A minimum of two per cent of GDP on defence and stable and transparent financing of large strategic defence projects are the main changes brought about by the new draft legislation on defence financing approved by the Government today.

The government has fulfilled another point of the programme declaration and approved a draft law that guarantees a minimum defence spending of two per cent of GDP and allows for stable and transparent financing of large acquisitions. "Security is not free. After years when defence was on the sidelines for previous governments, the war in Ukraine has confirmed that urgent modernisation of the army is absolutely necessary and cannot be postponed. We are coming up with a plan to accelerate the modernisation of the army and ensure its long-term financing," said Defence Minister Jana Černochová.

Picture: Government approves minimum defence spending of 2 % of GDP (illustration photo) | mjr. Ladislav Kabát

"Defence spending of two per cent of GDP is vital for us. If we want a secure Europe and not to fear for our lives, values and comfort, we must have a modern and effective army. That is why it is essential that the member states of the Alliance fulfil their commitment to common defence," the Minister recalls. Two per cent of GDP is our interest and obligation resulting from NATO membership, which the Czech Republic has not fulfilled for a long time.

"In the context of Putin's aggression in Ukraine, we need to accelerate the increase in spending on the Czech Republic's defence. The anchoring of this 2 % of GDP rule in our legal system is not only a confirmation of the Czech Republic's commitment to NATO, but it also creates a basis for the smooth financing of strategic projects of the army and enables easier planning of defence spending beyond the medium-term outlook," added Finance Minister Zbyněk Stanjura.

The law will also oblige future governments to spare no expense on the country's defence and to calculate the prescribed minimum amount of expenditure when preparing the budget, otherwise they would be acting illegally. In practice, the new legislation will work in such a way that the government will have to allocate an amount equivalent to at least two percent of GDP for defence in the draft budget, similar to other mandatory expenditures. It will submit such a proposed budget to the lower house of parliament, while MPs will also have to follow the relevant law when debating the budget and keep defence spending at a minimum of two per cent of GDP. "Both the Constitution and the Charter stipulate that the state power can only act within the limits of the law and in the way that the law explicitly stipulates," constitutional lawyer Jan Kudrna explained in the daily Právo why the ministry, the government or the lower house cannot adopt a state budget with lower spending than two per cent of GDP once the new law is in force.

The rules for financing large strategic projects that last for several years, have a major impact on the state's defence capability and involve a budget of over CZK 300 million will also be fundamentally changed. The government will decide on these projects. The change compared to the current practice will be that the Ministry of Defence will have an aggregate amount of funds for strategic projects each year, which can be used more easily for individual projects. This will ensure stable funding and stability of the projects themselves, as well as reduce administration and ensure the necessary public scrutiny and transparency through government oversight.

The new legislation will also make it possible to identify defence expenditure in other ministries in more detail and include it in the aforementioned two per cent. The Ministry of Defence is already mapping projects in other ministries that meet the definition of defence expenditure, but there is still no clear legislative basis for including them in defence expenditure, which is what the proposed legislative change brings. When the rules come into force, ministries will have to report their defence spending three years in advance to the Ministry of Defence, which will include it in the defence budget.