In the draft budget, 259 million euros are granted to the Defense Forces to replace the capabilities delivered to Ukraine. Altogether, about 1.5 billion euros will be allocated to acquiring defense materials by 2024. According to plans, the increase in defense material acquisitions required by the change in the military operating environment will be approximately 323 million euros, higher in 2024 than in 2023.
The draft budget for 2024 also includes a new order authorization of 117 million euros for the acquisition of defense material, which will develop the capabilities of the logistics system, as well as the demining capacity and underwater surveillance of the Navy, and a new order authorization of 146 million euros for the acquisition of spare parts for the Defense Forces and system service and maintenance contracts. The expenses corresponding to the new order authorizations are planned for the years 2024-2028.
In the framework period 2024-2027, the allocation level for the administrative sector of the Ministry of Defense is 6.2 billion euros in 2024 and 2025 and will decrease to 5.8 billion euros for the years 2026 and 2027. The proportion of defense expenditures in the expected annual gross domestic product will remain at the level of two percent throughout the period.
The variation in the level of credits in the administrative sector is mainly due to annual fluctuations in financing for the acquisition of multipurpose fighters. The plan for the framework period includes financing direct costs related to NATO and obtaining compensation for material support provided to Ukraine.
The supplementary budget compensates for the capacities delivered to Ukraine.
Furthermore, in the second separate supplementary budget for 2023, it is proposed to increase appropriations for the Ministry of Defense’s administrative sector by approximately 213 million euros in the current year.
The defense material delivered to Ukraine will be replaced by new purchases so that there is no shortage in the military performance of the Defense Forces. The supplementary budget proposal contains a total of €579 million to replace material delivered from 2024. In the past, €776 million was allocated for replacement procurement. The mentioned financial entities are budgeted for the years 2023-2028 in the amount of 1.36 billion euros to authorize Ukraine’s material support compensation procurement order 2023.
The Defense Forces will receive additional funding of €1.925 million in the 2023 budget to cover expenses caused by the damage suffered by the Hawk jet trainer. An Air Force Hawk training aircraft crashed and was damaged south of Keuruu in May 2023.
In accordance with established practice, a review of the cost level is assigned to the operating expenses of the Defense Forces, to the purchases of defense material and the expenses of administration and military crisis management equipment; in accordance with established practice, the amount of which for 2022 amounts to a total of 131 million euros.
The estimated value-added tax expenses of the administrative sector of the Ministry of Defense will be reduced by 240 million euros based on the detailed payment schedule of value-added tax expenses related to the acquisition of combat aircraft multipurpose. The supplemental budget proposal also includes changes to payments for other ongoing acquisitions and technical credits.
Finnish Ministry of Defense