Chile is expected to invest US$15.4 bn on its armed forces during the forecast period

Wednesday 18 July 2012, Amsterdam

Chilean defense expenditure grew at a CAGR of 12.62% during the review period to reach a value of US$4.2 bn in 2011. The country’s military expenditure is estimated to register a CAGR of 11.49% during the forecast period, and to value US$3.8 bn by2016. Defense expenditure is expected to be driven by factors such as border disputes, military modernization, and international peacekeeping missions. Due to the transfer of certain institutions such as Carabineros de Chile and Investigations Police of Chile to the Ministry of Interior and Public Security, the defense expenditure will decline in 2012 but retain the overall growth rate during the forecast period (reference see graph).

According to CPL, 10% of all export revenues from the state-owned copper company Codelco were automatically transferred each year to the military, for the purpose of purchasing weapons and equipment. During 2006–2009, US$4.2 bn were transferred to the military under the CPL. After the 2010 earthquake, funding from CPL to the military was opposed by the public due to lack of funds for recovery and development funds. According to the new law, the funding from CPL would be transferred to Economic and Social Stabilization Fund (ESSF) for better use by government departments.

The defense imports declined from US$696 m in 2007 to US$323 m in 2011. During the review period, funds from CRL were used to make the procurements of weapons and equipments. However, CRL was removed from 2012 onwards will result to the deficit of funds for more procurement leading to further decrease in imports during the forecast period.