Latvian government has presented the budget for Fiscal Year 2017. According to the plan, the authorities are going to allocate 1.7% of GDP in order to cover the defence expenditure.
The expenditure planned by the Latvian government is going to be contained in an amount of EUR 8.37 billion. 1.7% of the GDP is going to be used in order to cover the defence spending. The above means that Latvia is approaching the NATO-defined 2% threshold, referring to the relationship between the GDP and the defence expenditure. According to the plans made by the Latvian authorities, the aforesaid level is expected to be achieved in 2018 or 2019.
The defence spending increase is defined as EUR 98 million – this means that 27% of growth can be recorded. However, it is also worth to note that healthcare expenditure is also going to go upwards, by 8.5%. According to the Latvian authorities, all of the growth is connected to implementation of the plans, including achieving the level of 2% of GDP, referring to the defence spending. The budget has not yet been approved by the Latvian parliament.
Back in 2014, Latvia allocated a little less than 1% of its GDP to defence. According to the NATO data, Latvian defence expenditure in 2012 and 2013 was defined at the level of 0.9% of GDP. Next year, the budget is going to be increased up to 1.7%, which means that Latvia accelerated the completion of goals assigned to the NATO member states. According to the schedule and timelines defined in 2014, the 2017 defence expenditure was to constitute around 1.3% of the GDP.
Last year, Latvia announced that the government is planning to procure the US made Stinger MANPADS. The Ministry of Defence is also acquiring radar systems, significant priority has also been ascribed to the anti-tank weapons. Moreover, Latvia also is in process of receiving the second hand CVR(T) IFVs, acquired from the UK. Furthermore, the level of combat readiness of the army is being heightened. Works are also in process, within the scope of expanding the military infrastructure, also the infrastructure, the purpose of which is to facilitate exercises and training. Next year, NATO Battalion Battle Group is going to be deployed to Latvia, under the Canadian command, with additional support provided by the allied nations, including Poland.
Lithuanian Ministry of Defence, back in September, announced that a collaboration procedure has been established with Latvian MoD, referring to procurement of equipment and inventory for the armed forces. In order to implement the aforesaid steps, a letter of intent has been signed which is to act as the framework document tightening the collaboration between the states, especially in the field of expanding the defence potential. The cooperation between the two nations will also increase the level of regional security, increase the deterrence potential remaining at hand of the NATO member states in the Baltic region and, lastly, it is also going to allow Riga and Vilnius to make more significant contributions to the NATO-driven initiatives. We also know that IADS management system, ATGM and SHORAD systems tenders are planned to be announced by Latvia soon. The Baltic States have, along with Estonia, procured a certain quantity of Carl-Gustaf AT weapon ammunition, nevertheless, the scope of collaboration may be now significantly expanded.