03.02.2009.
State Secretary Miscevic's interview to "Odbrana" magazine
The defense system has received 72.763 billion RSD, which is a little over 2.1 % of GDP. This sum also includes 2.5 billion of self-generated income. The budget, in comparison to the last year’s budget, and without military pensions and the money from the National Investments Fund, has been increased by some 4.5 %. This increase is less than the projected inflation rate, while an overall realization of the MoD’s budgetary obligations reached 98 %.
The members of the defense system, that is, of the Ministry of Defense and the Serbian Armed Forces, want to know how their superiors have projected the funds in the military budget, and how they managed to put their skills in balancing and allocating funds to all those tasks they have planned to realize without any difficulties. Of course, the main question is how this will affect their standard.
REWINDING EXPERIENCE
The military budget for 2009 is 72.763 billion RSD The budget, in comparison to the last year’s budget, and without military pensions and the money from the National Investments Fund has been increased by some 4.5 %. This increase is less than the projected inflation rate, while an overall realization of the MoD’s budgetary obligations reached 98 %, according to State Secretary Miscevic.“Good allocation of funds means we can meet all our needs. However, no matter how much money we get, it is never enough, since the defense system has accumulated need due to poor investments in the last 15 years. For example, in 2008 we had only a 12 % increase of the military budget in comparison to 2007, but we managed to make bigger investments than in the previous three years. We increased the salaries of the members of the defense system by some 30 % in over a year. In the period from May 2007 till last year the salaries rose by some 39, 6 %, while numerous benefits rose to by 228 %. This year’s budget is similar to the one last year, if we take into consideration the 4.5 increase in the budget and the planned inflation”, says Aleksandar Miscevic.
As State Secretary point out, the Ministry of Defense will generate some 2.5 billion RSD. A more rational management of funds and a regular payment of financial obligations can also save the defense system significant sums of money.
“The budget has been projected so as to follow the trends imposed by the world economic crisis. We will continue to use our funds properly and economically, the same way we did in the previous year. The year before last, we increased our own income by 60 % when they reached 5.34 billion RSD. In 2008, these incomes were increased by some 5 % reaching 5.57 billion RSD, and we plan a similar increase for 2009.
HOW TO ALLOCATE FUNDS
What is the structure of this year’s budget?
An ideal model of the military budget’s structure has been promoted by Norway where personnel costs reach 40 %, while operational costs and investments take up 30 % each.
The international standard, MoD hopes to reach, is 50 % for personnel costs, 30 % for operational and 20 % for investments.
Last year, 57 % of the budget were spent on personnel costs, 23.6 % for operational and 19.4 % for investments, which has brought us closer to the world standard. The current economic crisis which had hit the whole world and even our country resulted in making a more restrictive military budget and forced MoD to first set some priorities and to redefine the structure of costs. One of the most important tasks is professionalizing the SAF, so with the expected increase of the number of professional soldiers the personnel costs will reach 63. 7 %. 20. 9 % of the budget were planned to be used for operational costs, while 15. 4 % for the investments. This kind of money being spent on personnel costs was influenced by the MoD’s decision to protect the standard of its employees with the world economic crisis knocking on our door.
The budget for 2009 projects 26 billion RSD for the employees’ salaries, while 23 billion RSD will be spent for military pensions. The military pensions budget has been increased by some 3 billion RSD or some 15 % in comparison to the last year. This increase is bigger than the projected annual inflation rate.
This year’s personnel costs have been increased by some 5 billion RSD so they total 30 billion RSD. The salaries with all insurance payments take up the largest portion of that part of the budget. Also other forms of benefits make part of the budget such as the payments for life away from the family, housing, transport, on call duty, sick leaves, social protection and solidarity help…Some 4 billion RSD are other forms of personnel costs. The percentage of 63.7 % of the budget for personnel costs only confirms that this year’s budget is a social one and not a developing budget. Operational costs are estimated at 10 billion RSD. They include the business trip expenditures, other contract obligations, specialized services, current repairs, and maintenance, as well as the materiel, such as fuel, medicines, food, medical supplies, uniforms and administrative, stationery material, and the funds intended for operational costs are used to pay the bills.
In the words of State Secretary Aleksandar Miscevic, some 1.5 billion RSD will be used for energy while 1.3 billion RSD will be used for food and 1 billion RSD for current repairs and maintenance, 900 million RSD will go for the fuel and 500 million for community services. We will be able to reduce certain operational costs by implementing stricter financial discipline, and these funds will be directed for the professionalization of the army.
When we talk about the investments during the year, Ministry of Defense will try to plan acquisitions in order to cushion the restriction in infrastructure investments and the purchase of machines and equipment for the army. Some 4.5 billion RSD will be used for acquiring new equipment for special and infantry units. 500 million RSD will be directed to the Air Force to acquire air control equipment and to equip the search and rescue service. The budget envisions spending 650 million RSD for the acquisition of transport vehicles and technical support movables, states Miscevic.
Vladimir Pocuc
HOW TO PLAN
The last year’s rebalance of the budget has deprived MoD of 3 billion RSD, that is, the funds in account no. 512 for the purchase of machines and equipment has been reduced.
The equipment purchased for the army is very specific. It is rarely stocked in warehouses, so the period after the signing of the contract to the time of delivery and billing is very long. The last quarter of the year is crucial for MoD when it comes to the realization of the budget.
