the Navy. Around 24 million zlotys would be the extra amount allocated to the Territorial Defence Component, and 17 million are to be assigned to the Gendarmerie (MP).

More than 23 million zlotys of ongoing expenditure would be allocated to cyber-security and cryptology. Ongoing expenditure would also be increased for military intelligence, and counterintelligence services, SOF, and support elements (the latter item would receive increased funds with the increase exceeding PLN 150 million).

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