The Politics and DV Engineering working group analyses current political developments in the defence sector. It provides independent facts and interpretation from the technological knowledge and experience of engineers.
The Politics and DV Engineering Working Group has the following findings on the outline of the Defence Equipment Budget Fund, as published by the Minister of Defence in her letter dated 5 April 2019. The comments have been prepared based on publicly available information and defence technology knowledge and experience.
The Defence Materiel Budget Fund (DMF) aims to provide a solution to the inflexibility of the cash system when making large investments. The establishment of this fund will create a simpler possibility to shift investment projects so that the project and technology are leading and not the cash system.
According to the parliamentary letter, the fund is mainly fed from unrealised amounts from the current Defence budget. As a result, the DMF allows saving and deferral of investment projects. Indeed, money only enters the fund if Defence has money left over from the budget in a cash year. Based on the 2019 budget, the fund could not be filled for the first time until well after 2027. Tension in the budget means there is a total of 9 bln underfunding for projected spending until that year. See chart below on page 62 of the 2019 budget.
In 2018, the Defence Paper and the National Defence Expenditure Plan for the benefit of NATO set out the need for more investment, increased combat power and advanced technology. Developing and building the capabilities needed for this takes a long time. Therefore, a different kind of fund should actually be formed. Namely, a fund through which investments can be accelerated .
The pink line is the available budget. All amounts above it are "tension" on top of the budget. Plans for which there is no cover in this budget.
From 2019-2026, there is a tension of 0.5 bln - 1.5 bln Euro per year on the 2019 budget. Summed up to about 9 Bln Euros.
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The Hague, 20 May 2019
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Disclaimer: The facts and opinions given are based on open sources and on the knowledge and experience of working group members.
As part of the professional association KIVI, the working group is independent of political parties, governments and companies.
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