Mongolia - Military Spending

Until the 1990s, grant aid from the Soviet Union constituted a significant percentage of Mongolia's defense expenditures. The cessation of Soviet aid and the emergence of an economic crisis in Mongolia affected the defense budget to a great extent, leading to the need to reduce it from year to year. The defense budget of Mongolia and its actual spending are, at the moment, being determined by the country's economic potential and is undergoing corresponding fluctuations every year.

The change in the defense budget's percentage of total state budget expenditures, the GDP, and the GNP is attributed to the worsening of the country's economic indicators in the late 1990s and to the contents of objectives set before the defense sector each respective year, at present, the Government of Mongolia is following its agenda to keep the defense budget at a level not exceeding 6.0% of total state budget expenditures, and 2.2-2.5% of the GDP and GNP, respectively.

Salary for personnel decreased in 1991 and 1993 compared to the previous years , however, it registered a 1-7% increase per annum in 1990, 1992, 1994, 1995, and 1996. Nevertheless, throughout these years, when the devaluation of currency was at a high rate, the salaries (in terms of purchasing power) of personnel steadily decreased. In 1989, expenses for social provisions constituted 36% of the budget, whereas in 1990-1996, after being decreased year after year, amounted to 20% of the total. This is due to the steady reduction in the number of servicemen.

Expenses for personnel materiel provisions amounted to 24% of the budget in 1989, whereas in 1990-1996 they experienced a constant increase as a result of increased prices for materiel, electricity, heat, and fuel as Mongolia transitioned to a market economy. Expenses for equipment rehabilitation constituted 3% of the budget in 1991. They grew by 1-17% in 1990, 1991, and 1994, were stable in 1992, 1993, and 1995, and decreased by 2% in 1996. This constant fluctuations in expenditures was due to the unstable economic situation in the country during that time. There were no significant percentage changes in the budget for training, cultural and educational activities, R&D, 3nd other expenses during these years.

Expenses for officers and non-commissioned officers constituted 39% of defense expenditures in 1989, 47% in 1991, and 49% in 1996; for civilian personnel the numbers were 12% in 1989, 16% in 1991, and 17% in 1996 for sergeants and soldiers the expenses amounted to 49% in 1989, 37% in 1991, and 34% in 1996. The trend is related, on one hand, to the steady reduction in the number of sergeants and soldiers, and on the other, to the implementation of the objective of making the armed forces professionally-oriented. Thus, the number of commissioned and non-commissioned officers and civilian personnel increased its proportion of the entire military personnel.

The percentage of personnel salaries in the total budget was 78% in 1989, 74% in 1990, 72% in 1991, and 70% in 1996 for servicemen, whereas for civilian personnel the numbers were 22% in 1989, 26% in 1990, 28% in 1991, and 30% in 1996. This is because many posts that were previously occupied by enlisted personnel were changed to civilian states.