Belgium - Defense and Security: Procurement programs to drive expenditure (Strategy, Performance and Risk Analysis)
Belgium registered a high economic impact of violence and conflict score due to a series of terrorist attacks in 2016. Attacks in neighboring France raised concerns over domestic safety and security, leading to an increase in the business cost of terrorism scores. The country also has small army comprising 21,339 soldiers and ranks low in comparison to its peers in terms of defense expenditure. The aircraft and homeland security categories are the industry’s key drivers.
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A decline in both capital and revenue spending negatively impacted total expenditure:
Belgium’s revenue expenditure declined at a CAGR of -7.4%, falling from US$2.7 billion in 2012 to US$2.0 billion in 2016; attributed to economic instability. However, it will post a forecast-period CAGR of 6.6% to return to US$2.7 billion in 2021.
Capital expenditure declined at a CAGR of -6.7%, falling from US$770.0 million in 2012 to US$582.7 million in 2016. However, it will post a forecast-period CAGR of 7.6% to reach US$792.3 million in 2021, owing to the procurement of multi-role aircraft, frigates and armored vehicles.
Total expenditure registered a CAGR of -7.3%, falling from US$3.5 billion in 2012 to US$2.6 billion in 2016, due to the effects of the European debt crisis and efforts to lower the fiscal deficit. Defense expenditure will post a forecast-period CAGR of 6.8% to reach US$3.4 billion in 2021.
Aircraft segment leads in terms of capital expenditure:
The aircraft category drove capital expenditure and stood at US$582.3 million in 2016. It will post a forecast-period CAGR of 5.1% to reach US$742.9 million in 2021 due to the procurement of fighter, refueling, and military transport aircraft. Belgium has also initiated the replacement of its F-16 fighters with 34 modern air frames.
Capital expenditure on C4ISR electronics and IT category to decline:
Capital expenditure on Belgium’s C4ISR electronics and IT category stood at US$161.6 million in 2016, and will post a forecast-period CAGR of -6.7% to reach US$130.2 million in 2021 due to the allocation of fund to more pressing areas of expenditure.