Poland Increases Its Defence Spending - Extra Funds in This Year's Budget?

The Ministry of Finances indicates that in 2020 the national defence budget is to be contained in an amount of PLN 52 bn. (13,9 USD billion), thanks to an amendment adopted by the government recently. As the 2020 GDP is also expected to go down, the defence expenditure share in the GDP is going to be significantly higher than 2.1% initially assumed by the Act.

Let us recall - originally it was assumed that 49.9 bn. zlotys (13,35 USD billion) would be spent on national defence in 2020 (2.1% of 2020 assumed GDP), whereas 49.015 billion zlotys was the amount that was to be allocated to part 29 of the budget - national defence (the total spending on national defence comprises of part 29 as well as certain other funds for defence-related purposes). The Ministry of Finances was mentioning a 3 bn. increase via its social media (up to 52 bn. zlotys). The information provided does not provide us with a clear indication as to which amount was mentioned by the Ministry. Anyway, we may count on at least 0,5 USD billion increase of the Polish defence budget this year. 

The spending objective has not been specified as well when it comes to the extra funds. It could be possible that the additional amount may be used to cover the extra cost incurred by the Polish Ministry of Defence fighting the coronavirus pandemic. The unexpected costs included the unplanned PPE procurement, as well as the money that was used to involve the soldiers in the operations locally, from March until June this year.

The increase of the expenditure so significant may also mean that the extra budget could also take into account other areas, related to the modernization, investment, or even the entrepreneurial support provided as a part of the Economy Mobilization Programme. The leading NATO states are implementing projects aimed at mitigating the effect that the pandemic may have had on the defence industry, to sustain the manufacturing continuity and the development of the new systems as well.

The details of the budget amendment will, most probably, be unveiled as the work progresses. The new bill now needs to be adopted by both chambers of the parliament. 

JR/JP