Serbia Defence and Security Report 2016
BMI View: Serbian defence spending will remain modest in 2016, amid the government's ongoing fiscalconsolidation programme. Despite the armed forces' requirements to replace much of its ageing equipment- particularly in the aerospace segment - new procurement will therefore be limited. However, militaryexpenditure will increase gradually in coming years as economic conditions improve, reflecting persistentsecurity risks stemming from unresolved disputes with neighbouring countries, separatists and ultranationalistgroups - as well as Belgrade's aim to strengthen Serbia's contribution to internationalpeacekeeping missions. Serbian defence manufacturers, most of which specialise in the ground segment,will, due to the lack of domestic demand for their products, remain export-focused. Although we expect thelocal defence industry to expand design and production capabilities in cooperation with foreign companiesover the next decade, Serbian purchases of technologically advanced equipment such as fighter jets will stillneed to come from abroad, as such items take years and significant amounts of funding to develop.
The Serbian government is continuing its fiscal consolidation programme into 2016, and consequently,we do not expect significant growth in the defence budget this year, despite the SAF's long-standingrequirements to replace ageing equipment. We forecast Serbian defence spending to come in atUSD809.5 in 2016 - a minimal increase from the estimated USD808.5 in 2015.
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