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

Wednesday 10 October 2012, Amsterdam

The Defense Ministry of Portugal‘s budget represented 1.42% of GDP in 2012, standing at US$3.14 bn. The country‘s defense budget grew at a CAGR of 1.7% during the review period, but with a soaring national debt, the government was forced to adopt austerity measures. These measures are expected to result in the defense budget declining during the forecast period to reach US$2.87 bn by 2017, recording an expected CAGR of 1.9%.

Military modernization plans and its participation in peacekeeping missions are the primary forces driving Portugal‘s defense budget, the majority of which is spent on revenue expenditure such as the salaries and pensions of armed personnel and operational and maintenance costs. Capital expenditure, which includes expenditure for equipment procurement, constituted an average of 18.6% of the defense budget during the review period and is expected to decrease to an average of 17% during the forecast period.

Portugal's defense budget was US$3.14 bn in 2012 and, during the review period, recorded a CAGR of 1.7%. However, the country‘s high fiscal debt is forcing austerity measures which will cause the defense budget to decline during the forecast period to reach US$2.87 bn by 2017.

The primary factors driving Portugal‘s defense expenditure are military modernization set out in the country‘s military procurement program1 (LPM) and Portugal‘s commitment to international organizations such as the NATO (North Atlantic Treaty Organization), the Organization for Economic Co-operation and Development (OECD), the EU (European Union), and the United Nations (UN). The majority of the defense budget is used for personnel expenses, including the pensions and salaries of the armed personnel. The expenditure for equipment procurement, which averaged 18.6% of the total defense budget during the review period, is expected to fall to 17.9% by 2013, as the country is intending to reduce the budget of LPM by 40%.