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Poland to Spend Hundreds of Millions on the Armed Forces Modernization

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The Polish Ministry of Finances has prepared an amendment bill for the 2020 budget that, after being transferred to the parliament, has been adopted by the Council of Ministers on 20th August 2020. The national defence expenditure section envisages that an expenditure increase of 3 PLN billion (approx. 0.8 USD billion) shall be expected. The money is to be allocated to modernization efforts, within the framework of a special purpose fund.

The changes mean that the defence spending planned so far, for the year 2020, would be increased from 49.8 PLN billion (approx. 13.5 USD billion) to 52.8 billion zlotys (approx. 14.3 USD billion). Of that amount, 17.8 billion zlotys (4.8 USD billion) would be allocated to capital expenditure, which means that 1/3 of the budget value would be assigned to that section - this is a record-breaking amount. The extra amount would be used to finalize extra equipment purchases, within the framework of the current Technical Modernization Plan.

The MoD has confirmed to that those additional funds will be allocated to the Technical Modernization Fund, rather than to ordinary budget. This means that if the MoD does not manage to spend those 3 billion in the current year, they will remain for the following year rather than being returned to the budget.

As the 2020 GDP is also expected to go down, the defence expenditure share in the GDP is going to be significantly higher than 2.1% initially assumed by the Act. Compared to the year 2019, the national defence budget is now 8 billion zlotys higher. What is more, the extra funds guaranteed by the amendment are to be used for modernization purposes, covering the cost of procurement of new equipment and upgrades of the existing armament and inventory operated by the Polish military.

Before the official announcement and adoption of the bill, it had been speculated as to the purpose for which the extra funds would be used. These could include the current needs, that the MoD needed to address facing the COVID-19 pandemic. The unexpected costs included the unplanned PPE procurement, as well as the money that was used to involve the soldiers in the operations locally, from March until June this year. Eventually though, the additional funds will be allocated to the technical modernization, which may also speed up the Polish economy recovery if they are spent in the domestic industry. The budget amendments in question have been taken by the Polish Government as a response to the effects of COVID-19 pandemic, which caused massive public spending increases in various areas.