Czech Republic Passes Law to Allocate 2% of GDP Annually for Defence

President Petr Pavel of the Czech Republic has signed into law a government bill that mandates the country to spend at least 2% of its GDP annually on defence starting from 2024. The legislation, set to take effect in July and applicable to next year’s state budget, aims to ensure stable funding for crucial defence projects aimed at modernizing the military.

In addition to the 2% spending commitment, President Pavel also signed an amendment to the defence law that grants Czech citizens broader opportunities to participate in the country’s defence efforts.

The Czech Republic has repeatedly pledged within NATO to increase its defence spending. The new law obligates the cabinet to allocate a minimum of 2% of GDP for defence in the proposed budget.

According to the explanatory notes justifying the legislative change, the Defence Ministry’s budget is projected to increase by approximately CZK 21.5 billion in 2024 compared to the medium-term budget outlook. The government’s current plans have envisioned defence spending of CZK 130 billion.

At the upcoming NATO summit in Vilnius, Secretary General Jens Stoltenberg will propose that the 2% of GDP target for defence spending should not be viewed as a maximum ceiling but rather as a minimum threshold from which member countries should draft their budgets.

In addition to increasing defence spending, the new law also allows for the inclusion of expenditures from other ministries and offices within the total defence spending. However, such spending must align with the definitions outlined in NATO documents. Other ministries will be required to inform the Defence Ministry of their spending plans three years in advance for inclusion in the defence budget.

The legislation also introduces changes to the financing rules for large long-term projects that significantly impact the country’s defence capability and have costs exceeding CZK 300 million. The cabinet will be responsible for deciding on such projects, and the Defence Ministry will have access to a comprehensive annual sum allocated for these projects, making it easier to allocate funds to individual initiatives.

Furthermore, the law stipulates that newly state-owned businesses and the national company Budejovicky Budvar brewery will have accounts managed by the national treasury. These entities will maintain accounts in the Czech National Bank (CNB) and will only be able to open accounts elsewhere with the consent of the Finance Ministry.

The amendment to the state defence law, also signed by President Pavel, covers the remuneration of active reserves and grants the Defence Ministry the authority to utilize data from public administration information systems for defence planning, even without a state of national emergency or war.

Under the new law, individuals will have the option to voluntarily participate in national defence efforts. Those who apply will undergo an immediate medical examination, and military training will only be required if the security situation worsens. The cabinet can impose this obligation through a government measure, which can be rejected by the Chamber of Deputies.

The amendment will also enable the state to provide an annual recruitment bonus to new members of the active reserves and introduces a special bonus for them. The draft does not alter the current annual remuneration of CZK 18,000 but makes it contingent on longer active service, requiring at least two weeks compared to the previous one week of annual military training. Active reserves will also be eligible for additional bonuses based on their service assessment results.

Article by Prague Forum

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