Brunei Announces Upcoming Fiscal Year Defense Budget

Brunei has announced its budget for the upcoming 2020-2021 fiscal year, with defense receiving an allocation of BND606 million ($430 million). This represents a 2.7 percent nominal increase over the FY19/20 earmark and will, according to the Brunei Ministry of Defense, help reinforce the three-pillar defense policy of the state, which involves diplomacy, deterrence and “holistic defense.”  Challenges for the military cited in the MoD announcement include protecting national assets in the South China Sea, cyber defense, and the novel coronavirus (COVID-19).

The small uptick in defense investment stands in slight contrast to the overall government budget for the next fiscal year, which will be flat in terms of year-on-year nominal expenditure relative to the current budget.

Though Brunei is a small country in terms of size (2,226 sq mi) and population (430,000), the Islamic monarchical state is home to significant wealth due to its oil and natural gas deposits. Last year it posted its highest rate of economic growth in 13 years as the economy expanded by 3.9 percent.

However, while the government anticipates even higher growth for the upcoming fiscal year (within a range of 4.9 percent to 7.1 percent), that stands to be an overly optimistic outlook due to the slump in oil and gas prices and overall slide in the global economy amidst the worldwide COVID-19 pandemic.

Generally, defense spending has reflected the up-down nature of Brunei’s hydrocarbon-dependent economy and therefore cycles accordingly. For example, in 2014 the year-on-year defense allocation grew by a whopping 39 percent – only to fall by 25 percent cumulatively the following year. Thus the upcoming defense earmark for Brunei reflects a small bit of stability in an otherwise uncertain environment.

About Daniel Darling

Dan Darling is a senior analyst covering both the Europe and Asia-Pacific regions for Forecast International's International Military Markets group.

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