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The combined budget of the Defense Forces and the RVL have remained fairly constant during the 1980s as a percentage of total government expenditures, in most years ranging from 5.5 to 6 percent. Defense costs generally constituted about 1.5 percent of gross national product (GNP--see Glossary), although they rose to 1.7 percent in 1983 before diminishing to 1.48 percent in 1987 as a consequence of budget cuts imposed on the Ministry of Defense. The defense budget totaled Fmk5.58 billion in 1987 and Fmk6.04 billion in 1988.

During the 1982-86 period, the principal expense category was equipment replacement and procurement (31 percent of the total budget), followed by payroll costs (25 percent). Upkeep of conscripts and training expenses averaged 13 percent of the budget; operations and maintenance, 16 percent; and real estate and other expenses, 15 percent. The procurement projection for the 5-year period, 1987-92, earmarked 48 percent for the army, 25 percent for the air force, 20 percent for the navy, and 7 percent for common-use equipment. This reflected increased emphasis on the acquisition of armor and firepower for the army and a diminishing rate of procurement for the air force. The air force share was expected to rise again after 1992, however, when the entire fleet of fighter aircraft was scheduled for replacement.

Although Finland's defense budget showed a slight increase during the 1980s, it failed to maintain the targeted annual real growth rate of 3.8 percent established by the Third Parliamentary Defense Committee in 1981. In both absolute and relative terms, Finland's defense budget continued to be among the lowest in Europe. A study prepared by the United States Arms Control and Disarmament Agency found that Finland's defense effort, expressed in terms of military expenditures as a ratio of GNP, was among the lowest of the developed countries of the world. Only Japan, Luxembourg, and Iceland had lighter defense burdens, based on 1985 data. Finland also ranked low in military expenditures per capita (US$156 in 1984, calculated in 1983 dollars) and as a percentage of central government expenditures (one hundred twenty-third in the world in 1985).

These low budget outlays presaged future deficiencies in modern arms when existing equipment had to be replaced. As senior military leaders pointed out, costs of new weaponry were increasing at a rate of 5 to 15 percent annually on world markets, with the result that new procurements could not keep pace with equipment obsolescence and deterioration, especially in the army. Finnish analysts argued, however, that the budgeted figures somewhat understated Finland's real defense effort compared with other Scandinavian countries, because of the low conscript pay and the fact that certain military infrastructure costs as well as military pensions were not included in the defense budget. Moreover, the RVL, which would be an important adjunct to the military in an emergency, was included in the Ministry of Interior budget rather than in the defense budget.

Data as of December 1988