Brazilian Defense Minister Nelson Jobim announced today (15/02) the probable size of the cut in the defense budget for 2011. In all, must contingence R 4.024 billion reals (approx. $2.41 billion), which corresponds to a decrease of 26.5% compared to the 15.165 billion reals earmarked for the defense portfolio in the Annual Budget Law (LOA).
The cut will occur in the discretionary portion of the Ministry’s budget, which includes operating expenditures and maintenance projects of the Armed Forces and other defense-related agencies. This was originally budgeted at 10.292 billion reals. The 4.873 billion difference between the discretionary balance and the Ministry’s total budget refers to the amount set in the budget law that cannot be reduced, such as spending on airspace control.
The announcement of the budget cut was made after Jobim’s meeting this afternoon with the Ministers of Finance, Guido Mantega, and Planning, Miriam Belchior. The minister did not specify which projects will be affected by the budget reduction, but said that the measure will impact the advancement of ongoing activities in most fields related to the Ministry portfolio, some of which may be frozen altogether.
Jobim avoided commenting on the size of the budget cut, which he attributed to the current situation of the economy. "It depends on the outcome of the economy, on economic conditions," he said.
In the coming days, the minister and his staff will review the consequences of the funding cut on the projects of the Armed Forces. The idea is to review the new budget, after the new cuts, to reconcile the needs of central government, of the Armed Forces Command and of defense related agencies such as the National Civil Aviation Agency (ANAC).
FX-2
Jobim said the budget cut will not necessarily impact the decision due this year on the FX-2 project, which calls for the purchase of new combat aircraft and a related technology package for the Air Force.
A report on the issue, which states the Defense Ministry’s position, has been delivered by Jobim to incoming President Dilma Roussef, who will take the final decision on the purchase after consulting the National Defense Council (NDC).
According to the minister, even if the President decides this year, the financial and budgetary effects of the aircraft purchase will only be felt in the budgets for 2012 or 2013. Jobim has reiterated that, after the selection of the winning competitor, negotiations on the purchase, including preparation of the related contracts, should last about a year, as happened with the submarines purchased under the navy’s Prosub project.
Jobim recalled that the decision of the President of the Republic will follow a legal process which includes the submission of the selected proposal to the NDC. It is only after the Council has evaluated on the proposal, and the subsequent decision by the President, that negotiations will begin between representatives of the Brazilian government and the company chosen by this process.
