Moldova - Budget

After 2005 the army started to be financed more or less according to its immediate needs. On 26 July 2002, the Parliament approved the Concept of Military Reform, in force from 15 August 2002, which provides an increase in the defence expenditures from the current 0.4% of GDP to 2.4% in the last stage of the reform (2009-2014). In fact, this is the standard applied by the countries joining NATO nowadays. In the state budget for 2007, the amount allocated to the Ministry of Defence increased significantly and reached around 170 million MDL, which is an important indicator showing the country's defence effort.

In fact, the issue of budgeting and financial allocations for defence needs used to be a very sensitive topic from the first years of the National Army creation. Every year while discussing the adoption of the state budget this issue was generating intense debates at all levels of the state administration. This is explained by the fact that year by year the military budget was decreasing as compared to the actual needs.

In 1993-2006, the portion of military expenditures in Moldova's GDP was changing constantly, and the military budget represented around 2-3% of the state budget. These amounts were covering, however, on average, only 40-60% of the needs.

Switzerland, Sweden, Austria and other countries embracing neutrality status did not cease to keep an army for decades. All states maintain their army as the most important attribute of their statehood, a guarantor of independence, sovereignty and territorial integrity. In view of this, important amounts are allocated to preserve the army, allowing thus the Armed Forces to be properly equipped and operate according to the legislation and regulations in force. This basic fact is not fully understood in the Republic of Moldova and, in reality, not only that Moldova had and have the smallest army, but also one of the smallest military budgets in the world.

The structure of financing indicates implicitly the approach taken by the leadership of the Ministry of Defence towards performing the missions of the National Army. The leadership is busy with solving current burning issues which in fact are quite superficial (ensuring necessary equipment and food, salaries), nevertheless failure to solve such issues might provoke unrest in the army. Those overall and perspective problems, such as maintaining the arsenal and military equipment, state of military materials stock, high degree of personnel flow, and, to a certain degree, the level of training and combat skills, are not solved or solved in an unsatisfactory manner.

The Military Reform Concept was approved by the Parliament in 2002 and must be implemented over a period of 12 years (2002-2014), divided into three stages (2002-2004, 2005-2008, 2009-2014). The Concept envisages a radical restructuring of the entire system of defence planning, financing, management and organisation and deals not only with the components of the armed forces, but also with other elements, such as: the system of military leadership in the state, military conscript and military infrastructure. The Concept also focuses on altering the principle of allocating budgetary resources for defence, having GDP as a reference and providing for an increase over the specified period of the defence budget from 0.7% to 2.5% of GDP, although the current administration does not seem eager to accomplish this objective. At the same time, there is an understanding that this reform process has to be adjusted to consider the SDR results.

Budget allocation of the National Army of Moldova for 2015
	Land troops	air force	Logistics management and insurance bodies	Participation in peacekeeping operations (including Transnistria, KFOR)
1	2	3	4	5
maintenance staff	102088,0	29662,3	113407,6	28744,0
Technical and material support troops	49331,8	4784,3	78961,4	1500,4
Capital construction (including repairs)			143,5
Total	151419,8	34446,6	192512,5	30244,4

The Distribution of the RM National Army Budget for the year of 2010

	Ground Troops	Air Force	Governing and logistic provision structures	Participation in peacekeeping operations (including in Transnistria)
1	2	3	4	5
Maintenance of staff	63845,5	14563,5	72058,5	2503,2
Preparation for battle
Technical and material assistance for troops	10313,7	2554,3	36242	953,9
Purchase of military equipment
Scientific research
Capital Constructions (including capital repairs)			2020
Development of military science and of new models of weapons
OVERALL	74159,2	17117,8	110320,5	3457,1

The Distribution of the RM National Army Budget for the year of 2009

	Ground Troops	Air Force	Governing and logistic provision structures	Participation in peacekeeping operations (including in Transnistria)
1	2	3	4	5
Maintenance of staff	70138,8	16946,7	73071	5380,1
Preparation for battle
Technical and material assistance for troops	13118,4	2533,4	59499	1615
Purchase of military equipment
Scientific research
Capital Constructions (including capital repairs)			8351,4
Development of military science and of new models of weapons
OVERALL	83357,2	19480,1	140921,4	6995,1

2008 Budget of the Ministry of Defense

	Overall	Including
		basic component	special means	special funds	projects financed from external sources
1	2	3	4	5	6
National Defense	279441,1	245441,1	34000,0
National Army	279441,1	245441,1	34000,0

Year	The approved budget for the Ministry of Defense	GDP	% of GDP, allocated to the Ministry of Defense
2008	245441,1	60,2	0,37%
2009	250753,8	66	0,37%

2007 Budget of the Ministry of Defense

	Overall	Including
		basic component	Including		projects financed from external sources	special funds	special means
			without capital investment	Capital investment
1	2	3	4	5	6	7	8
National Defense	268771,3	232270,3	218279,3	13991,0			36501,0
National Army	268771,3	232270,3	218279,3	13991,0			36501,0
Ministry of Defense	268771,3	232270,3	218279,3	13991,0			36501,0

Since 2007, the Ministry of Defense was involved in the drafting of the Medium Term Expenditure Framework (MTEF). MTEF is a forecast over the medium term resource framework (3 years) directly related to costs and actions planned in this period. Due to the participation in the MTEF development, 6 programs were drawn up within the Ministry of Defense, that were highlighted in the MTEF document. In its turn, the document was approved through a Government Decision and placed on the government official sites. MTEF is updated every year and extended to the next 3 years and serves as a basis for the annual budget laws.

According to 2008 State Budget Law, the Ministry of Defense has been allocated 222 741.1 thousand MDL, which are distributed by expenditures and the above-mentioned programs in the following way:

1. Allocation by expenditure:
- Personnel costs - 126 795.5 thousand MDL;
- Current expenditure - 85 710.6 thousand MDL;
- Capital expenditure - 10 235.0 thousand MDL.

2. Distribution according to programs:

Name of program	Amount (thousand MDL)
Development of defense policy and management	49003,0
Ground forces	63058,5
Air Force	17151,1
Operations abroad	445,5
Communications and IT	3563,9
National Army Support	89519,1

The Budget of the Ministry of Defense is executed through the Ministry of Finance Treasury, in compliance with the 2008 State Budget Law provisions.