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As military spending stabilizes, antipoverty outlays increase

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
January 2002
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Worldwide military spending, which declined steadily relative to GDP in the first half of the 1990s, appears to have stabilized since 1995 at between 2.3 and 2.6 percent of world output. In 2000–01, the latest year for which information is available, worldwide spending on the military stood at between 2.4 and 2.6 percent of GDP and between 11.5 and 11.8 percent of total government expenditure. These figures differ slightly depending on the source of the data: IMF, Stockholm International Peace Research Institute (SIPRI), or the International Institute for Strategic Studies (IISS) (see table).

Overall, military spending declines have tapered off, but regional differences persist
Number of Countries
1995199819992000200119951998199920002001Latest

Observation
Range

(1990-2001)1
(Percent of GDP)2(Percent of total government expenditure)3
IMF
All countries2.62.52.52.42.411.711.311.311.611.5127116-133
Advanced economies2.62.62.52.52.511.911.611.712.112.12424
Developing countries2.22.22.22.12.110.910.09.59.48.98579-89
Africa2.42.32.32.32.39.08.58.58.58.04239-43
Asia1.51.41.51.61.510.58.88.58.68.0119-12
Middle East6.16.25.85.86.319.718.817.516.517.01313-14
Western Hemisphere1.31.41.31.31.36.66.65.96.15.61917-20
Transition economies
Of which: Baltic states,
Russia, and other former
Soviet Union countries42.61.92.02.12.110.08.18.19.49.71813-20
Countries with IMF programs
for more than two years2.01.91.91.91.99.78.27.88.27.76558-68
ESAF/PRGF programs3.72.92.83.12.716.213.613.314.112.14035-41
HIPCs2.32.02.12.42.210.39.310.010.79.32929-31
Decision point1.92.02.43.02.18.69.310.312.18.21717-18
Completion point1.91.71.71.71.69.88.58.17.26.243-4
SIPRI
All countries2.42.32.32.6ֵ11.010.510.511.8ֵ7575-141
Advanced economies2.42.32.22.5ֵ10.810.410.412.0ֵ1919-26
Africa2.32.02.22.1ֵ8.57.47.87.5ֵ2020-41
Asia2.12.12.0ֵֵ13.612.611.4ֵֵ1414-16
Middle East5.96.66.46.4ֵ19.020.418.718.6ֵ1010-14
Western Hemisphere1.51.31.21.3ֵ7.56.05.36.0ֵ55-21
Transition economies3.12.52.52.6ֵ12.010.310.011.6ֵ216-25
IISS
All countries2.52.52.42.4ֵ11.511.511.311.5ֵ14686-148
Advanced economies2.42.32.22.2ֵ10.910.610.410.8ֵ2624-26
Africa2.83.43.33.2ֵ10.312.111.911.5ֵ4417-44
Asia3.63.83.43.3ֵ23.522.618.918.0ֵ1512-15
Middle East6.77.77.86.8ֵ21.623.423.220.1ֵ1412-15
Western Hemisphere1.41.92.01.9ֵ7.38.89.09.1ֵ2415-24
Transition economies2.72.42.32.3ֵ8.68.28.18.3ֵ236-24

IMF data are available until 2001, and data from SIPRI (Stockholm International Peace Research Institute) and IISS (International Institute for Strategic Studies) are available until 2000.

Weighted by GDP.

Weighted by government expenditures. For countries where central government expenditure is not available, general government expenditure is used (for example, in some transition economies).

Armenia, Azerbajan, Belarus, Estonia, Georgia, Kazakhstan, Kyrgyz Republic, Latvia, Lithuania, Moldova, Mongolia, Russian Federation, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan.

Data: IMF, WEO database; SIPRI, Armaments, Disarmament and International Security, 2002; and IISS, The Military Balance, 2002.

IMF data are available until 2001, and data from SIPRI (Stockholm International Peace Research Institute) and IISS (International Institute for Strategic Studies) are available until 2000.

Weighted by GDP.

Weighted by government expenditures. For countries where central government expenditure is not available, general government expenditure is used (for example, in some transition economies).

Armenia, Azerbajan, Belarus, Estonia, Georgia, Kazakhstan, Kyrgyz Republic, Latvia, Lithuania, Moldova, Mongolia, Russian Federation, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan.

Data: IMF, WEO database; SIPRI, Armaments, Disarmament and International Security, 2002; and IISS, The Military Balance, 2002.

Large differences persist across regions, however, in the share of both GDP and total government expenditure. All data sources confirm that military spending levels remain highest in relation to GDP in the Middle East and lowest in the developing countries of the Western Hemisphere. The decline in military spending between 1995 and 1998 in the region comprising the Baltic states, Russia, and other countries of the former Soviet Union has been partially reversed in recent years for a variety of reasons, including commitments made by the Baltic states to increase military spending to qualify for membership in the North Atlantic Treaty Organization.

Poverty-reducing spending rises and military spending declines in poor countries

Selected countries with loans under the IMF’s concessional PRGF1

Citation: 31, 11; 10.5089/9781451931433.023.A001

1 Changes are calculated between the pre-PRGF date (1999 in most cases) and the latest date for which information is available.

2 Arrangements approved between July 1, 2000, and September 30, 2001 (Azerbaijan, Benin, Guinea-Bissau, Lesotho, Madagascar, Malawi, and Niger).

3 Transformed from Enhanced Structural Adjustment Facility arrangements approved before July 1, 2000. These had two or more reviews under the PRGF framework or a review supported by a full PRSP by September 30, 2001 (Bolivia, Burkina Faso, Cambodia, Chad, The Gambia, Mauritania, Mozambique, Rwanda, Senegal, Tanzania, Uganda, and Zambia).

4 Benin, Bolivia, Burkina Faso, Chad, The Gambia, Guinea-Bissau, Madagascar, Malawi, Niger, Mauritania, Mozambique, Rwanda, Senegal, Tanzania, Uganda, and Zambia.

Data: IMF, WEO database; country authorities; and IMF staff estimates

Spending in poor countries

In the poorest countries with programs under the IMF’s PRGF, our study shows that, as with the world trend, military spending has stabilized. However, between 1998 and 2000, military spending in heavily indebted poor countries (HIPCs) increased, according to data from the IMF and SIPRI. This increase can be attributed principally to armed conflicts in Ethiopia and Guinea-Bissau. If these two countries are excluded from the sample, military spending appears to have declined in other PRGF countries.

At the same time, encouragingly, government outlays on poverty-reducing programs in the poorest countries have risen. These countries have prepared, in collaboration with the staffs of the World Bank and the IMF, poverty reduction strategy papers (PRSPs) that identify a range of reforms, partly involving increased spending on primary education and basic health care and on road construction, rural development, and agriculture, that help boost growth and reduce poverty. Nineteen countries with PRGF-supported programs increased spending on poverty-reducing activities, as defined in their PRSPs. This increase has significantly exceeded the reduction in military spending in percent of GDP (see chart, page 177).

This pattern is particularly evident in countries with new three-year PRGF arrangements approved between July 1, 2000, and September 30,2001, and countries with PRGF-supported arrangements transformed from arrangements under the previous Enhanced Structural Adjustment Facility (ESAF) that were approved before July 1, 2000. A similar trend is observed for the heavily indebted poor countries with new PRGF arrangements.

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