In 2020, Colombian military expenditure will contract for a second year in a row in USD terms. The Covid-19 inducedeconomic crisis coupled with a low oil price environment will have an impact on government spending. We forecast defenceexpenditure to reach USD8.84bn in 2020. Defence spending will increase over the medium-to-long term, reflecting persistentsecurity threats posed by tensions with Venezuela (as well as large inflows of refugees, given the collapse of the Venezuelaneconomy) and the ongoing fight against drug trafficking and related crime. We expect defence expenditure to remain above 3.0% ofGDP over the coming decade. Colombia will maintain a large defence trade deficit for the foreseeable future, given the highlyunderdeveloped nature of its local defence sector. The government is seeking to improve this trade balance through thedevelopment of the local defence sector; however, efforts are somewhat constrained by a limited defence budget.
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