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Hungarian Military Expenditures

Hungary has embarked on its biggest military development program in the 27 years since the fall of the communist regime. Known as the Zrnyi 2026 Program, the initiative will gradually increase military spending to reach two per cent by 2026, although Prime Minister Viktor Orbn said 31 May 2017 that we shall reach two per cent more or less by 2024. Hungary will increase its defense spending gradually to 2 percent of its economic output by 2026 from 0.95 percent in 2016, Defense Minister Istvan Simicsko said 12 January 2017. Hungary, which joined NATO in 1999, spent less on defense than other eastern European members Poland, Czech Republic, Slovakia, Romania and Bulgaria.

Defence Minister Istvn Simicsk announced the defence and military forces development program called Zrnyi 2026. The Defence Minister said at a background discussion held in Budapest 22 December 2016: they would like to place the Hungarian Defence Forces on an upward course by virtue of the availability of additional funds and the implementation of developments.

Defense minister Csaba Hende said in June 2015 that Hungarys defense budget would grow by 48 billion forints (EUR 154m) in 2016. Accordingly, the defence portfolio will have 299 billion forints at its disposal in 2016. The main defence tasks included Hungarys responses to the Ukraine crisis and NATO undertakings. Hende said previously that Hungarys defense budget had increased by 8.2 percent, or by 20 billion forints, in 2015 this year and it will be even higher in 2016.

Among procurements, Hende mentioned bomb armaments for ensuring implementation of air-ground operational tasks, as well as maintaining and developing an air defence missile system. In connection with the planned procurement of a fleet of new helicopters, Hende noted that needs had been assessed and related calculations prepared with the involvement of affected state partners. The cost of purchasing the 30 aircraft has been estimated at 172 billion forints (EUR 551m).

Hungarys military faced numerous challenges to its modernization program, as reflected in the 2008 Hungarian defense budget, which was set at 1.17% of GDP, well below the NATO target of 2%.

The military budget underwent a series of reductions in the late 1980s because of the country's worsening economic problems. The 1987 estimated military budget, based on Ministry of Finance information, was US$867 million (40.745 billion forints). The 1989 budget was cut to US$576 million (40.3 billion forints) even before January 1, 1989. The proportion of the military budget devoted to the acquisition of new technology dropped from 32 percent in 1988 to 16 percent in 1989. From 1980 to 1985, this proportion had averaged about 50 percent of the military budget.

In the late 1980s, the Soviet Union and other Warsaw Pact countries expressed displeasure with the relatively low Hungarian defense budget, but this pressure did not induce the Hungarians to increase the percentage of the gross domestic product (GDP--see Glossary) devoted to defense. Only Romania spent a smaller percentage of GDP on national defense than Hungary, but in absolute numbers Hungary's outlay was the smallest in the Warsaw Pact.

By contrast, the funds spent by the government for armed forces subject to the Ministry of Interior and the Workers' Guard increased by nearly 22 percent from 1987 to 1988 and by nearly 24 percent from 1988 to 1989. Much of this increase, however, was expected to be canceled out by inflation and price reform.

The budget for the defense and interior ministries had to be approved by the defense committee of the National Assembly, a body that managed to increase its power during the late 1980s. Nevertheless, in 1989 the committee once again approved the state budgets for the ministries of defense and interior and, for the first time, the Workers' Guard, without inquiring about how the money was to be spent.

The HDF have gone through an extraordinary change process. This process was conducted in three stages. During the first stage, from 1991 to 1994, the number of the defense forces was reduced dramatically from 200,000 to 40,000. The second stage, from 1994 to 2000, was devoted to creating the new national military doctrine, defining the new requirements and the necessary capabilities for the ground and the air forces. During the third stage, from 2001 to 2004, the government started to enhance those traditional military capabilities that already existed and to create new capabilities such as the ability to conduct peacekeeping operations.

After the organizational transformation was finished in 2007, from 2008, the emphasis was on stabilization and development. The vehicle sourcing program and the combat vehicle modernization program continued. Since the project was launched, nearly 600 new combat vehicles have arrived. Moreover, there has been important progress in the field of temporary and permanent signal system development. The developments related to the preservation of forces and increasing their mobility have also produced significant results. For example they have developed the EOD capability, preserved the armor-piercing and anti-tank capability of the Hungarian Defence Forces, and modernized the personal equipments and armament of the troops.

The aim is that the deployable ratio of the land forces and other organizational units supporting them should reach 40 per cent by 2014, and exceed 50 per cent by 2016. An army with modern, deployable capabilites cannot be imagined without a military force that can properly carry out its tasks. In the medium term, due to the increasing demand, Hungarian pilots have to be given more flying hours. In order to do so, the Mi-17 transport helicopters and the Mi-24 combat helicopters will be rehauled in the framework of the helicopter program. The Mi-8 transport helicopters will be replaced with a new type of aircraft.

The impact of the detrimental global economic environment that developed since 2008 on the national economy and within that the central budget significantly decreased the budgetary resources available to the Ministry of Defence. This negative trend constitutes an even more significant challenge due to the fact that national defense had been underfinanced in the previous period, too.

In order to stop and reverse the negative processes, the Government of Hungary committed itself in 2012 in a resolution that the budget of the Ministry of Defence for the budgetary years of 2013-2015 will be provided at least at the nominal value of the budgetary allocation for the year 2012, while from the budgetary year of 2016, with an annual increase of no less than 0.1 percent of the GDP, the total budgetary allocation will reach 1.39% of the GDP by 2022, which is close to the average of European NATO Member States.

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Page last modified: 18-12-2018 18:41:00 ZULU