Spending on health and education gaining on military spending in HIPC countries

• Author: Sanjeev Gupta/Calvin McDonald/Luiz de Mello/Shamit Chakravarti
• Position: IMF Fiscal Affairs Department
• Pages: 194-196

Page 194

Worldwide military spending, which has been falling steadily since the end of the Cold War, has stabilized, according to various data sources, including the IMF World Economic Outlook (WEO), Stockholm International Peace Research Institute (SIPRI); International Institute for Strategic Studies (IISS); and the U.S. Arms Control and Disarmament Agency (ACDA). In 1999-2000, worldwide military spending stood at between 2.3 percent and 2.6 percent of GDP, down from 3.1 percent to 3.9 percent of GDP in 1990, depending on the data source (see table, page 195). As a share of total government expenditure, worldwide military spending fell to between 6.4 percent and 9.4 percent in 2000, from 8.4 percent to 12.5 percent in 1990.

Differences persist across regions

Military spending levels remain highest in the developing countries of the Middle East and lowest in the Western Hemisphere, in terms of both GDP and total expenditure. In the Baltic countries, Russia, and other countries of the former Soviet Union, the decline in military spending since 1990 has been faster if measured in percent of GDP than in relation to total government spending. This shows the resilience of defense spending to overall fiscal retrenchment in these countries. For countries in Africa, the latest data from various sources show military spending at between 2.0 percent and 3.4 percent of GDP.

IMF-supported program countries

At an average of between 1.9 percent and 2.6 percent of GDP, military spending stabilized in countries with IMF-supported programs in the latter half of the 1990s.

For countries pursuing reform programs under the IMF's Poverty Reduction and Growth Facility (PRGF), military spending as a share of GDP remains above the world average. The heavily indebted poor countries (HIPCs) had a higher share of military spending, both as a percentage of GDP and as a percentage of government expenditure, in the first half of the 1990s than in the second half, because many were involved in intense armed conflicts. In a sample of up to 19 of the 22Page 195 HIPCs that reached the decision point by end-2000, military spending has been stable since 1998 at around 1.5-1.9 percent of GDP and at about 6.5-8.4 percent of total government expenditures. In Uganda, the only country to reach the completion point under the enhanced HIPC Initiative so far...