A bill submitted to the Parliament by DISY MPs Charalambos Petridis and Giorgos Karoullas aims to establish a stable national framework for the financing of defense, with a minimum defense spending target of 2% of GDP.
The proposal is entitled "The National Strategic Defence Armor of the Republic of Cyprus Law of 2026" and has as its main objective the gradual strengthening of the defence armour of the Republic of Cyprus, the strengthening of its deterrent capability and the assurance of the long-term operational readiness of the National Guard.
The central provision of the proposal is the setting of annual defense spending of at least 2% of GDP as a national budget planning target. The objective, the rapporteurs of the proposal state, should be taken into account both in the preparation of the Medium-Term Financial Framework and the annual state budget.
The proposal clarifies, however, that this provision does not in itself confer an expenditure power and does not circumvent the procedure for approving appropriations through the annual budget or, where necessary, a supplementary budget.
Based on the proposed law, the Council of Ministers will have to explicitly and documented the 2% target when approving the annual budget and the Medium-Term Financial Framework.
At the same time, along with the budget bill, a special Defense Financial Planning Annex will be submitted to the Parliament. This will include the projected share of defence expenditure in GDP, an analysis of the main categories of expenditure, their link to approved operational and strategic objectives, as well as projections for the next three fiscal years.
Five-year programme for armaments and capabilities
Particular emphasis is also placed on multi-year defense planning. The Minister of Defence, in cooperation with the Minister of Finance, should draw up and submit annually to the Council of Ministers and the Parliament a rolling Five-Year Defence Capabilities and Investment Programme.
The program will include the main strategic risks and deterrence needs, the planning of armaments, infrastructure and upgrading of means, the budgetary allocation per year, an analysis of the sustainability of the planned expenditures, as well as provisions for the strengthening of the reserve and human resources.
What will happen if spending falls below 2%
The proposal provides for a special procedure in case the Council of Ministers chooses to submit a budget or medium-term planning with defense spending below the 2% target.
In such a case, a specific explanatory memorandum will be required, stating the reasons for the deviation, the impact on defence capability, its estimated duration and a plan to return to the target within a time horizon not exceeding three financial years, unless there are exceptional reasons.
At the same time, the possibility of a documented deviation is provided in cases of severe economic recession, fiscal emergency, natural disaster, state of emergency or activation of national or European escape clauses.
The proposal also introduces an annual accountability mechanism. Within three months of the end of each financial year, the Ministers of Defence and Finance will have to submit a joint report to the Parliament on the actual amount of defence spending, its share of GDP, the deviations in relation to the budget and the progress of the implementation of the five-year programme.
The report will be made public, subject to national security requirements and classified information.
The explanatory memorandum states that the aim is to create a stable and predictable framework for fiscal planning for defence, citing the increased national security needs, the international obligations of the Republic of Cyprus and the need for institutional continuity in the financing of defence policy.
The rapporteurs link the need for regulation to the security conditions prevailing in Cyprus and the Eastern Mediterranean and argue that defence adequacy should not depend solely on fragmented annual choices.
The same report states that the 2% option is based on internationally recognized defense planning standards and refers to the corresponding NATO guideline, as well as to European states that have adopted corresponding or higher fiscal commitments for defense.
As noted, the purpose of the proposal is not to replace the annual budget, but to create a stable national rule of budgetary planning for defence, with an emphasis on transparency, accountability and institutional continuity.
