Internal Security Expenditure Estimated at US$860 m for 2012.

Tuesday 25 September 2012, Amsterdam

The defense budget of the Netherlands, which was estimated at US$10.09 bn in 2012, recorded a CAGR of -4.19% during the review period (2008-2012). During the forecast period (2013-2017), the defense budget is expected to decrease at a CAGR of -0.08%, to reach US$9.87 bn by 2017. The predicted fall compared to the review period level in the defense budget is largely due to the high fiscal debt of the country and subsequent cuts to government spending (reference graph).  

The Netherlands government has been criticized for giving inadequate support to its domestic defense industry over the review period, especially during times of economic crisis. Instead, the government reduced its defense budget, forcing the industry to rely on export orders for revenue. In addition, the government does not offer financial resources such as working capital funds to the industry in order to cater to export orders, which has forced many domestic firms to close.

The Netherlands has been constantly cutting down on its defense budget expenditure and this trend is expected to continue over the forecast period. This poses a major challenge for the Ministry of Defense, which plans to modernize its defense capabilities by not only upgrading the existing defense technologies, but also procuring advanced aircrafts, missiles and submarines.The trend shows a decrease in imports over the period 2007–2011, due to the budget cuts, thus contradicting the MoD’s plans of procuring and modernizing the Netherlands defense capabilities. This poses a key challenge for the MoD, forcing them to meet existing demands within the constantly shrinking budget resources.