Q29.

In law, are off-budget military expenditures permitted, and if so, are they exceptional occurrences that are well-controlled? In practice, are there any off-budget military expenditures? If so, does evidence suggest this involves illicit economic activity?

29a. Permitted exceptions

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29b. Recording mechanisms

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29c. Prevalence

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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).

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.

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.

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).

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).

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 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 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).

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

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 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).

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).

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].

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.

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).

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).

Country Sort by Country 29a. Permitted exceptions Sort By Subindicator 29b. Recording mechanisms Sort By Subindicator 29c. Prevalence Sort By Subindicator
Algeria 0 / 100 0 / 100 NEI
Angola 0 / 100 0 / 100 25 / 100
Burkina Faso 0 / 100 0 / 100 0 / 100
Cameroon 0 / 100 0 / 100 50 / 100
Cote d'Ivoire 0 / 100 50 / 100 25 / 100
Egypt 0 / 100 0 / 100 0 / 100
Ghana 0 / 100 0 / 100 50 / 100
Jordan 0 / 100 0 / 100 0 / 100
Kuwait 100 / 100 50 / 100 0 / 100
Lebanon 0 / 100 NEI NEI
Mali 0 / 100 0 / 100 0 / 100
Morocco 0 / 100 0 / 100 NEI
Niger 100 / 100 NA NEI
Nigeria 0 / 100 50 / 100 25 / 100
Oman 0 / 100 0 / 100 50 / 100
Palestine NEI 100 / 100 100 / 100
Qatar 0 / 100 0 / 100 25 / 100
Saudi Arabia 0 / 100 0 / 100 25 / 100
Tunisia 100 / 100 NA 100 / 100
United Arab Emirates 0 / 100 0 / 100 50 / 100

With thanks for support from the UK Department for International Development and the Dutch Ministry of Foreign Affairs who have contributed to the Government Defence Integrity Index.

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