The Fiscal System Council, an advisory body to the finance minister, discussed defense spending on Thursday. The government plans to revise its three security-related documents by the end of the year, with a substantial increase in defense spending expected. The Finance Ministry argued that fiscal discipline must underpin any strengthening of defense.
The ministry noted that Russia expanded its defense spending 2.8-fold and Ukraine 13.9-fold around the time of Russia's invasion of Ukraine. It said a security emergency brings not only greater fiscal demand but also an outflow of foreign currency and rises in prices and interest rates.
“It is necessary not to weaken the economic, financial and fiscal foundations of peacetime.”the Finance Ministry
Securing the revenue to cover higher defense spending is also a focus of the year-end budget compilation. At Thursday's meeting, council members said a stable source of funding is essential.
“Securing a stable source of revenue without relying on government bond issuance is indispensable.”a council member