MercoPress. South Atlantic News Agency

Argentina’s defence budget forecasted to reach 1.3% of GDP by 2015

The Argentine Army has the lion’s share of defence expenditure

Argentina, similar to other Latin American countries, is increasing its defence budget at a robust pace, according to Research and Markets, a defence procurement news agency based in Alabama.

In a paper under the heading of “The Argentine Defence Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2015”, R&M says Argentina’s defence budget, which stood at 2.6 billion US dollars in 2010, recorded a CAGR (Compound annual growth rate) of 17.36% during the review period.

The large growth in the defence budget was due to increased personnel salaries, but overall defence budget is expected to register a CAGR of 15.87% during the forecast period to reach 5.5 billion USD by 2015.

Defence expenditure is primarily driven by ‘modernization plans, participation in peacekeeping missions and a dispute with the UK regarding the sovereignty of the Falkland Islands’.

The Argentine government has announced plans to increase defence expenditure, which stood at 0.7% of GDP in 2010, to 1.5% of GDP over an unspecified period. It is estimated that by 2015 the defence budget will stand at 1.3% of GDP. Capital expenditure accounted for an average of 3.6% of the defence budget during the review period. However, modernization plans will increase capital expenditure to an average of 6.2% of the defence budget during the forecast period.

The Argentine army receives the highest allocation of the total defence budget, an average of 40.5% over the review period which is expected to increase to an average of 41.1% during the forecast period.

The budget allocated to the air force is expected to marginally decline from an average of 25.3% of the total defence budget during the review period to an average of 24.1% during the forecast period.

Allocation for naval forces is expected to increase from an average of 25.3% of the total defence budget during the review period to an average of 25.5% during the forecast period.

The remaining budget is allocated to the Ministry of Defence and joint forces responsible for defence administration, planning, execution and development of the domestic defence industry, concludes R&M.