BUDGETMinistry of Defence of the Czech Republic

FACTS & TRENDS 2018

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INTRODUCTION

The Ministry of Defence of the Czech Republic, in compliance with Act No. 106/1999 Coll., on Freedom of Information, issued this publication in order to inform the general public and partner nations about the basic data in the State Budget Chapter 307 – Ministry of Defence (MoD budget chapter) for the year 2018, including trends, structure, main expenditure categories and their proportions.

Summary of the main documents used for 2018 MoD Budget Draft preparation:■ Act No. 474/2017 Coll., on the Czech Republic State Budget for the year 2018, dated 19th December

2017;■ The Government Resolution No. 674 dated 25th September 2017, on the Czech Republic State Budget

Draft for the year 2018 including the Mid-term State Budget Outlook for the years 2019–2020;■ The 2017 Draft State Final Account – Chapter 307 – Ministry of Defence;■ The Government Resolution No. 442 dated 14th June 2017 for the preparation of the 2018 State

Budget Draft and the Mid-term State Budget Outlook for the years 2019–2020;■ Ministry of Finance’s Instruction for the preparation of the 2018 Czech Republic State Budget and

the Mid-term Outlook for the years 2019 and 2020 – Budget Chapter 307 – Ministry of Defence;■ The Government Resolution No. 339 dated 18th April 2016 concerning the Plan of MoD Forces and

Assets Deployment in Foreign Operations in 2017–2018 with the Outlook for 2019;

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■ The Government Resolution No. 276 dated 30th March 2016 concerning the Plan of the Air Advisory Team Deployment to the Republic of Iraq;

■ The Government Resolution No. 877 dated 5th October 2016 concerning the Plan of MoD Forces and Assets Deployment to the Republic of Iraq within the support of fight against so-called Islamic State;

■ The Government Resolution No. 351 dated 10th May 2017 concerning the Plan of MoD Forces and Assets Deployment to Lithuania, Estonia, Latvia and Poland within the Framework of NATO´s Enhanced Forward Presence;

■ The Government Resolution No. 385 dated 22nd May 2017, on the Czech Republic State Budget Draft-expenditure for research, experimental development and innovation for 2018 with the Mid-term Outlook for 2019 and 2020 and the Long-term Outlook until 2024;

■ The Government Regulation No. 59/2015 Coll., on service tariffs and on special pay for military professionals, as subsequently amended;

■ The Government Regulation No. 304/2014 Coll., on the salaries of civil servants, as subsequently amended;

■ The Government Regulation No. 341/2017 Coll., on the salaries of employees in public services and administration.

The basic budgetary limits for the Ministry of Defence for the year 2018 were set by the Government Resolution No. 442/2017 as follows:

- total revenues in the amount of CZK 4,778.028 million,- total expenditures in the amount of CZK 57,881.751 million.

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These limits were clarified during the preparation of the 2018 State Budget Act and set in force by the Government Resolution No. 674 dated 25th September 2017 on the draft Czech Republic State Budget for the year 2018 and the Mid-term State Budget Outlook for the years 2019–2020 as follows:

- total revenues in the amount of CZK 4,817.604 million,- total expenditures in the amount of CZK 58,893.351 million.The Draft 2018 State Budget - Ministry of Defence Chapter was prepared in accordance with Act

No. 218/2000 Coll., Budgetary Rules. It was based on the budgetary limits for the year 2018, regulation No. 133/2013 Coll., which determines scope and structure of the data needed for preparation of the Draft State Budget and Mid-term Outlook and deadlines for their presentation (as subsequently amended) and in accordance with objectives set in the Government Resolution No. 674 dated 25th September 2017.

The 2018 MoD Budget was prepared also with regard to increased transparency of public spending providing clear answers to the questions to which objectives are public funds spent. Objective-based budgeting and the criteria determined for valuation of their fulfilment are a basic instrument for the increased economy, efficiency and effectiveness of public spending. In accordance with Act No. 218/2000 Coll. and the Government Resolution No. 674 dated 25th September 2017, the 2018 Budget Draft and 2019–2020 Mid-term Outlook was prepared in the Integrated State Treasury Information System – Budget Preparation subsystem (IISSP-RISPR). Revenues and expenditures are presented in accordance with the MoF regulation No. 323/2002 Coll., on the Budget Structure (as subsequently amended).

The approved 2018 MoD Budget ensures essential resource framework for implementation of The Concept of the Build-up of the Armed Forces of the Czech Republic 2025, agreed and ratified by the Czech Government on 21th December 2015. This key strategic defence document outlines the scope

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and achievability of the identified capabilities vital to the politico-military ambitions and all the tasks and commitments of the Armed Forces up to 2025 in the context of collective defence. The implemented priorities are defined in the Minister´s Guideline for planning the MoD operation and development in 2018–2025 with the outlook until 2030.

The 2018 MoD Budget will cover primarily:■ non-discretionary expenditures related to personnel with the anticipated personnel number growth,■ strategic projects expenditures,■ expenditures related to the fulfilment of commitments towards NATO, represented by the adopted

capability targets (CT 2013) implementation, in the area of defence planning,■ commitments resulting from the membership of the Czech Republic in international organizations,■ ACR troops deployment abroad expenditures.

The MoD budgetary limit for 2018 is higher by CZK 6,358.308 million compared to the year 2017. The Mid-term outlook for the year 2019 is set in the amount of CZK 66,628.408 mil. and CZK 77,280.514 mil. for the year 2020.

Act No. 474/2017 Coll., on the Czech Republic State Budget for the year 2018, set the MoD expenditure limit in the amount of CZK 58,893.351 mil. The predicted approved MoD budget share on GDP is 1,11 %, compared to 1,04 % in 2017 (source: The Ministry of Finance - Macroeconomic Forecast, January 2018).

Total 2018 MoD revenues set in the amount of CZK 4,817.604 mil. are CZK 35.509 mil. lower compared to the previous year.

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Tax revenues, in the amount of CZK 4,082.144 million, is revenue from pension and health insurance and from employment policy contributions for professional soldiers. Other tax revenues amounting CZK 0.203 million are revenues proceeded from the selected activities and services (e.g. waste storing fees).

Non-tax and capital revenues in the amount of CZK 735.257 million include non-tax revenues amounting CZK 403.309 million (from own performance, rent of lands and immovable and movable assets, state-owned enterprises funds transfers into the state budget, property sales and other non-tax revenues), capital revenues amounting CZK 318.500 million (lands and other immovables sales and other long-term tangible assets sales) and transfers received from EU funds in the amount of CZK 13.448 million.

The amount of CZK 10,203.449 million (including EU funds in the amount of CZK 3.500 million) is allocated for the property reproduction programmes, which represents an increase of CZK 1,868.617 million compared to the year 2017 (index 2018/2017 is 1.22).

Operating expenditures (including related operating expenditures of programme financing and defence research, development and innovation operating expenditures) are approved in the amount of CZK 50,907.410 million (i.e. 86,4 % of the total MoD budget expenditures). There is an increase of CZK 5,069.269 million compared to 2017 (index 2018/2017 is 1.11).

Defence research, development and innovation expenditures have not been part of programme financing since 2011. CZK 436.040 million is allocated for defence research, development and innovation programmes for 2018. There is an increase of CZK 1.388 million in comparison to the previous year.

In accordance with the Government Resolution No. 339 dated 18th October 2016 concerning the Plan of MoD Forces and Assets Deployment in Foreign Operations in 2017–2018 with the outlook for 2019, the Government Resolution No. 276 dated 30th March 2016 concerning the Plan of the Air Advisory Team Deployment to the Republic of Iraq, the Government Resolution No. 877 dated 5th October 2016

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concerning the Plan of MoD Forces and Assets Deployment to the Republic of Iraq within the support of fight against so-called Islamic State and the Government Resolution No. 351 dated 10th May 2017 concerning the Plan of MoD Forces and Assets Deployment to Lithuania, Estonia, Latvia and Poland within the Framework of NATO´s Enhanced Forward Presence; the total expenditures of CZK 1,744.398 mil. are expected for ACR participation in operations abroad in 2018. This amount represents 2.96 % of the 2018 MoD budget.

Furthermore, the approved MoD Budget includes funds for fulfilment of commitments resulting from international defence documents, activities carried out in cooperation with NATO, EU and UN bodies and appropriate authorities of the Czech Republic, joint exercises, events and engagements arising from the North Atlantic Treaty and international treaty obligations.

The MoD also participates in the projects under the EU Operational Programmes. The amount of CZK 16.821 million is allocated for these projects, out of which CZK 13.448 mil. are the EU funds and CZK 3.373 mil. are the State Budget funds.

The number of personnel used for the MoD budget preparation for the year 2018 is 33 491 (32 557 for the state organizational unit MoD and 905 for on-vote organizations under the MoF regulation). There is an increase of 70 compared to 2017.

The number of systemised posts was adjusted for the following reasons:■ The recruitment effort to achieve the target personnel strength set by the Czech Armed Forces

Development Concept 2025 (Czech Government Resolution No. 1094 dated 21 December 2015);■ The change in the financing of state sport representation expenses (in the past it was a regular expense

transfer from the budgetary chapter of the Ministry of Education, Youth and Sports to the MoD chapter);

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■ Establishment of the Liberec women´s volleyball team (MoD on-vote organization);■ Exemption of Military Intelligence from the employment regulation based on the Government

Resolution No. 435/T (ref.no. T35/2001), specific procedures for government funds management reporting for the implementation of Section § 20 of the Act No. 153/1194 Coll., on Intelligence Services of the Czech Republic.

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Development of the MoD Budget in 2014–2020

CZK million2014 2015 2016 2017 2018 2019 2020

2017 Budget preparation limits and the Mid-term outlook 2018–2019 *) 52 529 57 770 62 654Approved MoD Budgets and Mid-term expenditure frameworks 2019–2020 **) 41 990 43 783 47 783 52 535 58 893 66 628 77 281

2018 Budget preparation limits and the Mid-term outlook 2019–2020 ***) 57 882 62 628 64 281

*) The Government Resolution No. 563 dated 22nd June 2016 on preparation of the Czech Republic State Budget for the year 2017 and the Mid-term State Budget Outlook for the years 2018–2019

**) Act No. 474/2017 Coll., on the Czech Republic State Budget for the year 2018, dated 7th December 2016 and the Mid-term State Outlook Frameworks for 2019–2020 approved by the Government Resolution No. 674 dated 25th Septemeber 2017

***) The Government Resolution No. 442 dated 14th June 2017 on the Czech Republic State Budget for the year 2018 and the Mid-term State Budget Outlook for the years 2019–2020 preparation

40 000

45 000

50 000

55 000

60 000

65 000

70 000

75 000

80 000

2014 2015 2016 2017 2018 2019 2020

CZK mil.

year

2017 Budget preparationlimits and the Mid-termoutlook 2018-2019 *)

Approved MoD Budgetsand Mid-termexpenditure frameworks2019-2020 **)

2018 Budget preparationlimits and the Mid-termoutlook 2019-2020 ***)

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Comparison of basic Macroeconomic Indicators

2017 2018 Index 2018/2017

Gross domestic product (in CZK billion) 5,042.00 *) 5,304.00 *) 1,05

Expenditures of the State Budget (in CZK billion) 1,309.27 1,364.50 1,04

Inflation rate (in %) 2,5 % *) 2,6 % *) 1,04

MoD expenditures as a % share on GDP 1,04 % 1,11 % 1,07

MoD expenditures as a % share on the State Budget expenditures 4,01 % 4,32 % 1,08*) source: Macroeconomic prediction of the Czech Republic issued by the MoF (January 2018)

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Basic Data on the State Budget – MoD Budget Chapter

Expenditures (in CZK million) Index 2018/2017Year

2017Year 2018

I. Total capital expenditures 6 696,9 7 985,9 1,19

II. Total operating expenditures 45 838,1 50 907,5 1,11

II.1. Employee's salaries and other payments for contract work 13 460,5 15 458,9 1,15

II.2. Retirement pensions and other social benefits 6 908,0 6 892,0 1,00

II.3. Non-discretionary employer-paid insurance and allocation to CSNF 5 607,5 5 902,1 1,05

II.4. Non-investment subsidies to on-vote MoD organizations 1 563,7 1 914,0 1,22

II.5. Non-investment subsidies to enterprises 377,9 365,6 0,97

II.6. Other material non-investment expenditures 17 920,5 20 374,9 1,14

III. Total MoD expenditures (I. + II.) 52 535,0 58 893,4 1,12

MoD expenditures (based on constant prices of the year 2011) 50 894,1 56 155,4 1,10

Revenues (in CZK million)

IV.1 Insurance revenues and other tax revenues 3 978,1 4 082,3 1,03

IV.2. Non-tax revenues, capital revenues and transfers received 875,0 735,3 0,84

IV. Total MoD revenues (IV.1. + 2.) 4 853,1 4 817,6 0,99

RESULTING BUDGET BALANCE 47 681,9 54 075,8 1,13*) Act No. 457/2016 Coll. , dated 7th December 2016, on the 2017 Czech Republic State Budget, Act No. 474/2017, dated 19th December 2017, on the 2018 Czech

Republic State Budget

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Comparison of Expenditures Based on the UN Methodology in 2017 and 2018

"UN Code" Expenditures (in CZK million)

Approved budgetDifference

(2018-2017)Index

2018/2017Year 2017

Year 2018

1. Personnel 29 510,7 31 578,1 2 067,4 1,07

2. Operation and maintenance 12 807,4 15 154,2 2 346,8 1,18

3. Procurement and construction 9 700,8 11 636,1 1 935,3 1,20

3.1. Procurement 7 766,6 8 720,8 954,2 1,12

3.2. Construction 1 934,3 2 915,3 981,0 1,51

4. Research and development 434,7 436,0 1,4 1,00

5. T O T A L (1 + 2 + 3 + 4) 52 453,6 58 804,4 6 350,8 1,12

6. Non-military expenditures 81,4 89,0 7,6 1,09

7. TOTAL MoD Expenditures (5+6) 52 535,0 58 893,4 6 358,4 1,12

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MoD 2018 Expenditures Based on the UN Methodology(divided by Forces)

"UN Code"

Expenditures (in CZK million)

"Land Forces"

"Air Forces"

"Other Forces"

"Central Support, Ad-ministration

and Com-mand"

"Not distributed" TOTAL

1. Personnel 8 427,4 3 655,0 477,7 12 178,0 6 840,0 31 578,1

2. Operation and maintenance 815,8 2 462,2 29,2 11 847,0 0,0 15 154,2

3. Procurement and construction 1 008,0 4 115,7 0,0 6 512,4 0,0 11 636,1

3.1. Procurement 718,6 3 763,3 0,0 4 238,9 0,0 8 720,8

3.2. Construction 289,4 352,4 0,0 2 273,5 0,0 2 915,3

4. Research and development 0,0 0,0 0,0 436,0 0,0 436,0

5. T O T A L (1 + 2 + 3 + 4) 10 251,2 10 232,9 506,9 30 973,4 6 840,0 58 804,4

6. Non-military expenditures 0,0 0,0 0,0 89,0 0,0 89,0

7. TOTAL MoD Expenditures (5+6) 10 251,2 10 232,9 506,9 31 062,4 6 840,0 58 893,4

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Structure of the MoD Budgetary Expenditures in 2014–2018

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

2014 2015 2016 2017 2018

CZK mil.

year

Structure of the MoD Budgetary Expenditures in 2014 - 2018

Programme financingNon-discretionary expendituresOther non-investment expenditures

Expenditure category (CZK mil.)Real

ExpendituresApproved

Expenditures

2014 2015 2016 2017 2018

Programme financing 4 328,3 6 793,9 4 805,4 8 363,3 10 203,5

Non-discretionary expenditures 24 155,1 24 929,3 26 913,0 29 004,1 31 191,2

Other non-investment expenditures 12 586,0 15 618,8 13 952,4 15 167,6 17 498,7

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Development of the MoD Budgetary Revenues in 2014–2018

Insurance revenues

Tax and non-tax revenues *)

3 833,83 568,1

5 127,94 853,1 4 817,6

0

1 000

2 000

3 000

4 000

5 000

2014 2015 2016 2017 2018

CZK mil.

year

2014 2015 2016 2017 2018

Total revenues 3 833,8 3 568,1 5 127,9 4 853,1 4 817,6

Insurance revenues 2 971,3 3 333,5 3 761,6 3 978,1 4 082,3

Tax and non-tax revenues* 862,5 234,6 1 366,3 875,0 735,3 * excluding revenue from compulsory social security & employment policy insurance and accident insurance

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Development of Proportions among Main MoD Expenditures in 2015–2018

Real expenditures* Approved expenditures

2015 2016 2017 2018

Property reproduction programmes 4 787,4 4 296,7 8 363,3 10 203,5

Salaries, insurance, allocation to CSNF and social benefits 24 862,0 26 812,6 29 004,1 31 191,2

Other expenditures 13 724,4 13 129,4 15 167,6 17 498,7* excluding extrabudgetary resources and carry forwards

Approved expenditures 2015 Approved expenditures 2016 Approved expenditures 2017 Approved expenditures 2018

32 % 30 % 29 % 30 %

11 % 10 % 16 % 17 %

57 % 60 % 55 % 53 %

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MoD 2018 approved budget structured in accordance with objective based budget structure

Breakdown by 1st level objectives („expenditure blocks“)

Defence of the Czech Republic by the Armed

Forces65,4 %

Design and development of the state defence system

16,6 %

Strategic Intelligence4,9 %

Support of President acting as the Supreme

Commander of the Armed Forces1,0 %

Pensions7,3 %

Other social benefits4,4 %

Sport representation expenditures

0,8 %CZK thousand

1st level objectives Approved amount

Share on total amount

Defence of the Czech Republic by the Armed Forces 38 513 908 65,40 %

Design and Development of the State Defence System 9 526 880 16,18 %

Strategic Intelligence 2 868 983 4,87 %Support of President acting as the Supreme Commander of the Armed Forces

611 721 1,04 %

Pensions 4 290 000 7,28 %Other social benefits 2 602 000 4,42 %Sport representation expen-ditures 479 859 0,81 %

Total 58 893 351 100,00 %

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Based on Act No. 474/2017 Coll., on the Czech Republic State Budget for the year 2018, programme financing budgetary expenditure is approved in the amount of CZK 10,203.449 million (i.e. 17.33 % of total MoD expenditures), out of which CZK 7,815.355 million is dedicated for capital expenditures and CZK 2,388.094 million for related operating expenditures.

Expenditure registered in the programme financing information system EDS/SMVS for the year 2018 is calculated within 15 property reproduction programmes. The amount of CZK 8.973 million is allocated for subsidy titles and CZK 10,194.476 mil. for expenditure titles.

In line with the Budget Structure the expenditures registered in the programme financing IS are divided as follows:

- capital expenditures CZK 7,815.355 mil. (i.e. 76,6 % of total expenditures),- operating expenditures CZK 2,388.094 mil (i.e. 23,4 % of total expenditures – out of which 96 % is

for supersonic aircraft JAS-39 Gripen lease).The new investment activities represent 59,56 % and ongoing activities represent 40,44 % of the total

programme financing limit. In the framework of armament modernisation projects, the amount of CZK 4,529.616 million is

allocated for 13 main investment activities (i.e. 44,39 % of programme financing expenditures) within the following programmes:

EXPENDITURES OF PROGRAMME FINANCING

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■ Military Intelligence development III■ Air Force sustainability and development■ Communication and information support sustainability and development■ Supersonic aircraft sustainability and development■ Land Force sustainability and development■ Management of the MoD civilian-administrative part and state on-vote organizationsThe total amount for the property reproduction programmes set on 1st January 2018 is CZK 10,893.094

mil. This amount includes, besides MoD budgetary resources registered in the programme financing IS in the amount of CZK 10,199.949 mil., also NATO resources CZK 5.000 mil., EU funds CZK 3.500 mil. (EU Structural Funds), extrabudgetary funds in the amount of CZK 568.896 mil., other domestic funds in the amount of CZK 5.305 mil. and programme participant´s own resources (resulting from the economic entity´s own performance, not included in the MoD budget) amounting to CZK 110.444 mil.

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Comparison of Programme Financing Expenditures in 2014–2018

0

2 500

5 000

7 500

10 000

2014 2015 2016 2017 2018

CZK mil.

year

CZK mil.

Real expenditures*) Approved expenditures

2014 2015 2016 2017 2018

Capital expenditures 1 975,4 2 278,4 3 740,2 6 490,5 7 815,3

Operating expenditures 1 271,2 2 509,0 556,5 1 872,8 2 388,1

Total 3 246,6 4 787,4 4 296,7 8 363,3 10 203,4* excluding extrabudgetary resources and carry forwards

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Breakdown of Programme Financing Expenditures in 2018

CZK mil.

Armament programmes, operational capabilities increase and maintenance programmes,etc. 8 339,0 81,7 %

Immovable infrastructure programmes 1 864,4 18,3 %

Total 10 203,4 100,0 %

Armament programmes, operational capabilities increase and sustainability,etc.81,7 %

Immovable infrastructure programmes18,3 %

Breakdown of Programme Financing Expenditures registered in EDS/ SMVS in 2018

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The MoD operating expenditures for the year 2018 (including related operating expenditures of programme financing and defence research, development and innovation expenditures) were approved in the amount of CZK 50,907.410 mil., which represents 86,44 % of the total MoD budget expenditures.

The amount of CZK 31,191.175 mil. (i.e. 61,27 % of operating expenditures) is allocated for salaries, other payments related to performed work (compulsory insurance and contribution to the Cultural and Social Needs Fund (CSNF) paid by the employer), remuneration for the use of intellectual property, salary compensations, pensions and social benefits, sickness benefits, students scholarships, service housing allowance and stabilization allowance.

From this amount, CZK 14,301.886 mil. is allocated for salaries, CZK 1,157.008 mil. for other payments related to performed work, CZK 5,616.090 mil. for compulsory insurance paid by the employer and CZK 286.038 mil. to the Cultural and Social Needs Fund (CSNF).

CZK 3,918.089 million is allocated for material purchase within operating expenditure. CZK 3,619.862 million is allocated for financing of services and CZK 1,055.367 million for water, fuel and energy supply. Repair and maintenance is budgeted in the amount of CZK 2,678.383 million and expenses for domestic and foreign service travel in the amount of CZK 605.389 million.

OPERATING EXPENDITURES

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Structure of 2018 MoD Budget Operating ExpendituresCZK mil.

Budget 58 893,4Capital expenditures 7 985,9Operating expenditures *) 50 907,5

I. Non-discretionary expenditures 31 191,21.Salaries, other payments related to performed work and directly related expenditures 21 361,0a) Salaries 14 301,9b) Other payments related to performed work 1 157,0c) Insurance 5 616,1d) CSNF 286,02.Other non-discretionary expenditures 9 830,2a) Social benefits 6 892,0b) Housing allowance 919,4c) Stabilization allowance 1 979,4d) Other (scholarship etc.) 39,4II. Other operating expenditures 19 716,31.Current life support 14 814,42.Transfers and Subsidies 2 894,33.Other operating expenditures 2 007,6

* – including related operating expenditures of programme financing and defence research, development and innovations expenditures – excluding Military Intelligence expenditures due to the Exemption of Military Intelligence from the employment regulation based on the government resolution No. 435/T (ref.no. T35/2001), specific procedures for government funds management reporting for the implementation of Section § 20 of the Act No. 153/1194 Coll., on Intelligence Services of the Czech Republic

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Personnel and Salaries at the MoD in 2014–2018 (excluding On-Vote organizations)

Real Plan

2014 2015 2016 2017 2018 **)

Professional soldiers 21 074 21 530 22 888 24 684 24 603

MoD positions under the Labour Code 7 359 7 071 6 280 6 550 6 672

MoD service positions under the Civil Service Act* 0 332*) 1 164 1 282 1 282

Total personnel 28 433 28 933 30 332 32 516 32 557

Salaries in CZK million 9 280 10 046 11 441 12 629 14 302*) service posts were filled in the middle of the year 2015, based on the Civil Service Act effective since 1st July 2015 **) excluding Military Intelligence expenditures due to the Exemption of Military Intelligence from the employment regulation based on the government resolution No. 435/T (ref.no. T35/2001), specific procedures for government funds management reporting for the implementation of Section § 20 of the Act No. 153/1194 Coll., on Intelligence Services of the Czech Republic

9 28010 046

11 44112 629

14 302

6 0007 0008 0009 00010 00011 00012 00013 00014 00015 000

20 000

25 000

30 000

35 000

2014 2015 2016 2017 2018 **)

CZK

mil.

Pers

onne

l

year

Total personnel Salaries in CZK million

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Development of MoD Personnel Number in 2014–2018

Real Plan2014 2015 2016 2017 2018 **)

Number of professional soldiers 21 074 21 530 22 888 24 684 24 603MoD posts under the Labour Code 7 359 7 071 6 280 6 550 6 672MoD service posts under the Civil Service Act * 0 332*) 1 164 1 282 1 282Total 28 433 28 933 30 332 32 516 32 557

*) service posts were filled in the middle of the year 2015, based on the Civil Service Act effective since 1st July 2015 **) excluding Military Intelligence expenditures due to the Exemption of Military Intelligence from the employment regulation based on the government resolution No. 435/T (ref.no. T35/2001), specific procedures for government funds management reporting for the implementation of Section § 20 of the Act No. 153/1194 Coll., on Intelligence Services of the Czech Republic

24 6

84

24 6

03

7 07

1

6 28

0

6 55

0

6 67

2

0 332 11

64

1282

1282

28 9

33

30 3

32 32 5

16

21 5

30

21 0

74

22 8

88

7 35

9

28 4

33

32 5

57

0

5 000

10 000

15 000

20 000

25 000

30 000

2014 2015 2016 2017 2018

Pers

onne

l

Professional soldiers MoD positions under the Labour Code Service positions under the Civil Service Act Total

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Expenditures for Pensions and Other Social Benefits as a % share of the Total MoD Operating Expenditures in 2014–2018

(approved budgets)

2014 2015 2016 2017 2018

Operating expenditures* 38 344,7 39 875,1 44 195,5 45 838,1 50 907,5

Pensions and social benefits 7 048,8 6 997,0 6 991,0 6 908,0 6 892,0

Pensions and social benefits as a % share of the total operating expenditures 18,4 % 17,5 % 15,8 % 15,1 % 13,5 %

* including related operating expenditures of programme financing and defence research, development and innovations expenditures

18,4 % 17,5 %15,8 % 15,1 %

13,5 %

0%

5%

10%

15%

20%

0

10 000

20 000

30 000

40 000

50 000

2014 2015 2016 2017 2018

CZK

mil.

year

Operating expenditures *) Pensions and social benefits Pensions and social benefits as a % share of the total operating expenditures

26

Comparison of Main Categories of Non-investment (Operating) Expenditures in 2017–2018

(approved budgets – excluding operating expenditures of programme financing)

3 297,4

571,4

2 724,1

1 129,4

3 189,4

10 911,7

3 619,9

605,4

2 678,4

1 055,3

3 918,1

11 877,1

0 2 000 4 000 6 000 8 000 10 000 12 000 14 000

Services

Travel expenses

Maintenance andrepairs

Water, fuel, energy

Purchase of material

Total

CZK mil.

2018

2017

27

Comparison of Expenditures allocated for Purchase of Material in 2017–2018 (approved budgets, excluding expenditures registered in EDS/SMVS)

19,3

18,7114,

0

99,330

2,9

326,

6

1 05

3,2

1 28

8,7

251,

8

305,

3743,

5

1 29

2,3

653,

6

541,

0

51,1

46,2

3 18

9,4

3 91

8,1

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2017 2018

CZK mil.

yearOther material * Medicaments and medical suppliesMaterial for operating, maintenance and repair Ammunition, missiles and weaponsSmall tangible assets Spare partsUnderwear, clothing, footwear Foodstuffs

* protective equipment, schoolbooks, books and school supplies provided for free

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DEFENCE RESEARCH, DEVELOPMENT AND INNOVATION EXPENDITURES

For 2018 CZK 436.040 million is allocated for support of defence research, experimental development and innovation, based on the Government Resolution No. 442 dated 14th June 2017 for the preparation of the 2018 State Budget Draft and the Mid-term State Budget Outlook for the years 2019-2020 and the Government Resolution No. 385 dated 22nd May 2017, on the Czech Republic State Budget Draft-expenditure for research, experimental development and innovation for 2018 with the Mid-term Outlook for 2019 and 2020 and the Long-term Outlook until 2024. There is an increase of CZK 1.388 million compared to 2017. These funds will cover 2 ongoing programmes.

Within an institutional support (CZK 102.200 million) the amount of CZK 91.166 million is allocated for an institutional support of research organizations, CZK 2.500 mil. for defence research, experimental development and innovation and CZK 8.534 mil. for the CZ participation in international projects under the umbrella of the European Defence Agency.

Within a specific support, the amount of CZK 333.840 million is earmarked for the armed forces development programme. The main objective of the programme is the development of armed forces capabilites in key areas essential for a country defence and declared politico-military ambitions.

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USED ABBREVIATIONS

ACR Armed Forces of the Czech RepublicCSNF Cultural and Social Needs FundGDP Gross domestic productEDS/SMVS Registration system of subsidies/Management of state-owned propertyMoD Ministry of Defence of the Czech RepublicNATO North Atlantic Treaty OrganisationEU European UnionUN United NationsMoF Ministry of Finance

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CONTENT

Introduction 1

Development of the MoD Budget in 2014–2020 8

Comparison of Basic Macroeconomic Indicators 9

Basic Data on the State Budget – MoD Budget Chapter 10

Comparison of Expenditures Based on the UN Methodology in 2017 and 2018 11

MoD 2018 Expenditures Based on the UN Methodology (divided by Forces) 12

Structure of MoD Budgetary Expenditures in 2014–2018 13

Development of MoD Budgetary Revenues in 2014–2018 14

Development of Proportions among Main Categories of MoD Expenditures in 2015–2018 15

MoD 2018 approved Budget - 1st level objectives breakdown (expenditure blocks) 16

Expenditures of Programme financing registered in EDS/SMVS 17

Comparison of Programme financing expenditures registered in EDS/SMVS in 2014–2018 19

Breakdown of Programme Financing expenditures registered in EDS/SMVS in 2018 20

Operating Expenditures 21

Structure of MoD Operating Expenditures in 2018 22

Development of MoD Personnel Number and Salaries in 2014–2018 23

31

Development of MoD Personnel Number in 2014–2018 24

Expenditures for Pensions and Other Social Benefits as a % share of the Total MoD Operating Expenditures in 2014–2018 25

Comparison of Main Categories of Other Operating Expenditures in 2017–2018 26

Comparison of Expenditures Planned for Purchase of Material in 2017–2018 27

Defence research, development and innovation expenditures 28

Used abbreviations 29

Ing. Eva StrządałováBudget – Facts and Trends 2018

Published by the Ministry of Defence of the Czech Republic – MHI PragueAddress: Military History Institute in Prague, U Památníku 2, 135 00 Praha 3www.army.czwww.vhu.cz

Prepared by the MHI Prague, the Presentation and Production DepartmentAddress: Rooseveltova 23, 161 05 Praha 6Layout of the English version: Adéla ZemanováTranslation: Ing. Pavla Hořejší

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© The Ministry of Defence of the Czech Republic − MHI Prague, 2018ISBN 978-80-7278-746-3ISBN 978-80-7278-745-6 (Czech version)

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