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2018 report – update prepared to inform the 2019 budget deliberations about the trend in departmental budget No. 14 “Federal Ministry of Defence”

Aug 29, 2018

Overview

0.1

The Ministry’s 2017 budget amounted to €37 billion.

Expenditure on international commitments further increased and exceeded forecasts by €279.7 million (21.1 per cent). In particular, additional spending on deployment-related activities was significantly higher than budgeted. According to the Ministry, the major reason for the cost increase was the provision of the HERON 1 system to the UN mission MINUSMA (Multidimensional Integrated Stabilization Mission in Mali).

The Ministry spent €895.1 million (18.9 per cent) less than projected on defence procurements. From this amount, €587 million were used to cover expenditures on other budget items. For example, the Ministry contributed €229.7 million to the multinational Multi Role Transport Tanker fleet. The Ministry made reimbursements of €47.5 million for administrative expenditures incurred by the federal states and purchased shareholdings in defence enterprises for €69.3 million.

0.2
The 2019 expenditure budget appropriations total €42.9 billion. Compared to the previous FY, budgeted expenditures rose by €4.4 billion (11.4 per cent). The increase has mainly caused a surge in expenditures budgeted for defence procurements and defence research and development. Expenditure on research and development soared by €447.9 million (44 per cent) to reach €1.5 billion. The appropriations for defence procurements total €6.4 billion. This amount exceeds the 2017 actual expenditure by €2.6 billion (66.6 per cent). Between 2013 and 2017, the annual procurement budgets were underspent by €464 million (10.1 per cent) to €1.6 billion (33.2 per cent).

In the light of persistent shortcomings in the procurement procedures and rather hampered fund utilisation, we doubt that the Ministry will be able to fully spend the significantly increased budget appropriations. We believe that considerable amounts will be used for other purposes or allocated to the reserve to cover future defence spending (cf. 2.4).

0.3
Maintenance expenditure rose steadily from €2.6 billion in 2012 to €3.4 billion in 2018. In 2019, such spending is expected to increase to €4 billion, which means another 19.4 per cent increase. Compared to 2017 expenditure, this is a rise of 30.1 per cent. More than half of the total budget funds are designed for aircraft maintenance. The Ministry justifies this increase by referring to the sophisticated and highly complex airborne defence systems and costly maintenance by defence contractors.

0.4
In April 2017, the Ministry set up the military branch “Cyber and Information Space Command”. The Command is primarily tasked with pooling certain competences of the Federal Armed forces. The Ministry reported to the Budget Committee of the German Parliament on organisational aspects and competences of the Command. Reporting, however, mainly focused on a desired future state. The Ministry thus suggested that it could respond to the Command’s dynamic nature and complexity in a swift and effective manner.

We found that the Ministry, as yet, has neither assigned sufficient extra manpower to the Command, nor has it expanded the Command’s competences.

 Table 01

Notes:

a After adjustment (cf. budget account 2017, overview No. 4.9).

b Calculated on the basis of the original figures; any differences due to rounding.

c Excluding pension liabilities (item group 58).

d Chapter 1405, excluding defence procurements in the international field (chapter 1401).

e Including excess and extra-budgetary commitment authorisations.

f Excluding voluntary defence service and reserve duty personnel.

g Actual staffing as of 1 June 2017.

h For comparison: actual staffing on 1 June 2018: 240 391 established posts/positions.

Source:
Departmental budget No. 14. For the year 2017: budget account; for the year 2018: budget estimate; for the year 2019: draft budget estimate

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