The Minister of Defence, Mrs. Mimi Kodheli presented at the National Security Committee of the Albanian Parliament, the draft budget of the Ministry for the year 2015.
Content:
a) Expected realization of 2014 budget
b) Priorities of 2015 draft budget
c) Conclusions
A- Expected realization of 2014 budget
Based on the assessment of the budget realization of the Ministry of Defence for the 10-month period, based on the status of public procurement procedures and arranged agreements, the Ministry of Defence budget for year 2014 is predicted to be realized over 97%, the highest level of realization of the budget in several years.
The expected result is a direct consequence of the significant improvement of public funds management and analytical control on the implementation of public expenditure. On the other side, the expected realization of investments, at the end of the year, is expected to be at very satisfactory level. The expectation of realizing investments is about 98%, while the 2% difference is only due to a lower price of the bids.
The non-realization of “wages and insurance” is caused as a result of the restructuring of the Armed Forces’ inefficient units that were often turned into shelter for people with a farfetched or unprofessional career.
With the redistribution of budget funds, during the 4th quarter of this year, the fulfillment of an early engagement towards NATO is being made possible, the equipment of the 2nd Infantry Battalion with new NATO-standard weapons and ammunition. Our air fleet was equipped this year with two helicopters, type “Cougar”, part of the contract that has been implemented for 4 years, while the amendment of the initial contract to equip the Air Force with two helicopters, type SAR (Search-and-Rescue), was assessed as necessary to replace the VIP helicopter, lost accidentally 2 years ago.
During 2014, with our contributions, we have closed an overdue account of 669 million Leke (ALL), or over 35% of the obligations inherited from the previous government, which are more than 19.5 billion ALL, or about 16 million Euros of unpaid depts. With our contributions and those of donors, we have also removed Albania from the list of countries with dangerous and excessive weapons and ammunition to the environment and to the community.
B- Priorities and objectives of 2015 draft budget
The budget projections for 2015 guarantee the fulfillment of the Armed Forces mission, ensure the functionality and operational capability of their structures and participation in all joint missions with allies. During 2015, the Ministry of Defence priorities will be:
• Further modernization of the Armed Forces and of the 2nd Infantry Battalion;
• Joint missions with allies, as well as those in the framework of EU;
• Our contributions to national initiatives, civil emergencies, civil-military cooperation;
• Increase of quality and improvement of training conditions, education and exercises, improvement of treatment and military housing, etc.
For their realization, all financial resources will be mobilized, as well as the secondary incomes.
INVESTMENTS
Investments, even for 2015, will continue focusing especially on improving their structure, the support of the Government’s program for the Armed Forces modernization will continue. First, the draft budget completely guarantees the equipment of the air fleet with two other helicopters. The conclusion of the helicopters contract for troop transport and SAR is up to 1.3 billion ALL; secondly, the continuation of the equipment of the 2nd Infantry Battalion, the realignment of military units, reconstruction of shooting ranges, training centers and classes, armament depots, computer automation system, and financial management, education, accommodation and care of military, etc., will use a total amount of 400 million ALL. We pick out the fact that the investments structure for 2015 marks a significant improvement, since in addition to the payment of helicopters that is 70% of this fund (the payment of helicopters was 97% of all investments for 2014), about 30% of this fund goes mainly to infrastructure improvement and modernization of the 2nd Infantry Battalion, a direct obligation in relation to our NATO commitments.
OPERATIVE EXPENSES
The specific weight of operative and maintenance expenses to the total budget increase from 33% in 2014, to 39% for 2015. It is worth to mention that due to the geopolitical situation in southern and eastern borders of NATO, the structure improvement within operative expenses will increase three times more the expenses for our participation in NATO peacekeeping missions. Over 800 million ALL will be used in operations, against 300 million ALL that will be spent in 2014. This includes:
A. Participations in joint operations;
B. The continuation of the operation in framework of NATO in hotspots;
WAGES AND SOCIAL INSURANCE
The amount of wages and social insurance account is 45% of the total budget. Regardless of the slight increase of this account in percentage in relation to the total budget expenditures of the Ministry of Defence, the account in question has an absolute reduction of 350 million ALL, a reduction which is due mainly to the effect of reducing the personnel of our Armed Forces, consequence of undertaking the reform and implementing the Strategic Defence Review document. Although personnel expenses fulfill the requirements and suit to the undertaken reform up to date, we think that with a greater attention, within the programmed budget, we will be able to propose some wages changes for some sectors such as: Special Forces or Air Forces, in order to unify these categories with those of the Ministry of Interior or Health, which present serious and unjustified differences, proposals for which we are working for.
SECONDARY INCOME
Ministry of Defence budget will be supported by secondary incomes generated from its structures, which will be used to modernize the Armed Forces. This is made possible thanks to a decision of the Council of Ministers this year, which allows the Ministry of Defence to use this incomes that are several times higher in percentage than before, which will be designated totally in function of the Armed Forces modernization. Meanwhile, the budget of the Ministry of Defence and Armed Forces will benefit from the significant increase of grants, donations and logistical support provided by ally countries during 2015.
C- Conclusions
For 2015, the program for the Ministry of Defence spending is projected to be 12.6 billion ALL. It is only 0.84% of the GDP.
As a member of NATO, Albania has the obligation of real growth of the defence spending from year to year. One of the decisions and conclusions of the Wales Summit is that by 2020, the NATO member countries should increase their budget at 2% of GDP. Even the structure of expenditures is also far from NATO standards (35% personnel expenses + 35% maintenance and operative expenses + 30% capital expenses, as well as military modernization expenses).
We will start with improving the structure and the significant increase of secondary incomes that will enable a smooth transition from the bad financial situation created by the mismanagement of public finances by the previous government.
Under these conditions, we ask you to approve and support the 2015 draft budget, but also we seek in accordance with 2015 budget performance, the continuation of financing the military modernization and also your support for this issue.
The further macroeconomic and fiscal consolidation would create the necessary premises for the fulfillment of the obligations of the Government of Albania toward the Alliance.
Despite the limitations of the 2015 draft budget, through the continuous improvement of expenditure management, designation of priorities, programming and project drafting, strengthening the control of growth efficiency, efficient use of internal resources of the Ministry of Defence (secondary incomes), we will continue with insistence to achieve our priorities.
