Friday 24 May 2013, Amsterdam
The Spanish annual defense budget stands at US$7.58 billion in 2013, which is expected to grow at an estimated CAGR of 1.95% over the forecast period (2014-18), to reach US$7.77 billion in 2018. This marginal increase in defense expenditure can be attributed to the modernization of its armed forces and the procurement programs that are to be executed over the forecast period; in addition, the participation in a number of UN peacekeeping operations and rising territorial disputes with Morocco are also expected to fuel Spanish defense expenditure. As a percentage of GDP, the country’s defense expenditure stands at 0.55% in 2013 and is expected to decrease to 0.51% in 2018; the primary reason for this decrease in GDP percentage is the deficit reduction efforts of the Spanish Government.
The Spanish Ministry of Defence (MoD) is expected to increase its capital expenditure from US$0.91 billion in 2013 to US$0.93 billion in 2018 in an effort to modernize its armed forces. Revenue expenditure is also expected to increase, from US$6.68 billion in 2013 to US$6.84 billion in 2018, which can be attributed to the additional recruitment, training, and development programs for military personnel that are to be undertaken over the forecast period. In 2013, capital expenditure accounts for 11.9% of the total Spanish defense budget, while revenue expenditure accounts for 88.1% of total expenditure.
Figure 1: Spanish Defense Expenditure, 2009-2013
Source: Ministry of Finance and Spain
During the review period (2009-13), the Spanish Army budget was valued at US$3.95 billion in 2009, which decreased to US$2.79 billion in 2013 at a CAGR of -8.3%. However, during the forecast period, the army budget is expected to grow at a CAGR of 2.49%, to reach US$2.96 billion in 2018, from US$2.68 billion in 2014. The growth in army expenditure can be attributed to modernization programs and a number of procurement schedules that are to be executed over the forecast period. The Spanish Army budget accounted for 36.8% of the overall defense expenditure in 2013, whereas the others category accounted for 35.2%, the air force, 14%, and navy, 13.9%.
The homeland security budget of Spain stood at US$6.8 billion in 2009 and decreased at a CAGR of -10.8% during the review period, to reach US$4.3 billion in 2013. However, it is expected to grow significantly at a CAGR of 4.9% over the forecast period, to reach US$5.2 billion in 2018. The homeland security expenditure of Spain is largely driven by the threat posed by terrorist organizations such as Euzkadi Ta Askatasuna (ETA) and Al-Qaeda, maritime security threats, and the rise in the illicit drug trade
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