By definition, off-budget military expenditures are those expenditures that are not formally authorized within the official defence budget. In the expenditures monitoring report of the Ministry of Defence (MoD) for 2015, the off-budget expenses are registered in the total amount of expenses; not as a separate row (page 5), and it catalogued as zero expenses [1]. In a first six months of expenditures monitoring report for 2016, the MoD specifically added a new row that indicates the amount of off-budget expenditures, and it is zero too (page 3) [2].

The spending of the incomes generated by the MoD is monitored by the Ministry of Finance and Economy (MoF) and audited by the State Supreme Audit Institution (SSAI) [1]. The MoD is obliged to produce periodic and annual reports on the spending of the budget [2].
However, recordkeeping of military off-budget expenditures is unreliable, inaccurate and inconsistent as suggested by the SSAI reports as in the cases of public auctions and budget plans [3, 4].

The armed forces have been involved in disaster relief activities which are not planned for in the MoD budget such as floods, fires or cleaning of the territory in which substantial resources have been engaged [1, 2]. The SSAI has found irregularities on how the incomes generated by MoD have been used [3]. This situation makes it unclear the extent to which records of off-budget military expenditures are properly kept and audited, as suggested by the media [4, 5].

There is evidence that off-budget expenditures are allowed in Algeria. To cover unseen expenses during the year, the executive can draw from resources that are called “common expenses” (charges communes) in the Law of Finance. These common expenses constitute the second-highest figure in the budget after defence expenditures and before the expenditure for the interior realm (1), (2), (3). In earlier years, this item in the budget has been discussed as a form of slush funds for the executive that it can control independently from the legislature (4). No information could be found on whether the Ministry of Defence has received any money from this item. A review of the official gazette, from the year 2016 did not provide any evidence (5). Article 10 of the 2006 Anti-Corruption Law only mentions the need to carry out the required actions to ensure transparency, rationality and responsibility in the management of public finance. It does not specify off-budget expenditures (6).

In the last three finance laws no off-budget for military expenditures was officially included in the budget (1), (2),(3).

This indicator has not been assigned a score due to insufficient information or evidence.

In light of the answers to question 29 A and B, it is very difficult if not impossible to answer this question. As has been said, there is evidence that the Finance Law does provide for off-budget expenditures but it is not clear if there has been any for the military (1). No further information could be found. Also, no information on possible expenditures with regards to the economic activities of the armed forces could be found (2), (5). In the last three years no off-budget for military expenditures was officially included in the budget (1), (3),(4).

Though the state budget does not account for in detail military and security expenses that are deemed secret, they are not entirely off-budget either. Art. 12 of the law that approves the 2018 state budget foresees “budget credits” for “Special Financial Security Funds” to cover special expenses for internal and external state security (1).

Being under the sole responsibility of the president, the management of the “special security funds” of the presidency has effectively been shielded off from parliamentary scrutiny. A law regulating the special regime of these funds has never been passed.
Opposition parties and civil society activists have for years criticized the lack of accountability and transparency of the presidential special security funds (1), (2), (3).

In response to criticism by the opposition party CASA-CE on the lack of public accountability for the presidential special security funds in January 2018, Finance Minister Archer Mangueira stated that a bill was being drafted to regulate the management of those funds (4).

There are indications that, apart from the lack of accountability over special security funds managed by the president, budget constraints due to the 2014 financial crisis have led to increasing off-budget spending in the defence sector generally, through additional credit lines that often imply direct contracts awards (1).

Further, there are off-budget expenditures as a practice in other policy domains. For example, the Chatham House paper suggests widespread off-budget expenditure through credit lines and Sonangol and the 2017 OBP Country Report suggests that oversight and reporting are especially weak (2).

A recent Law 27565 from September 2020 establishes a National Defence Fund, with the purpose of providing additional funds to the army/defence under broad terms including investigation (public and private), innovation, sustainabiligy, etc. Sources for this fund can include individuals and private sector entities. Even though the law does establish reasons for this fund, they are extremely broad and could be used under several circumstances. [1]

Money for the aforementioned National Defence Fund is to be obtained for specific purposes, and in accordance with a Plan Submitted to the National Defence Comissions and the Congress. Bi-annual reports are to be submitted with information on implementation of the projects and use of budget. At least 90% of the annual budget must be used on these projects.

Unbudgeted expenses are rare. In the 2018 budget for the defence jurisdiction, expenses have not exceeded the budget, so it is unlikely that non-budgeted expenses exist. [1] However, the frequency of budgetary reallocations is considerable. DNUs (Necessity and Urgency Decrees) are often used in Argentina as a mechanism for budgetary reallocations. According to an ASAP report in 2017, this represented more than 60% of the changes in the period 1994-2016. [2]

According to the Law on Budget System, all state and local-government bodies are allowed to hold off-budget accounts, subject to approval by the Government [1]. According to Decree N17 of 14 January 1999, the Government approves the Order of Control, Registration, and Service of Off-budget Resources Generated from Donations to Government Agencies or Other Benevolent Activities [2]. According to Decree N 420-N, the MoD is allowed to hold a separate off-budget account for the incomes and expenditures in the Treasury of Ministry of Finance specifically for medical services at military hospitals for external patients [3].

Off-budget expenditure reports per ministry (including that of the Ministry of Defence) can be found on the official website of the Ministry of Finance; however, information about off-budget expenditures of the Ministry of Defence is not available [1].

According to Article 3 of the RA Law on Foundations, the foundations have a right to open bank accounts [1]. According to Clause 9 of Article 15 of the Law on Budget System, the off-budget means may be generated from donations [2]. The foundation Hayrenik is a military-patriotic foundation for the Ministry of Defence. The foundation does not have an official website and the Charter is not available. No record was found about the sources of income. The annual financial reports on foundation expenditures can be found on the www.azdarar.am website. However, the report only has general descriptions of expenditures that are based on the last financial report indicating the implemented programs as donations for the MoD, and taking into account the Law on Budget System, we may assume that the off-budget income and expenditures are conducted through this foundation [3]. According to the Law on the Compensation of Loss of Life or Health of Servicemen Suffered During the Defense of the Republic of Armenia, Insurance Foundation for Servicemen exercises the right of every serviceman to receive compensation for loss of health resulted in their military duties as well as for families of soldiers who died while performing their duties. Every employed person in Armenia, by donating 1000 drams ($2) from their salary to the foundation ensures the soldier’s life. Apart from this, the donations are received from donors as well. According to the Charter of the Foundation, the funds are generated from loans, donations, grants, incomes from investments, etc. The records on donations and expenditures are reflected on the official website and recorded in the quarterly reports of the foundation [4]. Though there’s been a lot of media coverage of transparency issues in regards to the foundations Hayrenik and Martik off-budget expenditures, no evidence was found that these off-budget resources are used for the illicit economic activity [5, 6]. Foundations and the MoD normally sign Memoranda of Cooperation, according to which the MoD receives financial support from foundations [7]. In the 2019 State Budget, 1.700 million drams were included for Assistance to the Programs of the RA Ministry of Defence, based on MoD off-budget expenditure estimates [8].

Based on the legislative requirements which establish the institutional accountability of government institutions, such as the Public Governance, Performance and Accountability Act 2013 [1] and the Auditor-General Act 1997 [2], off-budget expenditure by Defence and other areas of government is strictly disallowed and all expenditure must be accounted for in annual financial statements. These annual financial statements follow strict accounting standards and are externally audited and subject to oversight by Parliament. Financial statements inform Portfolio Budget Statements, which are formalised into appropriations law as part of the legislative budget process [3]. The 2012 Williams v. Commonwealth case confirmed that the executive does not have the power to contract and spend without explicit legislative approval [4].

This indicator has been scored ‘Not Applicable’, as there are no off-budget military expenditures permitted (see Q29A) or present in practice (see Q29C). All departmental financial statements must follow strict recording standards as per the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 [1], which sets a standard that exceeds that of the Australian Accounting Standards [2]. Budgets must also comply with these accounting standards [3]. The Auditor-General and his or her team at the Australian National Audit Office (ANAO) are required to undertake thorough audits of financial reports using the ANAO Auditing Standards [4], which comply with international and domestic auditing standards [5].

There is no evidence of off-budget military expenditures in the media or other sources [1]. A recent report by the Australian Accounting Standards Board, while pointing out that the financial reporting standards were burdensome for the public sector, gave no indication that financial reporting and accountability is anything but highly robust [2].

Off-budget expenditure for the military is allowed in Azerbaijan (1). According to the Law on the Armed Forces, financial support of the armed forces is provided by the state budget and other sources stipulated in the law (Article 8.1). The funds allocated for the financing of the armed forces and its spending are controlled by the laws “On Budget System” and “On Chamber of Accounts” and the relevant normative legal acts adopted in accordance with these laws (Article 8.2).
The Academy of the State Border Service has the right to create special funds with the use of extra-budgetary funds, grants, donations and to use them in the manner prescribed by the Chief of the State Border Service (7).
Off-budget military expenditures are recorded in the State Budget under the name “Non-budgetary expenses of organizations funded by the state budget for defence sphere” (2). It was called “extra-budgetary expenses of organizations financed from the state budget for the defence sector”. This is described in the state budget, but the details are not known to the public. A Chamber of Accounts annual review shows expenditure from this budget line, but it doesn’t reveal information about extra-budgetary expenses. Therefore, most of the defence related expenditures are listed in the official budget.
There is also the Armed Forces Assistance Fund in the country. It was established in 2002. The decree stipulates that the fund’s financial source is through voluntary funding (3). The funds primary objective is to ensure the development of the armed forces and the further strengthening of the social protection of military servicemen. 101.775.225,87 Manats, 213.577,88 USD dollar, 17.266,0 Euros and 5000,0 Rubles were collected for the Armed Forces Assistance Fund by August 1 of 2019. The Ministry of Defence shares information about the income of this fund permanently (4). However, information on the collection of mandatory contributions to the fund from the country’s citizens is published in the press (5, 6).

Off-budget military expenditures are recorded in the State Budget under the name “Non-budgetary expenses of organizations funded by the state budget for defence sphere” (1). In the state budget for 2018, off-budget expenditures for the defence sector are 6,793,000.0 manats (1). In 2017, this figure was 6,940,000.00 manats (2). There is no information about where these figures came from.

There are substantial off-budget military expenditures recorded in the state budget, and it is legitimate and therefore constitutes a legitimate economic activity.
In the state budget, off-budget expenditures on all spheres are reflected. For example, the extra-budgetary expenditures envisaged in the State Budget for 2018 cover costs of 45 structures (1).
Compared to the defence sector budget, these costs are not so great and do not play a major role in building military structures. But there is not any information on how these off-budget expenditures are formed.
Another important issue is how the defence industry spends its revenues. According to official data, the Ministry of Defence sells weapons and equipment to the country’s military units (Defence Ministry, State Border Service, etc.) and foreign countries (2). There is no accountability and transparency in revenue. The formation and use of off-budget expenditure in military structures can be accompanied by corruption (3).

Strategic procurement, and purchases, of MoD and the armed forces are mostly off-budget funding [1]. Therefore, there is evidence to conclude that off-budget expenditure is permitted in strategic procurement for the Ministry of Defence (MoD) and the armed forces is mostly done through off-budget funding [1, 2]. The Financial Committee of the Shura Council only has authority over the budget submitted to the legislature, which excludes military and security spending. Because of this, all military spending is off-budget [3]. An extensive online search shows that there is no information about off-budget expenditures, it shows that a huge amount of strategic procurement (especially from the USA) done through the king’s office. Furthermore, no legislation prohibits or limits the military’s budget.

Based on the data from the general budgets announced by the government, military expenditure is not recorded in the budgets and therefore, off-budget spending is not recorded in the budget [1].

Most of Bahrain’s procurement of military needs is conducted through off-budget expenditures. The only in-budget items are salaries, benefits, and maintenance of vehicles costs. They come by ministerial, or the king’s, decrees which are considered legitimate [1, 2].

There is not enough information to score this indicator. Off-budget military expenditure is not clearly defined by law in Bangladesh. However, certain line items, such as special funds, foreign military assistance and supplementary budgets, appear in the defence budget from time to time [1]. Bangladesh uses the code ‘other source’ in its Budget & Accounting Classification Manual [2], however, it was not possible to verify whether this code is used to mean ‘off-budget’ expenditure.

There is not enough information to score this indicator. In the defence budget, there is a line item entitled ‘special funds’ [1]. The Budget & Accounting Classification Manual [2] uses the code ‘other source’. It could not be ascertained whether these items actually indicate ‘off-budget’ expenditure.

There is not enough information to score this indicator, since potentially off-budget items have not been clearly established.

Although off-budget expenditures are not prohibited by any specific piece of legislation, the Belgian consitution does not explicitly permit them [1].

There is no evidence of off-budget expenditures since 2015 [1, 2]. This indicator is therefore marked ‘Not Applicable’.

There is no evidence of off-budget expenditures since 2015 [1, 2].

The Ministry of Defence (MoD) cannot create any expenses that are not in line with budgetary and financial norms and procedures [1]. Thus, there are no off-budget military expenditures.

The Law on Financing of BiH Institutions (“BiH Official Gazette,” No. 61/04, 49/09, 42/12, 87/12, 32/13) [2] regulates preparation, bringing, executing, accounting, reporting and monitoring of the Budget of Bosnia and Herzegovina, unique account of the Treasury at the level of Bosnia and Herzegovina and investing of public assets, as well as principles, system and harmonization of financial management and control in institutions of Bosnia and Herzegovina.
Ministry of Finance and Treasury keeps the system of the General Treasury Ledger that records all financial transactions related to the budget, including transactions concerning debt and programs funded from foreign and domestic donations. The system of General Treasury Ledger represents the complete record of all income and expenditure, assets and sources of assets for all budgetary users. Following stipulated procedures, the MoD plans the medium-term and annual scope of expenditure and express it by analytical budgetary positions [1]. The ministry does not have a bank account, so all financial transactions (including donations, expenditure and income) are executed transparently, exclusively through Unique Treasury Account within the BiH Ministry of Finance and Treasury (General Treasury Ledger). When approving the budget, the operational financial plan is prepared, in which approved expenditure is expressed by analytical items [1].
IF during the year there is the need to finance expenditures that were not originally planned, the restructuring of the budget and the change of the financial expenditure plan is performed according to stipulated procedures and explanations [1].

The Ministry of Finance and Treasury has the right to review all documentation that is the base for payment of all obligations of budgetary user. The Ministry of Finance and Treasury has the right and obligation to refuse the request that is not following the law, scope, structure and schedule of approved budgetary expenditure and that is not based on adequate procedures, and to notify the budgetary user of it immediately [1].

There are no off-budget expenditures and, therefore, this indicator is marked Not Applicable.

All expenditures from the MoD, regardless of the source, are an integral part of the centralized and controlled treasury and periodic reporting and other stipulated procedures are followed. There are no off-budget military expenditures, thus no recording mechanisms are in place [1, 2].

There are no off-budget military expenditures [1, 2].

In terms of the Finance and Audit Act [Chap 54:01] Off-Budget expenditure is prohibited by law [1]. In terms of section 14 of the Finance and Audit Act:
(1) No moneys shall be withdrawn from the Consolidated Fund except upon the authority of a warrant under the hand of the Minister, and no such warrant shall be issued unless the withdrawal may lawfully be made following section 118(1) of the Constitution [1].
(2) The unspent balance of any warrant issued under this section may at any time be withdrawn or reduced by the Minister if in his opinion the exigencies of the financial situation render such withdrawal or reduction expedient [2].

There is no record or evidence of any Off-Budget expenditure. As such, this indicator is scored ‘Not Applicable’. As discussed above, the Finance Act prohibits any withdrawal of money outside the Financial legal framework [1]. For this reason, section 16 of the Finance Act provides that:
(1) No moneys shall be withdrawn from other public funds unless the issue of those moneys has been authorized by or under a written law.
(2) In this section “other public funds” means public funds other than the Consolidated Fund and trust funds not established by law [2].

As discussed in 29A and 29B above, there is no record or evidence of any Off-Budget expenditure. This is consistent with the outlawing of the Off-Budget Expenditure in terms of the Finance Act as highlighted above [1, 2].

The assessor could not find evidence of the off-budget transactions and expenditure described in the 2015 assessment regarding medals. Legally, union revenues can be two different types: budgetary, which includes taxes, contributions, patrimonial revenues, services, disposal of assets and others; and off budgetary, such as bonds, deposits, and other similar operations. Such revenues do not depend on legislative approval and go to the organization’s public fund. These funds generally come from the federal government. However, these revenues do not integrate automatically the budget; to be spent, legislative approval is necessary [1]. There are extra resources in cases of natural disasters [2], and military deployments in public security such as the Federal Intervention in Rio de Janeiro’s Public Security [3] but they also need to be approved by the legislature.

All off-budget revenues are recorded in each of the public institution’s financial statements. When these revenues can be spent, they are necessarily included in the institution’s budget at the end of the fiscal year [1].

The creation of additional credits to the planned budget often happens, as it happened for Law and Order Guarantee Operations (GLO) [1]. The use of additional credits is a common practice of the executive, which also includes the freezing of planned budgets too, and both follow political and economic contexts.

The economy of Burkina Faso has grown in part due to the expansion of gold production, which has resulted in a significant increase in military spending, including off-budget military expenditure (1), (2). In principle, the off-budget scheme is not codified, but the national annual budget, listing both expenditures and resources, arrives every year at the National Assembly during the budget session for adoption. However, off-budget military expenditure is tolerated under some circumstances (3). Under the Compaore’s regime, members of the former Presidential Security Regiment (RSP) used to get extra funds allocated some days in addition to their monthly salary (3).

Off-budget military expenditures are not officially recorded in the budget and often fall under the government/defence’s secret items with little to no public access (1) and are not available for external scrutiny (1), (2). According to the 2015 Burkina Faso Government Defence Anti-Corruption Index, there is very limited control with regards to off-budget military expenditure (3). For example, there was no record of off-budget expenditures in the recent defence 2018 – 2022 Strategic Reform Plan (PSR), and in the Military Programming Law (4), which presents an amount along with three components to implement. Off-budget military expenditures, therefore, do not get recorded in the government budget proposal before submitting it to the Parliament for approval and adoption (4).

The existence of off-budget military expenditures are illicit and prevence due to corruption [1]. Actually, the country’s recent development in the area of mining has increase public corruption, including military pernnel [3]. The 2015 Burkina Faso Government/ Defence Anti-Corruption Index (GI 2015) report clearly indicates that, ” these are less well-monitored than ministerial budgets, giving considerable scope for President Compaoré to reward political favours — referring to off-budget government projects”[4]. In addition, the budget of the Armed Forces offers great opportunities for high ranking military officers to accumulate personal wealth (Freedom House 2011) [2].

According to interviewees, military off-budget expenditures do occur due to uncertain and unforeseen circumstances and no evidence exists which sheds light on this issue. In addition, there is no legal text that requires the executive to obtain approval from the legislature prior to spending excess revenues in any sector including the military [1] [2] [3].

Parliament examines defence and security budgets under the right to vote on annual budgets (budget law). The Minister of Defence and generals of the armed forces come before the Committee and answer questions to defend the annual budget allocated to the armed and police forces. However, these budgets are only based on projections of expenses and the ministers, including the Minister of Defence, are required to spend within the budget allocated for the year. The Minister of Finance is in charge of budget adjustment and preparation before it gets to Parliament. Therefore, budget expenditures are not scrutinised by Parliament. MPs only consider the income and revenue, including foreign assistance, when adopting budgetary law [4]. Each ministry is expected to spend within the annual budget allocated; consequently, there are no off-budget amendments in Parliament. There is evidence to suggest that off-budget expenditures do occur; however, due to the confidentiality surrounding defence and security issues in Cameroon, it is not known how much off-budget activity is related to military spending, and the extent to which this is a regular practice is also unclear.

According to the Open Budget Survey (Jan 2018), expenditures can be made outside the budget process: “There is no law or regulation requiring the executive to obtain approval from the legislature prior to spending excess revenues … (amounts higher than originally anticipated) … and in practice the executive spends these funds before obtaining approval from the legislature” [3]. While this observation is not specifically in regard to military expenditure, there is no evidence to suggest that military expenditures are subject to more stringent regulations or practice.

No mention of off-budget military expenditures could be found in the most recent budget [1].

There is evidence to suggest that off-budget expenditures do occur; however, due to the confidentiality surrounding defence and security issues in Cameroon, it is not known how much off-budget activity is related to military spending, and the extent to which this is a regular practice is also unclear. According to the Open Budget Survey (Jan 2018), expenditures can be made outside the budget process: “There is no law or regulation requiring the executive to obtain approval from the legislature prior to spending excess revenues … (amounts higher than originally anticipated) … and in practice the executive spends these funds before obtaining approval from the legislature” [1]. While this observation is not specifically in regard to military expenditure, there is no evidence to suggest that military expenditures are subject to more stringent regulations or practice.

Off-budget expenditures, which may allow the military to conduct procurement without going through parliament, are permitted by law. The National Defence Act (Sections 2 and 38 – 41) vests Non-Public Property (NPP) with the Chief of the Defence Staff (CDS), Base/Wing Commanders and Unit Commanding Officers to be used for the benefit of serving and former Canadian Armed Forces personnel and their families. [1] [2] The Canadian Forces Morale and Welfare Services (CFMWS) has substantial off-budget income and expenditures. For instance, the CFMWS’s “total gross revenue earned in fiscal year 2019-2020 was $505 million.” About 27% is from DND (the defence budget), whereas the majority is from NPP, SISIP investments, revenues from CANEX stores on bases (accessible to the general public), and other sources. [3]

Off-budget expenditures, namely the majority of funds for the half-billion dollar CFMWS, are not included in the budget. The CFMWS is only briefly mentioned in the Departmental Plan 2020-21. [1] There are separate auditing mechanisms for the CFMWS, including independent auditors, the NPP Audit Committee and the Office of the Auditor-General. [2]

The majority of the CFMWS’s half-billion dollar financing is off-budget expenditure, that is, it is not directly financed by the Department since other government departments do not receive such benefits. The CFMWS receives off-budget revenues from NPP and CanEX stores. Such funds are described and audited. [1]

Legislators have had some opportunities to review and comment on processes of control and audit in the armed forces, but these instances The fundamental regulatory framework of the Public Budget Law is given by Article 67 of the Political Constitution and by the Decree-Law No. 1.263 [1, 2]. This framework establishes specific criteria to add additional resources to those approved in the respective Budget Law. However, in the defence sector, the main source of off-budget military expenditures corresponds to the revenue and expenditures associated with the Restricted Law of Copper and interest accrued on bonds [3]. According to the legislation, expenditures that belong to the Restricted Law of Copper are allocated outside of the general budget proposal of the public sector and shall not include in the national accounts [4]. Resources are allocated outside of any general budget deliberations and are fixed for each institution of the armed forces through supreme decrees. Their accounting is global and reserved through certifications of good investment [5, 6]. Although restricted funds that belong to the Copper Law must be used exclusively for the acquisition and maintenance of military equipment [7, 8], there is a perception that resources have been used with some discretion [9]. There is also evidence of the use of resources from the Restricted Law of Copper in specific events of natural disasters [10]. As stated above (Question 26), it must be taken into account that, in September 2019, a new legislation (Ley Num. 21.174) replaced the Restricted Law of Copper (Ley Num. 13.196) [11]. However, the transition toward the new mechanism of finance of the military capacities, which begins in 2020, will be implemented gradually, during twelve years. In practice, this regulation implies that, during twelve years, it will not be possible to limit exceptions for the execution of off-budget military expenditures.

Off-budget operations that belong to the Reserved Law of Copper and interest accrued on bonds have been integrated into the public budget documentation and the analysis of the fiscal policy of the Budget Department of the Ministry of Finance (DIPRES) [1]. The last version of the annual Report of Public Finance breaks down fiscal revenue in Central Government Budget and Central Government Extra-Budget; the last belonging fundamentally to transferences from Codelco to the Armed Forces according to the operational resources stipulated in Law 13.196 [2]. However, off-budget resources are reported in aggregate form, and it is not clear the link of these resources with the item of reserved expenditures for the armed forces, which are disaggregated for the three branches of the armed forces sub-secretary. Analysts have also commented about the difficulty of scrutinising the off-budget expending because of the lack of disaggregated and timely data [3, 4].

Off-budget military expenditure constitutes an institutionalised source for the acquisition and maintenance of war materials and the development of the military capacity in the country [1]. The number of resources for reserved expenditures can be estimated indirectly based on the resources transferred from Codelco to the armed forces. From 2006 to 2016, resources coming from this source represented, on average, revenues of US$1,174.52 million. This resource does not necessarily involve spending decisions for the defence sector. On the other hand, the Budget Department also considers extra-budgetary resources that come from the annual Public Budget Law. In 2018, these resources accounted for $766,957, or millions of Chilean pesos (DIPRES) [2]. Recent corruption scandals in the defence sector provide evidence of illicit activity involving the misuse of resources from the Restricted Law of Copper. From 2011 to 2015, fiscal fraud would have amounted to 5,500 million pesos [3]. Two legal cases currently in investigation involve irregular payments to false invoices for military acquisitions and services, making use of the reserved funds of the Law of Copper (Causa Rol N°575-2014 and Causa RUC N°1400687387-2).

China’s publicly announced defence budget includes only three broad categories: foreign acquisitions, military R&D, and the military component of space exploration. [1,3,4,5,9] It is widely accepted that off-budget items are significant, [3,6,7] with IISS estimating that an additional 33% of the budget involves off budget expenses and secret items. [8] There are no restrictions against off-budget expenditures.

There are no recording mechanisms or regulations that would force these off-budget military expenditures to be recorded in the budget. [1,2]

Off-budget military expenditures, which are not illegal in China, are estimated to be a large proportion of military spending, close to 33%. [1,2] The overall lack of transparency does not allow confirmation of whether the various corruption scandals that have emerged concern off-budget expenses or not.

There is not enough information to score this indicator. No legislation was found expressly dealing with the regulation of off-budget expenditures. In relation to non-budgeted expenses, the Ministry of Defence permanently receives important resources, represented in goods and services, from international cooperation with the aim of strengthening the Military Forces and the National Police. Many of these resources were related to Plan Colombia, which financed the Military in its fight against drug trafficking and subversion, investing some 9 billion dollars in 15 years, and allowing for the strengthening of the Armed Forces in operations, logistics, training, and weapons aumentation. [1]

Since the 2016 Peace Agreement, then President Juan Manuel Santos announced the start of a new phase of international cooperation with the United States, no longer based solely on the military struggle, but focused on social issues in the former conflict regions and the substitution of illicit crops. [2] This new process called Paz Colombia has allocated considerable cooperation resources to the Armed Forces. [3, 4] Given that these resources are not initially in the defence budget approved by Congress, there are directives within the Ministry that manage resources from international cooperation so that such resources can be planned, registered, and controlled. [5] Interviewee 2 reported that all resources coming from donations are entered into the Ministry budget or in each one of the Forces, and must be registered and treated financially as part of the budget of each agency. [6] It should be added that in the case of donations, when responding to a non-reimbursable modality of international cooperation, such was the case of Plan Colombia and of Paz Colombia, and they are delivered to be applied for a special purpose. The State is responsible for supervising the management and investment of these donations. “When the donations are in money and as such are delivered to the State, they enter its patrimony and therefore are considered occasional income that must form part of the public budget. (…) If the donations to the Nation are in kind (…) and are delivered to the Government so that it can later distribute them among the community, it is not appropriate that they be included in the national budget; in this case, the registration of the inventories of the entity that receives them will suffice.” [7] Normally, international aid does not count in the off-budget. However, given the responses obtained in interviews, this seems to be the case in Colombia specifically.

There is Not Enough Information to score this indicator. Historically, decisions regarding defence and security issues in Colombia have been handled with secrecy by the Colombian state, given the context of the armed conflict. In this sense, there is no clear evidence that the participation mechanisms stipulated in Colombian law propose regulations or guidelines on the issues of civil society engagement on security issues and defence. [1, 2] Nor are there any elements that allow evidence of oversight or citizen controls on the action of the Armed Forces. However, with the signing of the Peace Agreement, the National Commission of Security Guarantees (CNGS), within the framework of the Comprehensive Security System for the Exercise of Policy (SISEP) was created from Decree Law 154 of 2017, as a instance “whose object is the design and monitoring of public and criminal policy regarding the dismantling of organizations or criminal conduct responsible for homicides and massacres that threaten human rights defenders, social movements, or political movements, or that threaten or attempt to threaten people who participate in the implementation of the Accords and peacebuilding, including the criminal organizations that have been named as successors of paramilitarism and their support networks.” [3] This body, made up of various members of the government, also has the participation of civil society (2 members of human rights platforms), and members of social and political movements are allowed to attend its sessions. The CNGS seeks to guarantee the exercise of politics without the threat of weapons, including the protection of social leaders, based on the understanding of security adopted in the Peace Agreement, and on respect for dignity and human rights. However, since President Iván Duque took office, the CNGS has not been convened and remains inactive. Currently, only some technical teams operate, but there are no sessions on consultation or information exchange. [4, 5] Additionally, the current government has focused its energies on the Timely Action Plan (PAO) which it hopes to use to confront the situation of violence that the country is experiencing, but which excludes civil society from the debate and ignores other advances derived from the Peace Agreement on the protection of communities and social organisations, such as the Comprehensive Security and Protection Program for Communities and Organizations in the Territories, created from Decree 660 of 2018, also inactive. [6] Another space for civil society participation is the Integrated Rural Security System (SISER) of the Colombian National Police, implemented by the Carabineros and Rural Security Directorate. Among its components is the link between citizenship and rural development and rural security. Police stations have managers of citizen participation who act as facilitators and promoters of territorial management, and together with social organisations, they create work plans on the prevention and solution of problems that affect the populations. [7] SISER represents a great advancement, since it starts to understand the needs of the rural population. However, for this strategy to be a complete success, key aspects of political and legal representation in the territories must be strengthened. [8] To finalize the Defence and Security Policy, the President Duque created the Civic Participation Network as a tool to guarantee the rights of citizens, in which information is exchanged between the public security forces and citizens. The incentive to participate lies in the reward systems. [9] For some social leaders, this strategy represents a risk, because under the same idea of civic-military cooperation, Convivir began, which then became paramilitary groups in the 1990s. [10] Given this history, although there is an opening for the involvement of CSOs in the implementation of and participation in defence policies due to the Peace Agreement, there is no evidence that the current government links CSOs in the spaces created by the Agreement and has received complaints from CSOs regarding the inactivity.

In Colombia, civil society organisations are very active and cover a wide variety of social, political, economic, and environmental issues. However, levels of violence against social leaders and human rights defenders have increased exponentially in recent years, with 734 leaders and human rights defenders murdered between 1 January 2016 and July 2019. [1, 2] Additionally, ex-FARC combatants have also been murdered, such is the case of Dimar Torres, who was assassinated by the Colombian Army. A large portion of these murders have not been solved by the Colombian justice system, nor have individuals been found guilty even when suspicions and testimonies fall on drug paramilitary groups and State agents. [3, 4] Regarding the responsibility of the Colombian State in its exercise of the guarantee of protection and life of social leaders and ex-combatants of FARC, the Report of the Commission for Clarification of the Truth on Patterns of Aggression Against People who Defend Human Rights and Territory in Colombia (2018) reports that the exercise of socio-political violence falls mainly on the State, “either because it exercises it directly, or because it does so through paramilitary organisations that act with their acquiescence, collusion or tolerance, directing its actions not only to the rebels in arms, but taking it to broad layers of the unarmed civilian population, who fall or could fall into the territorial or ideological influence of the combatants.” [5] The Report recognises several patterns of repression of human rights defenders: i) repression by state intelligence entities through illegal surveillance, harassment, sabotage, defamation, threats, and murders; ii) extrajudicial executions committed by the state security forces as part of a phenomenon known as ‘false positives’; iii) executions committed by paramilitaries and/or post-demobilised groups with the collusion, acquiescence, or tolerance of the state security forces; iv) unsubstantiated criminalisation and abuse of the criminal justice system; and v) excessive force used against human rights defenders in the context of social protests, especially at the hands of the Mobile Riot Squad (ESMAD). Faced with these actions, the Colombian government has a framework for the protection of social leaders implemented by the National Protection Unit. However, this framework has been harshly criticized by the social leaders themselves, arguing that there is not sufficient institutional capacity to carry out this work, an aspect that is affirmed by the entity’s director. [6] It also has the Timely Action Plan (PAO), [7] which seeks to prevent and protect human rights defenders, social and community leaders, and journalists. However, this Plan is made up of statements only, distancing itself from a meaningful quest to attack organised crime, such that, instead of reducing the problem, it contributes to its prolongment, and ignores the instruments derived from the Peace Agreement. [8] Given the above, it can be considered that there is total defenselessness of social leaders even when there is a regulatory framework and an institutional design that protects them, such as the Political Constitution of Colombia. [9] However, there are also regulations that limit the exercise of mobilisation and actions of CSOs. For example, in the Penal Code, the judicialisation of acts directly related to the exercise of the protest, under the assumption of excess or abuse, such as: the disruption in the transport service; obstruction of public roads; and rioting, [10] and in the Police Code and Law 1801 of 2016, guidelines for the regulation of social protest are also established. Both of these laws, then, have a negative impact on the exercise of participation, such as in Title VI of the Code, which in Chapter II regulates everything related to protests in public space. Given the above, it can be stated that in Colombia, regulations stipulate a series of protections for CSOs to ensure their ability to exercise their functions, despite the reality of victimisation by the government and by illegal groups, in addition to the lack of protection and institutional capacity to respond to said violations.

Defence-related expenditure is listed in the annual draft budget (Projet de Loi de Finances). It includes off-budget expenditure (dépenses hors budget), expressed in a highly aggregated form under the heading for “Expenditure analysis by sector”. As per Chapter 2 (De la procédure législative), Articles 110-113 of the 2016 Constitution, the Budget Law, which includes all defence-related expenditure, must be approved by the NA after examining its content and carrying out debates. There is no explicit mention of off-budget expenses, but the fact that the government labels certain expenditures as being off-budget means it has discretion for spending beyond external controls (1). In the past, off-budget military expenditures have been regularly carried out. By labelling expenditure as off-budget, it affords a measure of secrecy or confidentiality which allows expenditures to remain without scrutiny or any type of oversight.

Article 110 – “All bills or legislative proposals shall be examined successively by both Houses of Parliament with a view to the adoption of an identical text. The state budget law is submitted first to the National Assembly.”
Article 111 – “Parliament votes the draft budget law as per the conditions determined by the organic law.”
Article 112 – “Parliament is presented with the draft budget law before the end of the ordinary session. The draft budget law must provide the revenue necessary to fully cover expenses.”

The draft Budget Law for 2018 lists off-budget expenditure for so-called sovereign entities (Organes de Souveraineté), as well as the spending for entities directly attached to Presidency (Organes Exécutifs), which would be the case of spending for intelligence services.

In the draft Budget Law 2018, a total of 291.9 billion FCFA was allocated to the sovereign entities and 88.8 billion FCFA was allocated to entities attached to the Executive. Furthermore, projected spending for defence and national security totalled 516.8 billion FCFA, of which 252.8 billion FCFA was allocated to the Armed Forces, 174.3 billion FCFA to the police and 79.3 billion FCFA to the Gendarmerie (2).

II.3 Analysis of expenditure by sector in the draft budget for 2018
The 2018 budget estimates, including those for MRIF and ERF, excluding expenditures on other assigned revenue, are broken down by sector as follows:
– “Sovereign bodies: 291.9 billion FCFA allocated to legislative bodies (27 billion FCFA), executive bodies (88.8 billion FCFA), judicial bodies (81.6 billion FCFA), consultative bodies (8.6 billion FCFA) and external affairs (85.9 billion FCFA);”
– “Defence and Security: 516.8 billion FCFA including, 252.8 billion FCFA for the services of the armed forces, 174.3 billion FCFA for the police and 79.3 billion FCFA for the gendarmerie;”

Table 5 in the draft Budget Law for 2018 (Breakdown of expenditures of draft Budget 2018 by sector, p. 17) also shows the percentage share for off-budget expenditure in terms of overall revenue. For the so-called sovereign entities, the share was 4.7%. For defence and security, the total share was 8.3%.

There are categories of off-budget expenditure listed in the final approved version of Budget Law 2018 (Law No. 2017-870), published in the Official Journal on December 29, 2017. However, the spending allocations are incomplete because the figures are provided in a highly aggregated form. They appear to be unrelated to military expenditure.
The Budget Law 2018 includes the approved expenditure for so-called Special Accounts (Dépenses sur ressources des Comptes d’Affectation Spéciale). The expenses recorded under such Special Accounts of the Treasury (Comptes Spéciaux du Trésor) in 2018 amount to 638,145,637,450 FCFA. No detailed breakdown of budgetary allocations is provided (1). As per Article 7 (Comptes d’affectation spéciale), these categories of off-budget expenditure appear to be completely unrelated to military expenditure. Instead, they seem to be dedicated to covering special programs, including spending dedicated to the coffee/cocoa sector (Conseil Café-Cacao), road infrastructure (Fonds Routier) and WAEMU/ECOWAS dues (1).

Defence-related expenditures are listed in the annual draft budget (Projet de Loi de Finances). The draft budget includes off-budget expenditure (dépenses hors budget), expressed in the highly aggregated form under “Expenditure analysis by sector”. There is no evidence that such expenditure allocations involve illicit economic activity.

By law, no public expenses must be made which do not comply with the Financial Act as adopted by Parliament or in an intermediate or supplementary financial act adopted by Parliament [1]. Any additional, e.g. unforeseen, expenditures not already adopted by the Finance Act must be approved by the Parliamentary Finance Commmittee through a formal and regulated process [2].

This indicator has been marked Not Applicable, as there are no off-budget expenditures.

Research found no instances of off-budget military expenditure [1]. This perception was confirmed by a former civil servant [2].

According to our sources, off-budget military expenditure is common in Egypt. The so-called “special funds” sanadi’ khasa or extrabudgetary funds are pervasive and considered a great challenge for transparency, especially in the defence and security sector (1), (2), (3), (4), (5). The law allows many entities, especially the ministers of interior and defence, to establish their own stream of revenues through earmarked taxes, fees and fines independent from the budget and treasury, and spend it as they please. These funds are usually not subject to the same level of scrutiny as other public money (5). The total size of these special funds is estimated at $9.4 billion. Both the police and the armed forces also have very sizable and lucrative economic activities, the revenue, and operations of those activities remain unknown (6).

According to our sources, off-budget military expenditures are not registered in the budget. The law does not require the army or intelligence to record their revenues or expenditure in the general budget (1), (2), (3), (4). A tax of up to 15% on the revenues of these extra-budgetary funds is paid into the treasury, and a law passed in 2007 requires all special funds to open an account with the Central Bank of Egypt (CBE). However, the armed forces and the police were exempt from this condition. The tax paid to the treasury (1-15%) on the revenues is recorded in the national budget which gives an estimate of the size of those funds. The proceeds from this tax were EGP 19 billion in 2015/16 (5). However, this whole regime of off-budget expenditure and revenues remains very murky despite attempts to bring it more within the state budget to fund a large and chronic budget deficit (6).

According to our sources, there are enormous off-budget military expenditures and revenues, but it is not clear whether they involve legitimate or illicit economic activity (1), (2), (3), (4), (5), (6).

There is no off-budget military expenditure permitted – or even mentioned – by law. [1] However, the expenses incurred by the Estonian Defence League, a voluntary national defence organisation operating under the auspices of the Estonian Ministry of Defence, are an exception. The Defence League has its own budget and expenses, in addition to the amount allocated from the state budget to the Defence League for specific activities and investments. [2] At the same time, the Defence League is the biggest and the most influential military organisation in Estonia. Amongst other tasks, it provides and organises military trainings and prepares the national defence capability of the state. [3] The legal status of the Defence League is a legal person governed by public law. In addition, during the state of emergency, the Government of the Republic may, for the purpose of eliminating a threat to the constitutional order of Estonia, submit a draft supplementary budget to the Riigikogu. [4]

The Defence League publishes their annual reports since 2002. The expenses are reflected, but not in detail. For example, in 2017 the expenses included employment, IT- and communication technology, the means of trainings and courses, defence-related equipment and materials, etc. Such information is not easily available and not made explicit. The public State Budget Explanatory Memorandum does not include an explanation about the expenses incurred by the Defence League, although these expenses include military expenditures (e.g. trainings and equipment). According to the National Defence Act and State of Emergency Act, the Defence League could be involved in emergency situations, as well as in official military drills. The Defence League, although largely voluntary, is strongly embedded in the Estonian official defence protocol.

The Defence League’s expenses are not included in the state budget, since legally it is a separate entity not governed by public law. The issue of the Defence League having a separate budget which is not included in the state defence budget is not part of the public discussion. There has not been any opposition to this system with separate budgets. Even though, in accordance with The Estonian Defence League Act, the Defence League is a “national defence organisation”, it is “organised in accordance with military principles, possesses weapons and holds exercises of a military nature”. [1] Therefore, all expenditures of the military organisation can be considered as military expenditures. The annual report of the Defence League suggests that they have a separate budget from the state defence budget. [2] The annual reports indicate clear costs (that are not included in the state defence budget): e.g. labour costs, administration costs, training costs.

There are no off-budget funds for military expenditure but both income and expenses are accepted by the Parliament in the annual budget processes and when accepting the final central government accounts. [1]

Act on State Budget, Chpt 1, Section 7: A fixed appropriation may neither be exceeded nor moved on to the proceeding budget year. An estimated appropriation may not be moved on to the proceeding budget year. A permission to exceed the estimated appropriation may be given for a justified reason (a law based or a similar reason, otherwise unforeseeable or difficult to estimate reason, due to significant rise in general costs) and the need for additional resources cannot be satisfied otherwise. A transfer appropriation may not be exceeded. Based on a decision in state budget, a transfer appropriation may be moved on to be used in the proceeding budget year or the budget year following it. [1]

According to the Constitution of Finland, Chpt 7, Section 87: An extra-budgetary fund may be created by an Act, if the performance of a permanent duty of the State requires this in an essential manner. However, the decision of the Parliament to adopt a legislative proposal for the creation of an extra-budgetary fund or the extension of such a fund or its purpose must be supported by at least two thirds of the votes cast. [2] The only such security related fund is the Security of Supply fund of which balances are nevertheless shown in the final state accounts. [1, 3]

This indicator is marked ‘Not Applicable’ as there are no reports on off-budget military expenditure over the past five years.

There are no reports on off-budget military expenditure over the past five years. As per 29A, the Constitution allows extra-budgetary measures if needed. However, the decision of the Parliament to adopt a legislative proposal for the creation of an extra-budgetary fund or the extension of such a fund or its purpose must be supported by at least two thirds of the votes cast. [1] As such, the record of off-budget or extra-budgetary measures would be recoreded in parliamentary records. The only such security related fund is the Security of Supply fund of which balances are nevertheless shown in the final state accounts. [2,3]

Off-budget military expenditures are provided by law, but funds are regularly used in an opaque way: the DDAI, « decrees of accidental and unpredictable expenditures ». Originally dedicated to funding responses to natural or sanitary disasters, the DDAI are – like special funds – discretionary in their use by the sole authority of the Prime Minister and do not need to be accounted for. [1] The CVFS expressed regret in its 2016 annual report that these funds have for years been misused for various purposes among which special military expenditures and exterior intelligence services (DGSE) actions, far from their initial role. [2]

DDAIs are mentioned [1] in the Finance Law (PLF). On average, between 2012 and 2015, they amounted to 12 million Euros. [2] The Finance Commission explicitly states that the DGSE is the main beneficiary of the re-allocation of DDAI funds: “It is usual for management contributions to intervene. The DGSE remains the main beneficiary.” [3]

The expenditures mentioned were at a level of 17.2 million Euros in 2017 and the total Defence budget was simultaneously 42,358 million Euros. [4] In 2018, it appears that there was no consumption of DDAI credits. [5]

Off-budget military and intelligence services expenditures happen on a regular basis, though the amounts, when compared to the Defence or Interior Security and Intelligence budgets, are very limited: in 2017, DDAIs amounted to 24 million Euros in “payment credits” (to be effectively spent in the year 2017) and 324 million Euros in “engagement authorisation” (total maximum limit of extension of expenses). [1]
In 2017, the part of DDAIs in the total budget of defence (32.7 M€ [2]) and interior forces (12.6 M€ [3]) was 0.7%. These off-budget funds are commonplace but the scale of these unaccounted expenditures remains small.

Off-budget expenditures are not permitted by law [1]. All military expenditure is incorporated in the Federal Budget, specifically in the budget of the Ministry of Defence (Einzelplan 14) [2]. In the event that the budget is not suitable for specific actions, a so-called ‘Wirtschaftsplan’ (business plan) must be compiled and added to the original budget pursuant to Article 26 of the Bundeshaushaltsordnung (Federal Budget Code – BHO) [3,4]. Off-budget military expenditure therefore does not exist in Germany.

This indicator is marked Not Applicable as there is no expenditure outside of the defence budget [1,2]. In case of unforeseen events such as natural disasters, support for the armed forces, in the form of personnel or material, can be initially funded by the Ministry of Defence. In such cases, the beneficiary must reimburse the Ministry after the required measures are complete. Although, there are some exceptions in which the reimbursement may be withdrawn by the Ministry of Finance [3].

Off-budget military expenditures are not permitted by law and are very rare (see Einzelplan 14) [1,2].

IIn practice, there is broad allocation for the military budget and expenditures, but a detailed breakdown and off-budget military expenditures are unallocated in law (1).

The official budget framework document and related publications do not list off-budget expenditure at all. Budget adjustments likewise do not account for these. Foreign funding such as US IMET funding, for example, are not listed at all. In “Building Integrity and Reducing Corruption Risk in Defence establishments” by Transparency International “Professor Hartley’s report commented on the extent to which government approved defence budgets deviate from actual defence expenditures for a sample of eight countries. The deviation is the extent by which actual expenditures exceeded planned expenditures. Typical deviations were noted to be above 20% for Ghana…” (1 p.20).

Although there are very few public instances illustrating off-budget expenses, there have been historical accounts of Ghanaian defence spending that is off-budget (1).

Off-budget military expenditures are permitted by law for general exceptions (e.g. the purchase of ammunition and spare parts) [1]. According to Article 1 of Law 3979/2011, “sub-programmes that are urgent or deemed necessary for serious defence reasons” can be approved within the overall budget of the Three-Year Plan [2].

Only some off-budget expenditures are recorded in the budget (e.g. emergency procurement of the UAV, see below) [1]. However they are usually recorded in highly aggregated form [2]. This is the result of two factors: one, a lack of effective external control and, two, a deep-rooted culture of secrecy regarding defence procurement. There is no evidence that off-budget military expenditure involves any illicit economic activity.

Off-budget military expenditures happen occasionally but are not a widely practiced phenomenon [1, 2]. In May 2020, for example, the Greek Government announced the leasing of three Israeli UAV for 39 million euros. It was an off-budget expenditure due to increased tensions with Turkey in the Aegean Sea [3]. The MoD announced only a few details about the contract with the Israeli company.

The Ministry of Defence (MoD) might ask for amendments regarding its budget, but it needs governmental approval. The government tries to plan every military cost in advance, but as the budget is approved in June/July before the following budgetary year it is almost impossible to plan with unexpected costs. As there is no flexibility in the military budget in most cases the special governmental reserve fund fits this purpose. In cases like this, the government announces the total costs approved for these exceptions without providing further details or discuss it in the respective commission [1].

Military-related expenditure occurring outside of the defence budget is well-recorded for the most part. The main exceptions consist of costs financed not from the defence budget, but the strategic reserve of the central budget. These costs have included so far a) unexpected disaster relief operations, b) construction and maintenance of the border fence, and c) most recently, the procurement of two Airbus A319 passenger aircraft. These aircraft were originally civilian aeroplanes, but were assigned to the Hungarian Air Force, received military call sign, military grey painting, etc. [1]. Regardless, their procurement happened outside of the defence budget, and by the circumventing regular military procurement rules.

On one hand, unexpected disaster relief operations, for example, get financed from the government’s strategic reserve budget – where all expenses are recorded. However, costs are not disclosed in detail; only information on the total costs are available for the public. A different category of off-budget expenditures is related to the spending of the incomes from disposals and real estate lease. Very detailed rules prescribe that incomes should be spent on expenses of the same budgetary sub-sector; for example, funds coming in from selling surplus military hardware can be spent only on military hardware, incomes from selling infrastructural elements (real estate, mostly) can be spent only on infrastructure, etc. On the other hand, costs related to the construction and guarding of the temporary protective fence on the border are largely non-transparent, as publicly available records lack details.

With the procurement of the A319 transport planes in 2017, the government provided extra funds for the procurement from the strategic reserve. However, the public has not received any information on the exact costs and the planes were bought from a Czech company with the unknown ownership structure [2]. However, basic recording in the law exists. The law on the approval of the previous year budget (zárszámadási törvény) includes the main items [3].

Off-budget military expenditures have generally been very rare, both in terms of value and occurrence [1]. However, in line with the significant increase of the defence budget, expenses outside of the defence budget are likely likely to increase in terms of value. So far the most spectacular examples have been the building and management of the border fence, and the procurement of the two Airbus A319s. Meanwhile, there is no information at all that any illicit economic activity would be involved in covering these expenses.

There is no evidence suggesting that off-military expenditures are not permitted by law.
A The Comptroller and Auditor General (CAG) report on the Fiscal Responsibility and Budget Management (FRBM) covering 2016-2017, said off-budget financing was being used to defer fertiliser arrears, food subsidy bills and outstanding dues of Food Corporation of India (FCI) through borrowings and that there should be a framework specifying the rationale and objective of off-budget financing, quantum of off-budget financing and sources of fund, among others and stated:

“Ministry maintained (July 2018) that off-budget borrowings remain within the scope of Union Budget as provisioning of repayment of principal and of interest of off-budget borrowings is being made through the Budget. Expenditure Budget contains the details of Extra Budgetary Resources (EBRs). Statement for ‘Resources of Public Enterprises’ contains details of Ministry-wise Internal and Extra Budgetary Resources of the public enterprises. Ministry also stated that amendments to FRBM Act in 2018 now include a debt target and widens the scope of the Central Government debt which inter-alia includes such financial liabilities of any body, corporate or other entity owned or controlled by the Central Government, which the Government is to repay or service from the annual financial statement. Thus, it is incorrect to say that there is no direct legislative control over off-budget borrowings.” [1][2] There is speculation that there are off-budget expenditures as seen elsewhere in other government depar.

In the Standing Committee on Defence 25th Report (2016-2017) Recommendation 27 and 27A on mismatch between projections and allocations at BE and RE stage each year for the Navy, the Committee stated:

“Since a financial crunch is always present, the Committee also desire that the Ministry of Defence to explore other alternatives of raising of resources for the Navy by way of leasing out ships etc. within the country during peace time and for extending bilateral assistance to friendly countries”.

The government replied with:

“This Ministry has been taking up the issue of lesser allocation than projections with the
Ministry of Finance time and again. However, no positive response is received from Ministry of Finance in this regard. The suggestions made by the Committee for exploring alternatives of raising resources has been shared with the Navy. The Committee will be apprised of the
outcome in due course” [3]. This could increase the potential for off-budget spending.

India does not have a defined and unified defence budget. As alluded to in earlier questions, the Defence Services Estimates serves as the accepted budget. Yet, it does not always comprehensively capture defence expenditure. In 2018, two Demands for Grants no. 20 and 21 were not included in the DSE [1]. Recent SCoD reports do not show off-budgetary expenditure [2]. It is clear that off-budgetary expenditure is not disallowed but there is no clear recording mechanism outlined.

It can be deduced that off-budget military expenditures could be occurring sporadically as seen in other departments, the extent to which this is a regular practice is unclear due to lack of written evidence [1][2][3]. Scrutiny of the DSE and other budgetary documents do not yield financials on defence pensions [4].

Article 25 of Law No. 3/2002 concerning National Defence and Article 66 of Law No. 34/2004 concerning the Indonesian National Defence Forces stipulate that the funding for the TNI comes exclusively from the state budget (APBN). The APBN can include pure rupiah (Rupiah Murni/RM), foreign loans (Pinjaman Luar Negeri/PLN), domestic loans (Pinjaman Dalam Negeri/PDN) and grants [1]. The TNI is allowed to use funding from the regional government budget (APBD). For example, when implementing the Tentara Manunggal Masuk Desa (TMMD) programme, the TNI received support in form of cement, iron, etc. from the local government and state-owned enterprise (Badan Usaha Milik Negara/BUMN) [2]. However, this is not considered to be off-budget because the administration of these support funds is recorded by each party. Interviewees stated that the term ‘off-budget’ no longer existed after the Reformation era because all budgets have to be administered or accounted for [2]. Therefore, arguably, the practice of using off-budget funds for the military no longer occurs.

This indicator is marked ‘Not Applicable’ as there is no off-budget military expenditure (see 29A)

Interviewees stated that the term ‘off-budget’ no longer existed after the Reformation era because all budgets have to be administered or accounted for [1]. Therefore, arguably, the practice of using off-budget funds for the military no longer occurs.

Off-budget military spending is permitted.

According to Chandler, “First in terms of the pitfalls, the budget that is put together and published is often only a small snapshot of the money Iran ‘officially’ spends. Many institutions, especially those in defence, can access funds from sources outside the official budget and are able to leverage finances from extra-budgetary funds, such as revenue from domestic oil sales. In addition, the Islamic Revolutionary Guard Corps (IRGC) engages in aggressive revenue-raising activities by establishing private companies, as well as using its powerful political influence to secure infrastructure contracts and private tenders worth more than US$2.5 million in diverse sectors, including housing development, energy, road construction, food and transportation” [1].

For the upcoming financial year, off-budget military expenditures were not recorded in the budget.

There is off-budget military expenditure, as well as illicit economic activity [1], but an explicit link between the two has not been found. For example, the Financial Action Task Force (FATF) is concerned with terrorist financing risks emanating from Iran, but this has not been linked per se to off-budget military expenditure [2].

In Article 7 of Iraq’s Financial Management Law, there is a contingency reserve, the sum of which is approved in the annual federal budget for “unexpected and unforeseen expenses” (1), this is noted in TI’s 2015 Iraq country assessment (2), the legal authority to vet and approve off-budget funds for defence expenditure. Furthermore, the Law states financial management is delegated to the minister of finance.

A government auditor confirmed that off-budget spending is permissible under Iraqi law. Federal budgets from previous years do; however, contain clauses cautioning against extra-budgetary spending in the realm of salary payments. The MoD-issued 2010 Federal Budget offers a case in point (1). Another source adds that “extra-budgetary spending may also be authorised by the commander-in-chief in the form of presidential decrees” (2) No evidence of recording mechanisms could be found. A World Bank report published in 2014 (3) identified off-budget expenditure as a problem caused by poorly regulated fiscal management, which the GoI should work to eliminate, given that it impacts the effectiveness of security forces (3).

In an interview, an Iraqi lawyer affirms the difficulty of obtaining information that allows this assessment to comment on prevalence (1). He explains that “the contingency budget is a requisite aspect found in all budgets, reserve funds used in emergency situations such as floods, epidemics and wars. The amount of this budget is determined during the discussion of all budgets annually as a percentage from the overall budget” (1). Parliamentary minutes (2) show great emphasis on building-up defence and productive defence capabilities, but nothing for defence audits was found.

The 1985 Budget Foundations Law stipulates that the Government may expend in any financial year only the amount specified as expenditure in the Annual Budget Law for that year (1). This article applies to all government ministries including the MOD. There are no further provisions in the law allowing for off-budget spending to occur.

The Ministry of Defence has its “own books”on budget/expenditures that are not publicly available (1). The ministry even does double book keeping. All processes are only transparent within the Ministry, but not to public.

There are substantial off-budget military expenditures, but this involves legitimate economic activity. Illicit economic activities are rare cases. No further information could be found on this issue, the IDF were contacted, however, no response was provided.

Law n. 559 of 23 December 1993 abolished off-budget expenditures for all public administrations. The same law provides for a re-allocation of then-remaining budgets to the relevant administration (art 5.2). The re-allocation is carried out by the Ministry of Economy and Finance [1]. In the allocation of the Ministry of Defence, included in the 2020 budget law, the value of re-allocation is specified in line 3518 [2].

Given the abolition of off-budget expenditures, as outlined in 29A, [1] it is not possible to assess the recording mechanisms. This indicator is therefore marked ‘Not Applicable’.

Given the abolition of off-budget expenditures, as outlined in 29A, [1] no evidence could be found of them occurring.

Articles 83 and 86 of the Constitution of Japan are interpreted to the effect that the fiscal budget, including all income and expenditure, is to be submitted by the Cabinet to the Diet and voted on by the Diet (see Q18). [1] All defence expenditures are therefore included in the fiscal budget. The Base Grant / Coordination Grant is a special case. These expenses are provided from the government to the local communities that host national assets such as the land, facilities and buildings of, respectively, the US Forces in Japan and the Japan Self-Defence Forces. Thus, they contribute to the defence of Japan. [2] They are, however, covered by the budget of the Ministry of Infrastructure and Communications, [3] not of the Ministry of Defence. [4]

As there are no off-budget military expenditures in Japan, there is no recording mechanism for off-budget expenditures either. The Base Grant / Coordination Grant (see Q29A), is found in the budget of the Ministry of Infrastructure and Communications. [1] Therefore, this indicator is marked ‘Not Applicable’.

There are no off-budget military expenditures in Japan (see Q29A). [1] [2] All military expenditure is covered by the fiscal budget. However, some non-military expenditures that contribute to the defence of the country are covered by other parts of the fiscal budget than the defence budget. [3] [4]

There are no laws that limit military or defence expenditures, and in fact parliamentary recommendations have historically encouraged further defence expenditures [1]. The fact that the King is the Supreme Commander of the armed forces, according to Article 32 of the Constitution [2] means that there are no controls over off-budget expenditure other than those exercised by the King. In addition to that, it is not possible to account for all military and defence expenditures, as the armed forces are associated with income-generating businesses that do not fall under the mandate of the Audit Bureau [3], which indicates that it is possible to have off-budget defence expenditure that is not accounted for or reported to the legislature. For example, income generated through the King Abdullah II Design and Development Bureau is neither audited by the Audit Bureau nor reported by the Ministry of Finance [4,5].

As explained in the previous sub-indicator, there is evidence that off-budget expenditure occurs within military institutions, if not through central Government funds, then through the enterprises and businesses associated with the armed forces [1, 2]. These expenditures are not recorded or reported through audits and final account reports. Research into all audits and financial reports available to the public for the past three years has revealed that off-budget military expenditures are not officially recorded in the budget [3, 4, 5].

There is no official data on any off-budget expenditure (see sub-indicators 29 A & C). However, there is evidence that the lack of oversight over the military and general defence budgets, enables illicit economic activity, such as in the case of the sale of weapons shipped to Syrian rebels on the black market by some personnel associated with the intelligence services in Jordan. Besides that, major purchases and expenditures are off-budget as well, which is considered legal by royal decrees [1, 2].

Off-budget expenditure in government is generally permitted and this does not exclude the military. Section 223 of the Kenyan Constitution permits the government, with Parliamentary approval, to spend money that has not been appropriated. [1] Off-budget transactions are crucial for budget flexibility in order to accommodate unforeseen emergencies. [2] Off-budget expenditures are generally regularized and reported in supplementary (revised) budgets that are published by the National Treasury and presented to Parliament for approval during the financial year. [3] However, researchers at Institute of Economic Affairs note that due to poor legal and institutional frameworks that governs approval of off-budget expenditure, revised supplementary budgets are published close to the date of parliamentary debates which limits the time for scrutiny and dissemination of information. In the past, off-budget expenditure including Ministry of Defence (MOD) have expolited these loopholes to approve irregular off-budget transactions that are expensive, have little value for money and are prone to corruption. [4]

Furthermore, national security institutions like the Ministry of Defence (MOD) and National Intelligence Service, as seen in the latest 2019/20 supplementary Estimates II published by National Treasury, have expenditure lines that are abbreviated and have limited information. Hence as IEA researchers note, it is difficult to scrutinise military budgets without information on what consitutes off-budget military expenditure. In the past, findings suggest off-budget transactions within government, in general, including MOD expenditure have been used to finance non-urgent expenditure such as building bullet factory.

The MOD has on many occassions, been accused of irregular expenditure, and often they exploit legal provisions such as the Public Procurement and Assets Disposal Act that protects organs of state security from divulging expenditure information that would compromise state security. [5] As such it has been difficult to point out any illicit economic activities within the ministry that would be conducted under off-budget expenditure.

In general, there is limited information on off-budget expenditure by national security institutions, including Ministry of Defence and National Intelligence Service (NIS). In Supplementary Budget estimates, where off-budget expenditure is published, information is largely aggregated and there is limited information on expenditure lines. [1] The National Treasury provides general statements to accompany reasons for increase or decrease of financial figures from approved budgetary appropriations. Therefore, although off-budget expenses many be officially recorded within the ministry, they are not listed within the national budget that is shared with the public. [2]

Ministry of Defence (MOD) and National Intelligence Service (NIS) has always had an off-budget military expenditure. [1] However, it is unclear how often such expenditure occurs due to limited information provided in supplementary budget estimates. For example, in the 2019/20 Supplementary Estimate II budget, while MOD expenditure had an overall decrease, several budget lines recorded as ‘Use of Goods and Services’ had a significant increase of approximately 50% from initial approved estimates. [2]

In the same supplementary budget NIS budget had an overall increase of 9.35% in off-budget expenditure. Due to limited information about expenditure lines, its is difficult to establish whether this involves legitimate or illicit economic activity. Previous research, although not conclusive and specific to MOD or NIS, suggests that at times these off-budget expenditures have been exposed to fraud and abuse due to inadequate financial controls. [3]

The annual defence budget is included in the Law No. 06/L-133 on the Budget Appropriations for the Budget of the Republic of Kosovo for 2019 [1]. This law outlines budget details for wages, personnel, goods and services, utilities expenditures, subsidies and transfers, and capital expenditures [2], although the information provided remains superficial. However, the Law No. 06/L-133 on the Budget Appropriations for the Budget of the Republic of Kosovo for 2019 does not provide detailed data on military expenditures, and these are not made publicly available. According to the government reviewer, the Minister keeps the register of all approved budget allocations, transfers and reallocations of budget allocations and other approved adjustments of budget allocations made during the fiscal year 2019 through KFMIS. While the law generally covers almost all expenditures of the Ministry of Defence and the Kosovo Security Forces [1] and that all expenditures related to the defence sector are registered in the Kosovo Financial Management Information System [3], there may be some exceptions, such as the Forces’ involvement in natural disaster relief efforts or other activities not foreseen by the annual budget.

This indicator has been scored Not Applicable. There is no evidence of off-budget military expenditure. According to senior officials of the Ministry of Defence, all expenditures related to the defence sector are registered in the Kosovo Financial Management Information System [1].

There is no evidence of off-budget military expenditure. According to senior officials of the Ministry of Defence, all expenditures related to the defence sector are registered in the Kosovo Financial Management Information System [1].

Off-budget expenses are not permitted, according to article 141 of the constitution (1), which says that no Government agency can spend public funds without a law, which needs to go through Parliament first.

But much of their spending is included in aggregated form in the official budget that is extremely vague. There is also no legislation that obliges the security agencies to explicitly say what they are spending the money on. Also, purchases of “defence materials” made by these institutions are exempt from the oversight of the Public Tenders Authority, according to article 3 of the PTA’s law (2). The exemption is a blank cheque that covers all defence and police spending, and article 24 of the police law (3) and 27 of the the military law (4) give Defence and Interior Ministers complete power over the finances of the organisation, and set their internal auditing policies.

The KNG, on the other hand, falls under the control of the Prime Minister, according to Law. no 2 of 1967 for the KNG (5). The head of the KNG sets the rules of the organisation, but they usually tend to copy the procedures in the military law. The law of the organisation is not available to the public, media or researchers.

As far as activists, officials, journalists and the media are concerned, none of these off-budget defence and security spending items are related to illicit business activity (6, 7, 8, 9, 10 and 11).

Defence purchases, according to the Government guide of doing business in Kuwait, include all weapons, communications and monitoring systems related to defence and security. There are internal policies regulating these purchases but the Government admits that they are “more flexible” than the ones applied by the PTA and not available to the public (12).

Even though the aforementioned secret expenses are recorded, the information is always filed under vague categories in the budget like “buying non-current assets.” And even though these ministries are supposed to give the SAB, Parliament and other auditory bodies full access to their records, they flout the law and stonewall them, without any consequences — because all of these bodies are full of supporters of the Emir and the corrupt officials, or too scared of them to take strong actions, officials, activists and a member of the royal family said (1, 2, 3, 4 and 5).

There is substantial official spending on activities, services and equipment that are entirely unspecified but there is no reason to believe that it is related to illicit economic activity, according to retired and current officials, a Kuwaiti royal journalists and activists (1, 2, 3, 4, 5, 6 and 7). In 2017/2018 and 2016/2017, about 50 percent of the military expenditure and 15 percent of the expenditure of the police and KNG went to unknown assets and services, according to the final report of the Finance Ministry. In 2015/2016, 96 percent of the military’s budget went to poorly described categories like “needed sales and services.” (8, 9 and 10.) However, no evidence has emerged to suggest that these funds went to illicit business activities, the sources said.

Off-budget expenditures are not permitted by the law on Budget and financial management, sections 5, 27, 33,46. [1] The MOD strictly follows the law. [2]

This indicator is marked Not Applicable as there are no off-budget activities. In Latvia off-budget activities are not allowed by the law.

There are no off-budget activities. In Latvia off-budget activities are not allowed by the law.

Off budget expenditures are approved through a special procedure (1). For instance, the parliament can endorse external cash borrowing or external loans outside the normal budgetary procedure (1). This occurred when Lebanon did not have a budget from 2005 until 2017 (2), (3). At the time, the government’s spending was based on the “provisional twelfth” which allowed the government to spend based on the previous year’s budget until a new state budget is passed (3).
Off-budget military expenditure occurs due to the lack of resources in the defence budget (4). The LAF usually relies on military assistance to support, equip, and train military personnel (5). The value of assistance they receive is presented in the form of military equipment, training programs, etc. (6) or credits that are then used for specific reasons depending on the agreement (7). The credits given are placed under revenues in the state budget (7).

This indicator has not been assigned a score due to insufficient information or evidence.

According to Article 52 of PAL, funds offered to the state including donations sold be approved by the CoM in the form of a decree and listed in the revenues section of the budget (1). Foreign military assistance in the form of credits, for instance, are not recorded in the budget (2).

This indicator has not been assigned a score due to insufficient information or evidence.

The defence budget renders the LAF unable to purchase weapons (1). Since 2009, the budget has followed the same trend of allocating almost 80% of it towards salaries and other allowances and around 20% for the LAF motor pool (2). Thus, LAF heavily relies on foreign assistance in the form of equipment, training, etc. setting a legitimate off-budget military expenditure (3). Foreign military assistance, such as the US’s $2.25 billion from 2016 till 2019, has maintained the LAF’s acquisition-intensive cycle from 2006 to 2016 (4). The post-2016 sustainment cycle (the cost of maintaining modern and relatively modern systems operational) is on the order of no less than $170 million a year to keep US-sourced systems operational (4). US-sourced systems account for more than 80% of LAF holdings and systems (4).

All defence expenditures are included in the official budget: the budget consists of national financial allocations and financial contributions received through international agreements. Funds received through international agreements are also allocated in the official defence budget [1, 2]. Also, the Ministry of Defence publicly discloses full information on how its expenditures are allocated across sectors. For example, the defence budget for 2018 was 873 million euros, amounting to 2,01 percent of GDP. The allocation of the Ministry of Defence budget across expenditure sectors was the following:
1) Personnel – 363,2 million Euros (41,6 %);
2) Investment and other property – 176,3 million Euros (20,2%);
3) Maintenance and operation – 133,5 million (15,3 %);
4) Weapons and military equipment – 117,8 million Euros (13,5%);
5) Military stock – 81,6 million Euros (9,3 %);
6) Subsidies for municipalities – 0,6 million Euros (0,1%).
The most expensive purchase – 88 armed vehicles – was procured based on government-to-government agreement with funds taken from the annually increasing defence budget. [3]

The budget of the Ministry of Defence consists of national financial allocations and financial contributions received through international agreements. The sum that the Ministry receives through international agreements is included in annual financial reports and budgets, and is publicly available [1,2,3]. As there are no off-budget acquisitions, this indicator has been marked not applicable.

All procurement expenditures that are not secret are subject to the Public Procurement Law, except the finances that are received through international agreements. This Law also refers to secret procurement expenditures, and these are also included into the budget [1 – 6].

There are occasions where off-budget expenditures have occurred due to several unexpected situations. The most common way for the Ministry of Defence to receive off-budget allocations is through a supplementary budget. Financial practice allows this with the approval of the Finance Ministry. A special committee chaired by the Defence Ministry’s Secretary General convenes to justify the off-budget request, which is submitted to the Ministry of Finance for an approval. [1] [2] In 2019, RM100 million was allocated to the Ministry of Defence to service a contract relating to maintenance work for air force hardware. [1] It has been quite common for the Malaysian government to table supplementary budgets, at least over the last decade. But how much defence sector has been allocated of this kind of budget cannot not be quantified.

Off-budget procedures are clearly recorded during a special meeting chaired by the Ministry’s Secretary General. The process needs approval from the Finance Ministry. But it is not clear whether off-budget expenses are subsequently recorded as an official military expenditure. [1] Off-budget expenses are not publicised in any systematic way. They are largely accounted for as Ministry of Defence (MINDEF) expenses, but not itemised line by line. There has not really been a systematic process of publicising off-budget expenses.

According to Dr Kogila, the need for off-budget expenses rarely arises, but if it does, there are procedures to be followed, with a fast track process. [1] The procedures follow the same budget preparation process, where approval from the Ministry of Finance is required. According to her, when the need arises, discussions and verbal agreements were already made. This is to expedite the process in very exceptional cases such as major floods or sudden humanitarian requests. One example is the allocations for Malaysia’s field hospital in the Cox’s Bazaar in 2017. (3) This was a project run by MINDEF. In this instance, the figure was made public in the news – probably for political reasons (Najib’s approach to foreign policy entailed consolidating Malay-Muslim support domestically by showing himself as a champion of “religious causes” abroad) (4) (5) This kind of off-budget expense would have been convenient throughout the Najib administration as Najib was simultaneously the Prime Minister and Finance Minister. Prior to him, Abdullah Badawi also was PM and Finance Minister, and Mahathir was PM and Finance Minister for one year. However, it is not clear how often something like this would have happened in the last five years or so.

There is clear evidence that off-budget purchases are permitted by law. Article 8 of the Code des marchés publics et des délégations de service public (Code for Public Procurement and the Delegation of Public Services), which was updated in 2015, says: “This decree does not apply to contracts for works, supplies or services when they relate to the needs of national defence or security, which require secrecy or for which the protection of essential national interests is incompatible with the publication of such contracts. The system under which these contracts operate is fixed by decree of the Council of Ministers”.¹
In 2014, the BVG determined that the former Minister of Defence, Soumeylou Boubeye Maïga, and the Minister of the Economy had effectively broken the law by incorrectly interpreting this clause, which existed in the previous version of the Code.²

The assessor found evidence that numerous off-budget military expenditures are not recorded in the budget. When the IMF, the World Bank and the EU suspended their aid programmes to Mali following reports of the off-budget purchase of a new presidential jet in 2014, it was the BVG that audited the account (see Q16C). The BVG determined that the former Minister of Defence, Soumeylou Boubeye Maïga, and the Minister of the Economy incorrectly interpreted a legal clause that allows for certain acquisitions to be off-budget.⁸ In addition to the presidential jet, which grabbed all the headlines, the audit also looked at the purchasing of equipment for the armed forces. The report found that 18.59 billion CFA went towards the presidential jet, while a further 69.18 billion CFA was spent on other military equipment, primarily transport vehicles.7,8 The BVG found that the MDAC had failed to respect the 2014 Finance Law requiring it to register these contracts and submit them as part of the annual budget. Moreover, many of the contracts were found to be heavily overpriced.¹¹
– Lorries that can transport up to 5 tonnes of goods that normally cost 28.5 million CFA were priced at 78 million CFA under the contract.
– Lorries that can transport up to 10 tonnes that normally cost 34 million CFA were priced at 115 million CFA.
– Petrol-tankers that can carry up to 6 cubic metres of fuel, normally costing 29 million CFA were billed at 120 million CFA.
– And petrol-tankers that can carry up to 18 cubic metres of fuel, normally worth 38.5 million CFA were billed at 210 million CFA.¹¹
Furthermore, the published budget of the armed and security forces does not include the intelligence service, whose annual spend is kept entirely secret and thus is not subject to auditing.¹ There have been no mentions of intelligence spending in recent annual budgets or defence plans.² ³ ⁴ Neither the BVG nor any other public body has the power to oversee DGSE operations, organisation, budget or activities.⁵
Moreover, the World Bank’s 2013 study notes that the maintenance of a special account for operations in the country’s “Northern Zone” is a major source of vulnerability.⁹ This spending similarly does not appear in the government’s annual budget. The account has no de facto spending ceiling, the purpose and operating conditions of the special account are not adhered to, budget charges display anomalies and lack transparency, and the controls performed on expenditures from the special account are less rigorous than the country’s normal budget procedures.⁹
Even these do not always function as they should. For instance, in 2016, Mali’s authority for regulating public sector contracts and spending (ARMDS) found that it was wholly unable to audit the Ministry of Defence’s finances for 2014 because of the lack of documents provided by the ministry.⁶

The assessor found evidence that numerous military expenditures are not recorded in the budget, some of which point to illicit flows of resources.
When the IMF, the World Bank and the EU suspended their aid programmes to Mali following reports of the off-budget purchase of a new presidential jet in 2014, it was the BVG that audited the account (see Q16C). The BVG determined that the former Minister of Defence, Soumeylou Boubeye Maïga, and the Minister of the Economy incorrectly interpreted a legal clause that allows for certain acquisitions to be off-budget.6,7,8
The audit found that the government had spent 87.77 billion CFA (USD 163.44 million) on defence items that were not declared in the official budget.⁸ In addition to the presidential jet, which grabbed all the headlines, the audit also looked at the purchasing of equipment for the armed forces. The report found that 18.59 billion CFA went towards the presidential jet, while a further 69.18 billion CFA was spent on other military equipment, primarily transport vehicles.⁸ The BVG found that the MDAC had failed to respect the 2014 Finance Law requiring it to register these contracts and submit them as part of the annual budget. Moreover, many of the contracts were found to be heavily overpriced, strongly suggesting that these acquisitions involved substantial illicit activity.¹¹
– Lorries that can transport up to 5 tonnes of goods that normally cost 28.5 million CFA were priced at 78 million CFA under the contract.
– Lorries that can transport up to 10 tonnes that normally cost 34 million CFA were priced at 115 million CFA.
– Petrol-tankers that can carry up to 6 cubic metres of fuel, normally costing 29 million CFA were billed at 120 million CFA.
– And petrol-tankers that can carry up to 18 cubic metres of fuel, normally worth 38.5 million CFA were billed at 210 million CFA.¹¹
As of April 2018, it has yet to be determined what happened to the money overspent on these contracts, which would have amounted to 393 million CFA had the government not subsequently cancelled them. But the Defence Minister responsible for signing these contracts has since returned to government as Prime Minister.
Substantial sums of military expenditure are routinely spent off-budget. The published budget of the armed and security forces does not include the intelligence service, whose annual spend is kept entirely secret and thus is not subject to auditing.¹ There have been no mentions of intelligence spending in recent annual budgets or defence plans,² ³ ⁴ leaving a large chunk of spending entirely opaque. Neither the BVG nor any other public body has the power to oversee DGSE operations, organisation, budget or activities.⁵
Moreover, the World Bank’s 2013 study notes that the existence of a special account for operations in the country’s “Northern Zone” is a major source of vulnerability.⁹ This spending similarly does not appear in the government’s annual budget. The account has no de facto spending ceiling, the purpose and operating conditions of the special account are not adhered to, budget charges display anomalies and lack transparency, and the controls performed on expenditures from the special account are less rigorous than the country’s normal budget procedures.⁹

Legislation does not expressly mention off-budget expenditures, to either permit or prohibit. As such, it is likely that there are defence-related expenses not included in the official budget, for example, those from funds for military business activities. [1] [2]

Experts on the subject point out that there is little transparency in military spending, so there are difficulties in knowing what funds are spent on. Annual reports contain general information, no details are given, and there is also no protocol for reporting and monitoring. [3]

Officially unbudgeted military expenditures are not recorded in the budget. [1] [2

There is no information that shows the frequency with which military expenditures are not budgeted. [1] [2] As such, it is not possible to score this indicator and it is marked ‘Not Enough Information.’

This indicator has not been scored due to insufficient information. Research found no articles in the law forbidding or allowing off-budget expenditures. Defence-related expenditures are listed in the official budget, but issues related to accounting practices in this area are repeatedly addressed by the State Audit Institution. [1][2][3]

Although off-budget military expenditures are recorded, this recording is incomplete or is otherwise unreliable, due to repeated issues underlined by the State Audit Institution. [1][2][3]

Off-budget military expenditures can happen occasionally, but they occur every year, and in each audit report the State Audit Institution underlines similar issues related to inappropriate practices in this area. [1][2][3] However, there are no indications that this involves illicit economic activity.

No explicit mention of off-budget military expenditures was found in the current 2018 Budget law. There are some risks that off-budget expenditures exist due to the absence of audit reports and the absence of a detailed defence budget in the 2018 Budget Law, but no specific evidence could be found (1).

The organic finance law provides for off-budget expenditures in two cases:
– Through the application of article 70 of the 2011 constitution (currently in use), the government can issue decrees on subjects that are usually provided for by laws if the issue affects national interests. Once published, these decrees are valid but they later need to be ratified by parliament (2).
– Government can provide additional investment budgets if the financial situation of the country requires it. The respective parliamentary commission has to be informed in that case.

Given the broadly summarised format of the defence budget, compounded by a lack of evidence, actual military off-budget expenditures remain unknown (2).

These elements, combined with the general lack of transparency of the functioning of the Moroccan armed forces and their close association with the King, suggests that it is likely the King would authorise such off-budget military expenditures, without the need to draft legislative measures, should he deem it necessary. This heavily implies a strong risk of corruption.

(46) (48) (49) The 2018 Budget Draft, the 2018 Budget Law and the Budgetary Forecast of the High Planning Commissioner’s Office for years 2017 and 2018 show no official records of off-budget expenditures (1; 2; 3).

This indicator has not been assigned a score due to insufficient information or evidence.

No evidence was found in Moroccan or foreign media investigations to suggest that there are any off-budget expenditures, whether these be substantial or not, legitimate or illicit (1)(2)(3)(4)(5)(6)(7)(8)(9).

No evidence was found in CSO reports of off-budget expenditures, substantial or not, legitimate or illicit (10)(11)(12).

Interviewees did not confirm any off-budget expenditures in the defence sector, whether these be substantial or not, legitimate or illicit (13)(14).

The Union Budget Law does not include provisions for off-budget military expenditures [1]. There is no law on off-budget military expenditures. In practice, off-budget expenditures may exist and involve illicit economic activity. The Anti-Corruption Commission and the Union Auditor General do not have oversight authority (with respect to the defence sector) and the C-in-C of the armed forces can administer their own affairs independently, according to the Constitution [2].

There is no law on off-budget military expenditures. In practice, off-budget expenditures may exist and involve illicit economic activity. Brigadier-General Zaw Min Tun, Secretary of the Tatmadaw’s True News agency, said the following at a conference: ‘We are even farming with the aim of reducing the defence budget and our normal expenditures to some extent’ [1]. This shows that there are off-budget expenditures that are not officially recorded in the budget. The military’s two conglomerates perform a wide variety of business activities, including banking and insurance, tourism, jade and ruby mining, timber and construction, as well as the production of palm oil, sugar, soap, cement, beverages, drinking water, coal and gas. Many of the companies are set up to supply goods and services to the military, such as food, clothing, insurance and cell phone service [2].

Military-owned business groups such as MEHL and MEC enjoyed privileges and engaged in illicit business activity under the military junta [1]. Myanmar’s military has received funding from MEHL and other business donors as outside revenue for the past 50 years, according to Mr Marzuki Darusman, who led the UN’s independent fact-finding mission in Myanmar [2]. According to MP U Aung Hlaing Win, MPs allegedly knew that the military purchased arms not from the national budget but from their own budget for Myanmar Economic Holdings Limited [3]. The Asian Development Bank (ADB) has observed that the budgets published in Myanmar’s official gazette include a space for ‘Other General Revenues’. The sources of these revenues are not explained. The World Bank’s Public Finance Management Performance Report identifies ‘Other Accounts’ held by ministries and SEEs at branches of Myanmar Economic Bank, which represent extra-budgetary expenditure and are not fully reported. The report reads as follows: ‘Many government and other public sector entities do not fully report their financial operations, and ‘Other Accounts’ are widely used, with over 13,400 in total. The amount of key fiscal information made available to the public also remains lower than in most other countries, limiting the input citizens and other non-governmental actors can have on fiscal management issues’ [4].

Off-budget military expenditures are not legally permitted [1]. The defence budget, actual spending and revenue are all reported and subsequently audited by an independent body [2].

This indicator is marked ‘Not Applicable’, given that there are no off-budget expenditures.

There is no evidence to suggest that off-budget military expenditures exist. Media reports refer to defence procurement budgets that exceed initial estimates, but no reports suggest off-budget practices [1].

Off-budget expenditures are not permitted by law as stipulated by the Public Finance Act 1989, Section 4 (1) [1]. Section 5 of the act states that spending of public money must be as “expressly authorised by or under an act…” [2]. The only alternative would be validation “by Parliament in an Appropriation Act” accompanied with details of each category expense or capital expenditure and an explanation by the Minister [3]. As such, operational contingencies requiring additional funding would be met by the Appropriations (Supplementary Estimates) Bill and in the interim by an Imprest Supply Act, which, although authorised by the Executive initially, must go through the regular oversight mechanisms by Parliament, including the provision of the reasons for Change in Appropriations by the Minister [4, 5, 6]. In 2020, The Supplementary Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2020 (B.7) was presented to the House of Representatives on 14 May 2020 [7].

This indicator is scored Not Applicable because there are no off-budget expenditures etc. as noted in Q29A.

In the course of conducting this assessment, no evidence could be found within the sources examined, interviewed, or consulted to suggest the existence of off-budget Military expenditures.

The Nigerien Constitution (2010) does not allow for off-budget military expenditures (dépenses hors budget, dépenses extrabudgétaires), although they may take place illicitly. The National Assembly must approve the State Budget, including all defence/security expenditures. All military spending has to be funded via the budget, which has to be authorised by the National Assembly (1).
Article 101: The State Budget (Loi de Finances) provides and authorises for each calendar year all the resources and public expenditures.
Article 113: The National Assembly votes the State Budget Law as per the conditions established by law.
Article 114: The National Assembly is tasked with examining the draft budget law in the budget session; the draft budget law must provide the revenue necessary for the full coverage of expenses.
Article 115: The National Assembly can request the Court of Auditors (Cour des Comptes) to carry out any investigations and studies related to the execution of public revenue and expenditure.
In addition, countries such as France contribute (through cash and in-kind donations, as well as training) toward military expenditure in Niger. According to OECD data, France contributed USD 5.03 million to Niger in 2014. This type of international military assistance (mostly for training purposes) is not included in the State Budget (2).

Provided that off-budget expenditure is not authorised, this indicator has been marked Not Applicable.

This indicator has not been assigned a score due to insufficient information or evidence.

The Nigerien Constitution (2010) does not allow for off-budget military expenditures (dépenses hors budget, dépenses extrabudgétaires), although they may take place illicitly. There is no evidence to show how prevalent this phenomenon may be.

Off-budget expenditures are permitted in law. The PPA 2007 is exempted from military procurement to the extent permitted by the president (1), (2).

Off -budget expenditures are permitted in law. They are reported under special intervention funds and appear in subsequent year or later years (1).

Special intervention funds are obtained through the legitimate economic activity of the oil company and associated companies. Such funds are sometimes disbursed through the central bank but without the budget allocation process involving the legislature, which means there is limited public oversight (1), (2). A senator recently stated, “there was no mechanism in place to monitor and track the CBN’s intervention funds over the years, adding that lack of proper tracking of CBN intervention funds was, among others, responsible for the reason lawmakers could not effectively carry out their oversight functions on the CBN” (1).

Article 145 from the Law on Defence stipulates that financial resources for state administration bodies with regards to defence are taken from the national budget [1]. In addition, this article outlines that financial resources for defence requirements can also be taken from other sources [1]. No off-budget expenditures are allowed. Even in an exceptional state of emergency, the Parliament would need to create a relevant budget from within the State budget. The Law on the Budgets, Article 7, forbids any expenditure above the approved annual budget.

This indicator has been marked Not Applicable, as there are no public indicators suggesting possible off-budget military spending. Further, the budget of the Ministry of Defence does not take into account off-budget expenditures [1]. Similarly, neither the Ministry of the Interior’s Public Procurement Plan [2] nor its annual balance sheet mention off-budget expenditures [3].

There are no public indicators suggesting possible off-budget military spending. No off-budget expenditures are allowed. Even in an exceptional state of emergency, the Parliament would need to create a relevant budget from within the State budget. The Law on the Budgets, Article 7, forbids any expenditure above the approved annual budget [1].

Although off-budget military expenditures are not explicitly prohibited, the Norwegian constitutional or budgetary law neither allows for nor mentions them [1]. However, expenditures which are not included as ordinary budget items are permitted, but only in cases where the funds are separately allocated by Parliament – a process similar to that of agreeing the budget. As the previous GDI mentions, this was the case with, for example, the acquisition of the F-35 aircraft by the Norwegian Air Force, when funds were separately authorised by the Norwegian Parliament [2]. Although resources were allocated to the military outside of the general budget deliberations, the scrutiny accompanying the process makes it impossible to conduct procurements without going through Parliament. In 2019 the Government considered funding a new warship (in addition to rebuilding Government headquarters in Oslo) through an off-budget expenditure channel funded by the Government Pension Fund (the so-called Oil Fund), where revenues from the country’s offshore oil production are supposed to be saved for future generations [3]. A new warship was planned as a replacement for the sunken frigate KNM Helge Ingstad. The Government argued that Norway faced an extraordinary situation that could justify using Oil Fund money. By covering the claims without making reallocations from the state budget, the Government tried to omit Norway’s budgetary rule (handlingsregel) that states that a maximum of 3% of the Oil Fund’s value (estimated annual earnings from the fund) should be allocated to the yearly government budget. The majority of the press, several leading economists and the opposition were highly critical of the Government’s proposed funding approach. The Government eventually decided not to pursue the scheme [4, 5]. It is therefore possible to argue that, in practice, there are no off-budget military expenditures.

The expenditures related to acquisition of the F-35 aircraft by the Norwegian Air Force, where funds were authorised by the Parliament outside of the general budget deliberations, have been recorded in the respective budgets [1]. In 2019 the Government considered funding off-budget expenditures through the Oil Fund, mainly in order to omit the limitations posed by the budgetary rule. This suggests that off-budget expenditures would not be recorded in the respective budgets. However, because the Government eventually decided not to pursue the scheme, it is not plausible to use the case as a pretext to give any score. As indicated in Q 29a, there are in practice no off-budget military expenditures in Norway. Therefore this indicator is Not Applicable.

In practice there are no off-budget military expenditures in Norway. The 2019 public debate sparked by the Government’s idea to fund the rebuilding of Government headquarters in Oslo and a new warship through an off-budget expenditure channel funded by the Oil Fund provides strong evidence of this [1].

There are no royal decrees or any legislation regarding off-budget military expenditure according to the Omani eGovernment portal (1). Equally, there is no information on off-budget expenditures on either the MoD website or the military’s website (2), (3). Neither is any reference to off-budget military expenditure made in media reports, the Ministry of Finance, or the State Audit Institution (4), (5), (6). The lack of details regarding off-budget military expenditure across both institutional and media sites demonstrates a lack of transparency and accountability in MoD financial activities. In addition to that, the fact that military budgets that are available contain no details or a breakdown for expenditures means that it is practically impossible to tell whether off-budget expenditure occurs in the first place. According to multiple resources, off-budget military expenditures are allowed as they occur based on sultan’s decree and not the government’s. The office of the sultan is the administrative unit where the majority of military purchases go through (7), (8).

Building upon sub-indicator 29A, no off-budget military expenditure is noted on the MoD, military, or Ministry of Finance websites (1), (2). The last announcement, regarding the annual budget, in Royal Decree 1/2018 contained no details stating the breakdown of ministry budgets or off-budget expenditure (3). Moreover, no official records on budget expenditure are made publicly available, neither are any recording mechanisms for inconsistencies in the budget (4), (5). According to multiple sources, off-budget military expenditures are allowed as they occur based on the sultan’s decree and not through the government. The off-budget purchases and expenditure are, therefore, not recorded in the budget (5), (6).

According to multiple sources, off-budget purchases happen occasionally, especially in times of regional conflicts such as in Yemen. The expenditures can range from logistics to weapons and ammunition (1), (2), (3).

This indicator has not been assigned a score due to insufficient information or evidence.

All military and security-related expenditures are recorded in the official budget of the MoF. This routine was institutionalized in 2007 (1), (2). What may not be recorded in the budget are materials, tangible donations, and funds from foreign countries (3). Security services have been given the authority to not register certain items as the items are confidential or subject to special instructions (4).

There is a clearly stated manner in which expenditure in the respective line of the budgets is recorded (1), (2). This mechanism is clear as every security agency registers its assets and spending based on the MoF mechanism (3).

No evidence or data proves or shows there is off-budget expenditure (1), (2), (3).

The DBM has defined off-budgetary funds as receipts which are authorised to be deposited for expenditure items that are not part of the general appropriations placed in the following categories categorised into: (1) retained income/funds; (2) revolving funds; and (3) receipts from borrowing by the Bureau of Treasury [1, 2]. Retained income are collections legally authorised to be used by the Defence Department for operational purposes; revolving funds are receipts derived from the business activities of the defence agency and are legally authorised [1, 2, 3].

The off-budget accounts described in 29A are publicly available via the DBM website and are recorded in disaggregated form according to agency or service, legal basis, source of revenue and class/nature of expenditure [1].

There are substantial off-budget military expenditures but this involves legitimate economic activity. The off-budget accounts described in 29A are publicly available via the DBM website and are recorded in a disaggregated form according to agency or service, legal basis, source of revenue and class/nature of expenditure [1]. This is reported annually.

The Polish MoND has at its disposal one ring-fenced fund devoted to the modernisation of the Polish armed forces. These expenditures are regulated by Article 6 of the Law on Rebuilding and Technical Modernisation and Polish Armed Forces’ Financing [1] and are composed of direct budgetary expenditures, income derived from the privatisation of the state-owned defence industry, and income from the Technical Modernisation Fund (i.e. the income of the Military Property Agency) [2]. These expenditures are part of the official budget framework.
No legal provisions allow off-budget expenditures, and there is no evidence that these types of expenditures exist. Alternative income sources and expenditures such as American military aid, R&D expenditures or special funds are also included in the budgetary framework [3].

There are no off-budget military expenditures, as such this indicator is scored Not Applicable.

There is no evidence of off-budget military expenditures. The likelihood of the existence of unrecognised sources of income is extremely low given the Polish budgetary legal framework.

The Constitution of the Portuguese Republic specifies a unitary budget structure to impede off-budget or confidential expenditure [1]. The Budget Framework Law provides for exceptions pertaining to national security, which must be approved by Parliament [2].

Off-budget military expenditure is understood as being a part of “provisional allocations”, which may be used for national security purposes under exceptional conditions and must be approved by Parliament [1]. These “provisional allocations” are recorded by the Directorate-General of Budget (DGB) [2], and there is evidence of recorded budgetary change by the Ministry of Defence (MoD) on a quarterly basis [3].

While there is significant evidence of budgetary reallocation by the MoD [1], these procedures are recorded by the DGB and suggest well-controlled operations with very limited scope for irregular activity. On the basis of existing sources, namely budgetary oversight reports by the CA [2] [3] [4], there is no evidence that off-budget military expenditure is prevalent.

Off-budget military expenditure is permitted in Qatar by Emiri decree. It is widespread and occurs multiple times a year. This is because the military expenditure is based on circumstance, and the capacity of countries and companies to sell their products to the Qataris. It, therefore, cannot be subject to advanced planning. [1,2]. It has been established in previous questions, that the Qatari Government reveals limited information about the general budget, but this excludes the military. For this reason, it is impossible to obtain information about off-budget expenditure, without governmental access to this type of information. It has become apparent through media reports, that Qatar keeps information about defence budgets and expenditure confidential [3]. After consulting several governmental webpages, there are no regulations or laws concerning off-budget expenditure.

The off-budget military expenditures are not included in the general budget. These expenditures are contained within the Emir’s budget, which is not declared. This makes it difficult to check the details of off-budget spending. [1,2]

Off-budget expenditures happen regularly. This is legitimate as the Emir is the Head of State and the Commander in Chief of the armed forces [1,2].

All defence-related expenditure, both secret and non-secret, is recorded in the federal budget [1], although the secret articles make up over 60% of the budget [2]. However, there are a number of off-budget, affiliate companies under the MoD administration, including ‘DefenceForest (OboronLes)’ and ‘DefenceLogistics(OboronLogistika)’ [3]. Each of them has a specific area of authority (e.g. forest management for DefenseForest). Comment: all revenue from affiliate companies of the MoD undergoes budgetary procedures, according to Interviewee 2 [4]. However, there are a few exceptions – in particular, if it is related to military intelligence and contingency plans. This expenditure is not reported or particularly planned, but it does undergo a special inspection and overview before being done [4].

Ministry of Defence Decree No. 300 ‘On Planning, Using and Revising Incomes Received by the Military Forces for Conducting Legally Permitted Activities’ of June 28, 2011 defines the planning, usage and revision procedures for off-budget revenue [1]. In particular, it provides reporting forms for off-budget revenue and expenditure estimates [2].

Comment: according to Interviewee 2, such exceptional off-budget expenditure for contingency and intelligence is not planned or fully recorded. But it does undergo special control procedures [3].

Expenditure related to military intelligence and contingency plans can be off-budget, but that happens quite rarely. This expenditure is not reported or particularly planned, but it does undergo a special control and overview procedure before being done [1].

According to our sources, off-budget expenditure is norms in the Saudi military. The crown prince has issued many decrees for military purchases that are off-budget in the last few years, such as purchases from Serbia, the USA, and other countries (1), (2). There is no evidence of any specific law, for example, a Royal Decree or a Council of Ministers’ Resolution, explicitly permitting off-budget military expenditures. Article 47 of The Government Tenders and Procurement Law, issued by Royal Decree in 2006 as part of Saudi Arabia’s accession to the World Trade Organisation, states that purchases of weapons and military equipment are exempted from Saudi procurement law (3). There are no clear frameworks surrounding off-budget military procurement, which appears to occur in an ad hoc manner.

There is no reference to off-budget military expenditures in the Saudi budget, which itself provides limited details relating to defence and military spending. This historically involved only a top-line figure for defence spending, whereas the 2018 budget for the first time included a broad breakdown of the budget allocations for different areas (1), (2). However, this still does not include any record of off-budget military expenditure. According to our sources, off-budget expenditures are recorded only in the budget of the crown prince’s office and not the general budget of the MoD (3), (4).

According to our sources in KSA, off-budget expenditure is not prevalent in small and medium purchases. Rather, they are used in strategic and politically-motivated activities such as the war in Yemen. Additionally, in KSA there are no unauthorized or illegal economic activities where oil is considered the main economic commodity to be used in off-budget purchases (1), (2). Historically, off-budget defence procurements were used frequently in Saudi Arabia (3). These include transactions such as the controversial Al-Yamama oil-for-arms deal between Saudi Arabia, the UK government, and BAE Systems during the 1980s (4). According to a diplomatic cable sent in 1996, from the US embassy in Riyadh, and later published by WikiLeaks, revenue from one million barrels of oil per day was used for “off-budget programs under the control of the king and several top princes.” According to a government adviser, similar programs still existed, at least up until December 2016; they remain unregulated, and it is unclear what amount of the Saudi budget they account for (5).

There is no way of ascertaining the amount, or prevalence of off-budget military expenditures given the lack of details provided by the Saudi government and financial authorities with regards to the defence budget. That being said, military procurement procedures in Saudi Arabia appear to be undergoing substantial changes as part of Crown Prince Mohammed bin Salman’s broader reform program (6). These reforms include streamlining the procurement processes and rooting out inefficiencies in the sector. As part of these plans, two new military industry bodies were created in the last year the Saudi Arabian Military Industries (SAMI) and the General Authority for Military Industries (7), (8). Both are intended to help centralize decision-making and procurement processes.

GAMI, established in August 2017, is set to act as an industry regulator, issuing tenders and licenses and approving contracts, while SAMI, formed in May 2017, is an industrial manufacturer and service provider that contracts directly with foreign companies. According to a regional consultant who has worked with the Saudi defence sector, the two bodies will be involved in procurement processes across various Saudi military and defence bodies such as the Saudi Arabian National Guard, the Royal Guard, the Presidency of State Security and the Ministry of Interior (9). Intelligence Online further stated that both SAMI and GAMI will be steered by inter-ministerial committees led by Mohammed bin Salman (10).

Given that the reforms are still in their early stages and the scarce information released regarding the regulatory activities for instance of GAMI to date, it is unclear how these two new bodies will affect off-budget military spending.

The legislation does not explicitly mention off-budget expenditures. What is more, the Law on Defence proscribes that the Republic of Serbia finances defence related commitments from its budget [1]. Furthermore, the Budgetary System Act proclaims basic principles of fiscal policy, including accountability (the government is accountable to the National Assembly, which adopts annual budgets) and transparency [2].

SAI audits of national budget execution have not indicated any off-budget expenditures, which is logical considering the nature of such audits [5]. However, one well-documented case of off-budget expenditures suggests that such expenditures may exist, but do not get displayed in public accounting. In 2015 Serbia purchased two Mi-17 helicopters from Russia. The then prime minister (now president) revealed the price of the helicopters to be EUR 25,349,000 and publicly thanked the public enterprise for arms imports and exports, “Jugoimport SDPR” and Serbian and Montenegro Air Traffic Services LLC (SMATSA) for their donations for this procurement [1]. Thereby he explicitly stated that “Jugoimport SDPR” (legally a public enterprise, owned by Serbia, but not a budgetary beneficiary) had donated approximately EUR 12 million, whereas SMATSA had contributed with a donation of EUR 3.8 million [3]. The contract was signed in 2015 and helicopters delivered in 2016. After the helicopter delivery, the MoD stated in response to BCSP’s question that the full payment had already been made [2], which means that the transfer was made at latest in 2016. However, records of MoD’s finances in 2015 and 2016 show that donations received from private and legal persons in these two years amounted to just under EUR 4 million [3]. When such donations from 2014 are added, this makes around EUR 4.2 million in total, which is significantly lower than the amounts reported by the Prime Minister. This case is thus in direct contravention with the provision of the Budgetary System Act that even unforeseen donations have to be followed by the opening of adequate appropriations in the budget before the donations are channelled to expenditures [4].

It is unclear how common off-budget expenditures are, considering that they are not reported or recorded. They could only be discovered in media reporting, which typically covers only high profile events in the defence sector, such as major procurement deals, which only take place infrequently. However, it was confirmed from one of the state officials that the procurement of two helicopters Mi-17 in 2015/2016 had been financially supported by donations from external legal persons and these donations were never recorded in Serbian public accounts [1, 2].

Off-budget expenditures are not permitted by law and there is no evidence of any off-budget expenses in recent years, as all military expenditure is covered by the government’s budget and must be prepared well in advance for cabinet approval in the leadup to each Financial Year. Information on proposed defence expenditures, current Ministry of Defence (MINDEF) and Singapore Armed Forces (SAF) developments and issues of interest are provided to the Government Parliamentary Committee for Defence and Foreign Affairs (GPC-DFA) for oversight before being submitted by the minister for finance for executive approval, among other ministry budget requests [1, 2].

This indicator is marked ‘Not Applicable’ because there is no evidence of off-budget expenditure. The MINDEF’s annual budget is debated in Parliament and then authorised by the executive under the Supply Act [1]. There is no evidence that it has access to or has utilised off-budget funding [2].

There is no evidence to suggest that off-budget military expenditures are a common occurrence. Major military equipment acquisitions, training, and operational requirements have been openly debated in Parliament and are typically consistent with the requested budget for the respective Financial Year [1].

According to the DAHB 1000, all acquisitions and procurement can only be funded through either the Special Defence Account or General Defence Account [1]. These are both audited by the auditor-general [2].

Shifts to the General and Special Defence Accounts from other departments or within the defence budget are recorded as virements in both the Annual Report [3] and the annual Medium Term Budget Estimate updates published by National Treasury each October [4].

As off-budget expenditures are not permitted, this indicator is scored ‘Not Applicable’.

No evidence could be located regarding off-budget expenditures taking place in the military sector. While there are some donor-funded activities in the South African National Defence Force (SANDF), such as pilot training, these are accounted for in the budget. The most recent Department of Defence Annual Report (2017/18) specifies no donor funding was received during this period [1].

In South Korea, off-budget expenditures are prohibited by law. The National Finance Act states that any government agency, including the military, cannot use any expenditure which is not prescribed by the budget, and all expenditures should be recorded. [1] [2]

This indicator is not applicable because off-budget expenditures do not exist in South Korea. [1] [2]

As mentioned in Q29A, off-budget military expenditures are not likely to exist under the terms of the National Finance Act. [1] [2]

Both the SPLA Act 2009 and the NSS Act 2014 are silent on off-budget expenditures for the military and the National Security Service, respectively. [1] [2] Nevertheless, the organisational structures of both entities have units for production [3] that serve as alternative sources of revenue generation, indicating the practice is not illegal. The military has been implicated in mineral mining. The NSS has an extensive business footprint, including in the oil sector. It’s head, Gen. Akol Koor has sat on the board of the national oil company, NilePet [4] and NSS officials also sit on many boards for various businesses in the country, which is a contravention of the NSS Act that prohibits employment outside the service. [5] In general, the practice of engaging in alternative off-budget revenue generation is not spelled out in the acts governing both the SPLA and the NSS.

Theoretically, all off-budget expenditures are supposed to be officially recorded in the respective budgets of the military and the NSS. But there’s usually a discrepancy between theory and practice. For instance, the NSS Act 2014 prohibits its officers from engaging in employment outside the service. [1] Yet, the evidence suggests that they have sat on the boards of businesses in the oil sector. [2] Given the prevailing corruption in the country, it is fair to surmise that these expenses are not recorded in the budgets of these organisations, or that, if recorded, an amount is skimmed off by officials.

Both the SPLA and the NSS have a well-developed business footprint that is not stipulated in the acts governing the operations of both organisations. [1] [2] Nevertheless, the fact that the organisational structures of both entities contain provisions for off-budget production indicates that the practice is tolerated or even considered legitimate. [3]

No evidence was found that off-budget military expenditures are permitted by law in Spain. Nevertheless, it is worth mentioning that the Spanish military budget, as explained previously, is shown to have recurring extra-budgetary military expenditures coming from other ministries or even from the Contingency Fund to cover the expenses of military operations abroad [1, 2]. In all the aforementioned cases, the irregular absence from the initial military budget or their inclusion in other ministries, but they are part of the annual budget. However, the contingency funds are not up for debate in the initial budget, although it is included throughout the year [3].

As outlined in 29A, there are no off-budget military expenditures in Spain and therefore there is no recording mechanism. As such, this indicator is marked ‘Not Applicable’.

There are no off-budget military expenditures in Spain [1, 2]

No evidence could be found that off-budget military expenditure is prohibited by law. In 2020, Freedom House reported that, in practice, ‘President al-Bashir’s government was considered opaque before its overthrow, running large off-budget accounts and reserving up to 80 percent of the formal budget to security institutions’ [1]. In his report on Sudan’s ‘political marketplace’, Sudan expert Alex De Waal explained that foreign governments, including Saudi Arabia, the UAE, Qatar and Turkey, have each given Sudan one-off budgetary support payments in one way or another to support Sudan’s military activities, such as separate SAF and RSF deals to deploy troops to fight in Yemen’s conflict and direct investment in projects such as the Turkish rehabilitation of a port city that houses a naval facility [2].

For years, individual security units have accrued their own off-the-books revenue as well, so even if the Ministries of Defence, Interior and Finance were given full visibility into how armed elements spend centrally allocated funds, they would still be in the dark with regard to the additional amounts that are collected and spent – in hard currency, in-kind deliveries or exchanges – by individual units. In a telephone interview, an expert on Sudan’s security sector said: ‘Really, there are a lot of figures floating around, but nobody knows how much money is being spent in the security sector’ [1]. Reports from a number of sources [2,3,4] indicate that various Sudanese military units have received significant revenue and in-kind resource income in recent years, from the UAE, Saudi Arabia, Turkey, Qatar, other parties to the conflict in Libya and elsewhere, in exchange for military assistance, gold, other off-the-books exportation of goods and other unknown items, services, political favours, etc.; the value of the exchanged goods, services, etc. is not visible to Sudan’s government ministries or oversight bodies.

As emphasised in the U.S. Department of State’s 2018 Integrated Country Strategy for Sudan, ‘GoS officials with access have reaped illicit benefits from the parallel exchange rate and other economic distortions’ [1]. In 2020, Freedom House reported that, in practice, ‘President al-Bashir’s government was considered opaque before its overthrow, running large off-budget accounts and reserving up to 80 percent of the formal budget to security institutions’ [2]. The Sentry, a watchdog organisation, writes that the Sudan Armed Forces (SAF), the National Intelligence and Security Services (NISS), the National Police and the Rapid Support Forces (RSF) developed business ’empires’ and were allowed to keep part of their revenues off-budget, using the extra resources to feed the regime’s patronage systems. Officials ‘maintained their own private companies and received preferential treatment in bidding for government contracts’ and used political connections to squirrel away proceeds from exports [3].

The Budget Law [1] and Appropriations Law [2], which both entered into force in 2011, regulate budget expenditure for all defence agencies [3] [4]. The laws do not, however, clearly define off-budget expenditure but rather emphasise agencies’ financial reporting obligations to the National Financial Management Authority.

There are no off-budget miliatary expenditures in practice. Budget expenditure and financial reporting is regulated by the Budget Law [1] and Appropriations Law [2].

NAO has not found any off-budget expenditures in the audit for the Swedish Armed Forces in the studied time period [1]. All defence related expenditures are presented in the annual defence budget, and there are no record on off-budget military expenditures [2].

The different units of the Federal Administration operate with global budgets (i.e. a budget with a global set amount for a fixed period without specific budget lines). Building up of reserves is allowed. It is also possible to overspend that global budget. However, both procedures are part of parliamentary oversight and need to be transparent. There seems to be no other provision in the Finance Law that would allow for off-budget provisions [1]. One of the reasons for creating the new oversight system of the Nachrichtendienstgesetz (NDG) was a scandal in 1999 involving a member of the intelligence service withdrawing almost nine million Swiss Francs for personal use, and the purchase of weapons. Although he initially claimed that he was acting on orders the case was later classified as fraud. He was discovered, due to irregularities discovered during an audit [2]. This shows that in theory off-budget spending was possible under that system even if not allowed. The efficacy of the new system in preventing this kind of abuse is an open question. No similar stories of abuse have emerged yet.

There is no legal provision that would allow for off-budget spending and all spending is subject to parlamentary oversight [1].

There is no legal provision that would allow for off-budget spending and all spending is subject to parlamentary oversight. There were no reports during the last five years on any off-budget spending [1].

“Rule of Law” is the central theme for Taiwan’s defence governance [1]. Off-budget expenditures for the military or intelligence are against the law and are strictly prohibited by vigorous legislative scrutiny in Taipei [2].

This indicator is marked ‘Not Applicable’. No off-budget expenditures have been identified in either the MND or NSB.

Off-budget expenditures for military or intelligence are against the law and are strictly prohibited by the Budget Act legally and politically by the vigorous partisan rivalry that exists in Taiwan [1, 2].

Off budget expenses, such as millitary involvement in natural disaster relief efforts, are permitted by law. [1] [2] [3] Such expenses are rare. However, since they are not itemised in public reporting, and only in very aggregrated form, it is difficult to know their extent and how much scrutiny is imposed on such items. The lack of detail in budgeting and reporting on expenditure in general may create an environment conducive to off-budget expenditure.

Some limited off-budget expenditures are recorded in aggregated form and not itemised in public recording. [1] It is also possible that some may occur as secret expenditure items which are not publicly available.

Given the available information, off-budget expenses in the defence sector are rare given the rarity of natural disasters. [1] [2] That said, since access to secret expenditure items is not available, it is difficult to conclude that natural disaters are the only existing off-budget expenditures in the defence sector.

In December 2019, the issue of the Ministry of Defence’s 18-billion-baht off-budget spending was raised by Future Forward Party (FFP) leader Thanathorn Juangroongruangkit. These off-budget funds are exempt from public disclosure and scrutiny by the Lower House [1]. It should be noted that, in 2018, the Fiscal Responsibility Act was enforced to place more restrictions on government off-budget loan-seeking legislation, finance projects or inappropriate activities by requiring the responsible agencies to seek approval from the Finance Ministry beforehand [2,3]. Nonetheless, the FFP party leader claimed that the Financial and Fiscal Discipline Act of 2018, which was passed by the former military regime’s lawmakers, provides a loophole for the Ministry of Defence to seek an exemption from the Ministry of Finance, which enables the budget to bypass compliance with the laws and regulations that apply to all other government agencies [1]. For example, in 2019, the NACC awarded the army a full score of 40 for disclosure of information. The agency justified the result by stating that it only evaluated disclosure of information by agencies as required by law. Therefore, it did not take the military’s off-budget funds into account because these funds are not subject to disclosure under the law [4].

According to Future Forward Party (FFP) leader Thanathorn Juangroongruangkit, unlike other agencies, the Ministry of Defence was apparently exempt from providing details about off-budget spending; no information was provided by the ministry about who was authorised to use the off-limit funding or precisely how it would be spent [1]. Again, even though the Fiscal Responsibility Act was enforced to monitor, evaluate and report off-budget borrowing and thereby strengthen fiscal discipline, key issues such as transparency remain beyond the scope of the Act [2]. Since the Ministry of Defence’s regulations allow it to manage its funds under its own set of regulations, it is impossible to examine where the off-budget funds are allocated and how they are spent.

An appendix document detailing the budget for off-budget funds shows that the Ministry of Defence was allocated off-budget funds of 32,393,000 Thai baht (out of 6,230,967,600 Thai baht, which was the total amount of the Ministry’s budget), which is equal to 0.5% of the total ministerial budget in 2019. Interestingly, these kinds of off-budget funds tend to be set equally each year between 2018-2020 [1]. During a public lecture at the FFP head office, Future Forward Party (FFP) leader Thanathorn Juangroongruangkit claimed that the off-budget spending of the Ministry of Defence in 2018 amounted to 18.6 billion baht [2]. In response to Mr Thanathorn’s request for public disclosure and external audit of this large amount of expenditure, Deputy Prime Minister Prawit Wongsuwon argued that the money was used for defence personnel welfare benefits and for public services. Still, this explanation was too vague and insufficient to give the public a clear picture about what the off-budget funds were needed for [3].

According to our sources, off-budget military expenditure in the last five years does not exist. It is forbidden by law and also it does not exist in practice (1). All defence-related expenditures are recorded in the official defence budget. Article 66 of the new Constitution of the Republic of Tunisia provides that the law determines the state’s resources and its expenses in conformity with the provisions set out in the Organic Budget Law (2). Moreover, Article 1 of the Organic Budget Law provides that the finance law sets out and authorises, for each year, all expenditures and resources of the State, meaning that off-budget expenditure is strictly forbidden (3).

This indicator is marked Not Applicable because all the expenses of the Ministry of Defence are recorded in the Ministry of Defence’s budget documents (1). Although there is no detailed budget of the military expenditure, the aggregated and general expenditure (numbers) does appear and is recorded in the budget(2,3).

There are no off-budget military expenditures, such practices are strictly forbidden by the rules of public accounting which also apply to defence expenditures (1,2). There were no media sources found which discuss the issue of off-budget expenditure or suggest that it is common practice in Tunisia (3).

Every year in the last week of December, the law for the next fiscal year is published in the Official Gazette in Turkey, marking the beginning of the new, parliament-approved fiscal year. As seen in Articles 6 and 11 of the Law of Budget of the Fiscal Year 2020, the Ministry of Defence has the authority to ask for an extra 30% of the subsequent year’s budget as an advance payment in case of an emergency, such as a war or a natural disaster, in which military units need to be used en masse [1].

Aside from this, the only means of off-budget military expenditure permitted in Turkey is the Presidential Secret Fund, or Implicit Presidential Fund. According to Article 24 of Public Financial Management and Control Law No. 5018 [2], the ‘Implicit Presidential Fund is used for covert intelligence and defence services are the grants put into the Presidential budget for use for state and government requirements related to national security and high interests of the State and the requirements of the State’s reputation, political, social and cultural purposes and extraordinary services. The budgets of other public administrations that carry out intelligence services required by law or by Presidential decrees may also be covered. Apart from these purposes, the Implicit Fund cannot be used by the President or his/her family for their personal expenses or for the administration, propaganda or election of political parties. The sum of allowances allocated for this purpose cannot exceed 0.5% of the total budget approved by parliament. Where the implicit allowances are used in the presidential and other relevant administration budgets, who will make the expense, the method of keeping and closing the accounts and which documents are transferred to the new authority are decided by the President’ [2].

The Article presented above grants the President full authority to finance any intelligence or defence activity from his covert fund, but strictly limits the use of the secret fund to up to 0.5% of the total budget. Off-budget military expenditure is permitted by law. Although there are limitations, the interpretations of the exceptions are becoming broader. As stated in Public Financial Management and Control Law No. 5018, discretionary funds are provided for confidential intelligence and defence services, and to fulfil national interests and objectives. As specified in Article 24, the total amount of the covert appropriation allocated in the relevant year cannot exceed five per thousand of the sum of the initial appropriation in the general budget [2]. Although the amount of the discretionary fund used or to be used is known or at least estimated, detailed information about the allocation of these funds among the institutions is kept confidential because the use of the funds is flexible for all State needs. Decisions regarding expenditure and the realisation of covert appropriation is under the authority of President Erdoğan.

The Presidential Secret (or Covert) Fund, the only means of off-budget military expenditure, is not officially recorded in the budget and this fund is closed to legislative oversight. According to the media reportings, the covert fund budget which can officially not be recorded, is around 900 million USD for 2021. [1]

As explained above, the Presidential Covert Fund is the only means of income for off-budget military expenditure in Turkey. Interviewees 3 and 4, relying on their employee experience, both suggested that off-budget military expenditure happens occasionally because the Turkish military and intelligence agency have ongoing operations abroad [1,2]. With regard to the question of frequency, Interviewee 6 suggested that, considering the off-budget military activity abroad, particularly in Syria, Libya and Qatar, it is likely that there are monthly transfers from the Presidential Covert Fund for military and intelligence expenses [3]. Open-source reports confirm these suggestions. According to one report from November 2019, which cites sources at the Ministry of Finance, cases of the Presidential Covert Fund being used without accountability to any person or institution are dramatically increasing [4]. According to this report, secret fund spending increased nearly 10-fold to 1.8 billion over a 10-month period from September 2018, surpassing the previous year’s total amount of 1.7 billion [4]. In her article entitled ’16 years of Secret Fund’, journalist Cogdem Toker addresses and provides insights into a change in secret fund spending over the past 16 years, with the secret fund increasing 17.5-fold between 2002 and 2018 [5].

According to another report, the secret fund reached 14.1 billion TL (more than 2 billion USD) in the 2020 Budget Proposal [6]. The report cites ‘sources’ from the Ministry of Treasury and Finance and claims that, according to the data contained in the 2020 Budget Law Proposal submitted to parliament, the total secret fund rose from 4 billion, 805 million TL (around 650 million USD) in 2019 to 14.1 billion TL in 2020, a 4-fold increase with the support fund that can be used after the actual budget has been used [5]. According to Interviewee 2, because the President has been avoiding opening the presidential covert fund to legislative oversight and CoA audits, it is likely that the expenses are ‘at the grey zone between what is legal and what is illegal’ (direct quote) [7].

While this is not permitted by law, under the Public Finance and Management Act (2015)[1], given the secrecy of the Ministry of Defence and Veterans Affairs (MoDVA) under the pretext of national security, it cannot be ruled out that MoDVA cannot access such budgets [2]. Many things are done without the Parliament’s approval, sometimes Parliament only finds out through the press [3].

This indicator is scored Not Applicable, as there is no provision for off budget expenditure by the military [1, 2]. The Public Finance and Management Act (2015) spells out the sources of all government revenues and how such funds should be accounted for.

The MoDVA has been requesting supplementary budgets from Parliament more often. There is no public evidence to prove that off-budget military expenditures happen [1, 2].

The State Budget of Ukraine consists of two parts – general and special budget funds. While the general funds are filled generally by all kinds of taxes, the special fund is filled by the state authority’s income [4]. Thus, off-budget defence-related expenditures are permitted by law [1] and are listed in the annual Law on the State Budget under the category of “Special fund” [2]. Moreover, there is income which cannot be predicted, like donations. Those donations are not part of the planning process and are highlighted in the annual laws on the state budget and the MoD budget requests only in form of information “funds donated to the MoD” and “how did the MoD use those funds” [5]. In 2015 the CMU decided that the MoD can get funds from charitable donations and adopted a corresponding procedure for that [3].

The only off-budget military expenditures are possible through the charitable donations. The MoD publishes on its official website information on the volumes of charitable donations received on its accounts as well as their use; quarterly – to publish a summary of the volume of received charitable donations [1]. Compilation and submission of financial and budget reports on received and used charitable donations as well as control over the targeted and effective use of charitable donations are carried out in the same manner as other MoD expenditures [2]. The MoD regularly publishes data on received charitable donations [3] as well as on the recent ones [4]. However, the reports on the use of received charitable donations seem to be outdated, with the most recent one published at the end of 2014 [5]. MoD annual budget requests provide this information [6]. In the MoD annual budget requests charitable donations, for example, are listed under code 250201 “Сharitable donations, grants, gifts;” annual laws on state budget of Ukraine provide these data under code 25020000 “Other sources of own revenues of budget institutions” (although annual budgets provide this data in aggregated manner) [7].

Off-budget military expenditures are common practice in Ukraine (special fund expenditures). However, those expenditures are included in the state budget file and remain under the same control with the general fund expenditures. There is no evidence of off-budget military expenditures being involved in illicit economic activities. The MoD publishes amounts of the charitable assistance received and also published (no recent publications have been made) reports on their usage [1, 2, 3].

As no law prohibits off-budget military expenditures, sources have confirmed that there are major off-budget military expenditures especially with contractors such as Blackwater and ammuniation purchases from Balkan countries (1), (2).

Off-budget military expenditures are not officially recorded in the budget as they are mostly registered as expenditures by the Office of the Crown Prince personally (1), (2).

Off-budget military expenditures occasionally happen, particularly in the last five years. Off-budget expenditures are usually used for strategic purchases from Western countries, mainly from the USA (1), (2).

All defence-related expenditures are recorded in the official budget, which is subject to parliamentary scrutiny and approval [1, 2]. All government spending is authorised through an annual Finance Bill, which is, again, subject to parliamentary scrutiny and approval. [3] Prior to the passing of the Bill, the Chancellor presents his Budget and parliamentary debate follows. Prior to this, government departments submit budgetary estimates in Main Supply Estimate submissions which are then incorporated into the Budget [4].

The budget process in the UK is considered highly transparent by independent commentators, as evidenced by the Open Budget Index [5]. The defence budget, like all other central government departments, is subject to parliamentary scrutiny. The accounts of the MoD and its Arms Length Bodies are audited by the C&AG and the National Audit Office. Intelligence agency expenditure is also recorded through the Single Intelligence Account and audited financial statements are presented to parliament.

This is Not Applicable, as all defence-related expenditures are recorded in the official budget, which is subject to parliamentary scrutiny and approval [1, 2].

All defence-related expenditures are recorded in the official budget, which is subject to parliamentary scrutiny and approval [1, 2]. The assessor plans to add more details for this indicator.

Off-budget expenditures are typically ‘supplemental appropriations’, which are used to provide for unforeseen needs. For example, supplemental appropriations were used to fund the recovery costs due to Hurrican Sandy in 2013 [1]. In the aftermath of September 2001, supplemental appropriations were used for opeations in Afghanistan and Iraq. In 2009, however, the Obama administration moved to using the term ‘Overseas Contingency Operations’ (OCO) for post-9/11 military operations. OCO funding, as with all supplemental appropriations, is not subject to limits in the same way that discretionary spending is. This means that the Budget Control Act spending limits do not apply to OCO funding. For this reason, Congress and the President have taken to designating funding for OCO to support activities that, in previous years, were funded within the base budget (and therefore subject to the Budget Control Act) [2]. For this reason, the OCO fund is often referred to as the DoD’s ‘slush fund’ [3,4]. Although off-budget expenditures are permitted, their use is broad and without limitation.

The OCO is recorded in the DoD budget overview, however, a disaggregated record of the OCO funding is not published [1]. The overview outlines the three overall categories that the funding is used for (direct war, enduring and OCO for base) and breaks these down further by operational support category, for example, ‘Afghanistan Security Forces Fund’ (ASFF). Some details about mission activities are provided, for example, the ASFF request funds training and equipment for up to 352,000 members of the Afghan National Army and National Police [1]. This information is provided in narrative form and disaggregated budgets are not provided. The information provided appears to be selective.

The OCO budget in FY 2020 was $173.8 billion, $96 billion more than the amount appropriated for FY 2019 [1,2]. Only 15% of the OCO request in FY 2020 was for direct war requirements. The use of OCO funding is highly prevalent and has become a significant component of the overall defence budget, to the extent that the DoD is reliant on the OCO. Critics of the OCO widely agree that it has become detached from its original purpose as an ’emergency’ fund for supporting operations in Iraq and Afghanistan [3,4]. Moreover, in 2013, it was found that the Pentagon was including an estimated $20 billion of non-war funding in the ‘operation and maintenance’ accounts of the OCO budget to avoid budgetary caps. The use of the OCO as a loophole from budgetary caps appears to have continued, according to widespread criticism, leading to the OCO fund being termed a ‘slush fund’ [2,5,6,7].

In accordance with the Organic Law on Financial Regulation (LORP), the budget act will incorporate a budget appropriation amendment, and additional appropriations may be approved to cover shortfalls or unforeseen expenditure [1]. In other words, the law allows for extra-budgetary expenses that must be approved and subsequently submitted in the annual report and account of each institution without allowing for undeclared or off-budget expenses. In the case of the defence sector budget, recent years have seen irregularities in the approval of additional appropriations that prevent an assessment of whether unbudgeted expenses have been spent [2].

By law, the use of appropriation amendment must be approved by presidential decree. However, recent years have shown no evidence of how this has been assigned or used. Meanwhile, additional appropriations must be requested by the president and approved by the AN, with corresponding publication in the Official Gazette. These appropriations may come from uncommitted stocks from the nation’s treasury, from savings in other areas of expenditure, or from other sources approved by the National Assembly.

Given the country’s macroeconomic condition – with hyperinflation causing a steady increase in estimated values [3, 4] – and the little or no available information on the justification for use of these additional appropriations, the irregularities in approval processes, [4] and the fact that the Ministry of the People’s Power for Defence (MPPD) has not submitted accounts since 2016, the risks of corruption in the management of extra-budgetary costs are high. This includes the risk of off-budget expenses. In addition, the defence sector has received funding through the National Development Fund (FONDEN), which is managed at the discretion of the executive [5]. The lack of oversight over the resources of this fund produces opportunities for their easy use in off-budget expenditures and means they are not budgeted [6]. While reports render an account of the management of this fund, it is impossible to rule out its use for these purposes.

The LORP indicates that the use of both the budget amendment and additional appropriations should clearly indicate to which sector and project resources were allocated, recording these changes [1]. However, registration mechanisms for cases of off-budget expenditures have been bypassed in recent years, with only partial information available about the approval of these loans, most of which are not recorded in public documents. Moreover, opacity in the publication of budgets and accounts of public institutions since 2016 prevents an assesment of whether there are unrecorded unbudgeted expenditures, in addition to irregularities with extrabudgetary expenditures.

Approvals of additional appropriations in recent years have violated of the LORP in various ways. Since 2017, the approval of these appropriations has not met the requirements and processes established in the law, as they have not been approved by the AN and have not been published in decrees. According to unofficial sources, 60% of appropriations approved for 2018 were not instituted by decree nor published in the Official Gazette [2]. Moreover, in 2015, before the inauguration of the current AN, the former Assembly approved an enabling law by which President Maduro approved a decree of State of Emergency and Economic Emergency, which has allowed him to modify the procedures of approval of appropriations so that the continued approval of the AN is not required [3].

Meanwhile, the failure to publish the reports and accounts of the different public authorities prevents any evaluation of the ways in which these appropriations have been used. The 2015 MPPD accountability reports [4] included summary information on programs that received additional appropriations, indicating the total budget that was implemented during the year. However, there is no precise information on the actions carried out with these resources. According to unofficial information, 117 additional appropriations were approved for the year 2018, exceeding the prescribed amount for that year’s budget more than five times over. [5]

While the budget has increased exponentially over the years, experts agree that this is insufficient to anticipate the hyperinflation that has affected the country in recent years. As a result, approval of appropriations has been the pattern since 2015, increasing considerably in recent years, as reflected in the over 400% increase of the budget for 2017, a trend that persisted into 2018 [1]. Given this situation and the irregularities in the registration process for budget expenditures, there is a high risk of off-budget spending in the defence sector. Civil organisations monitoring the management of the budget, for this and other sectors, have not directly reported the existence of unbudgeted expenses. However, they have reported a continued lack of information on the budget and its implementation, which prevents any accurate assessment of expenditures outside the budget; their existence cannot be ruled out.

The defence sector is one of the sectors that receives the largest number of additional appropriations, given the high demand for defence sector resources. By mid-2018, unofficial information confirmed that eleven appropriations had been granted to this sector in excess of its initial approved budget, out of 70 total approved appropriations [2]. According to the LORP, the funds for these appropriations should come from legitimate sources such as oil resources and other savings within the nation’s treasury. [3] However, experts say that with the decline in oil production and oil prices over recent years, the government has drawn on unsupported funds from the Central Bank of Venezuela (BCV) at will to finance these appropriations [1, 4]. Although no evidence has been published of the financing of the budget with illicit money, there is no clarity on the provenance of these resources.

The Constitution of Zimbabwe, declares that it is imperative that all expenditure be approved by Parliament, all money raised nationally, must in terms of the Constitution, be put through the consolidated revenue fund [1]. Following this principle, off-budget expenditure is not allowed by the provision of public finance management contained in the supreme law [2].

Even though ‘off the budget’ expenditure is not allowed by the law, there is evidence that shows that the military in Zimbabwe conducts ‘off the budget’ financing. Considering the fact that the Zimbabwean military has known off-budget financial sources means off-budget expenditure happens anywhere. Some of the reported purchases cannot possibly be financed through the appropriated figures, which are relatively small compared to actual expenditure amounts. A look at the national budgets shows military profit enterprises are not recorded as part of the sources of money in the consolidated revenue fund, which is the money controlled by Parliament [1, 2, 3, 4, 5].

The frequency of off-budget expenditure is unclear, so it is hard to determine, there are no accessible documents to ascertain the number of times money from outside authorised expenditure from the consolidated revenue fund is used. Only a comparison of budget figures and some reported expenses from the military proves that the military has extra sources of money. There are reports that the military is in many profit ventures [1, 2, 3].