Development of the defense budget differs in critical ways from civilian sectors. The Ministry of Defense requests allocations that are approved in consultations between the president, defense minister, and ad hoc bodies. Military spending was kept secret under emergency laws in force until 2011, but the lack of transparency has continued since. The Council of Ministers and Parliament ratified the annual defense budget as a single line item until 2017, without debate or oversight of subsequent implementation. They have not received draft defense budgets since 2018, and it is probable that core military spending and increases are now decided on an ad hoc basis. This may also reflect the sharp depreciation of the national currency, which subjects budgets to high volatility.

The accuracy of budget figures could not be verified even prior to 2018, and the true costs of overall military spending probably exceed the declared budget on a routine basis, including foreign military assistance, financing of which appears to be charged to the general budget and state treasury. The military is not known to hold special or discretionary funds, but the Ministry of Defense almost certainly retains the income of several military businesses and factories affiliated with it. The Ministry of Defense is subject to its own procurement law, but comes under the same law as civilian entities with regard to audit by the Central Organization for Financial Control, subject to maintaining the secrecy of defense-related transactions.

The financial administration of the Ministry of Defense is responsible for internal inspection and auditing, but high levels of corruption within the armed forces indicate that enforcement is lax. Corruption was chronic and large-scale prior to 2011, and proliferated and diversified under the war economy that emerged subsequently. The armed forces and allied militias have engaged in widespread extortion at checkpoints, hostage- and ransom-taking, looting, and other forms of racketeering, although there has been a decline in such activities as the conflict has wound down.

Public debate of the defense budget and military finances is not allowed, and the armed forces do not discuss these with any civilian agencies or civil society organizations. Pro-government social media in loyalist communities have nonetheless occasionally accused senior commanders and government officials of corruption.

The military is not instructed by law to undertake income generating or business activities, but it runs several enterprises that are nominally geared to providing the military with services such as housing, pharmaceuticals, and food. These also serve civilian markets, and the Military Housing Establishment is reportedly the country’s largest contractor. As they are affiliated to the Ministry of Defense, these enterprises are probably subject to the same forms of financial reporting and inspection, while coming under the same rules and regulations as the rest of the military with regard to social security and terms of service.

The military has no direct role or stake in commercial exploitation of natural resources, but may provide engineering services as a subcontractor for companies operating in this field. Income from the goods and services produced by the military does not appear in the defense budget, and it is almost certainly retained by the Ministry of Defense, not passed to the state treasury. The military is not known to generate extrabudgetary income from other kinds of officially approved services, but it accounts for a significant proportion of public tenders issued to civilian contractors.

Unauthorized and illegal business activity and income generation, including petty bribe-taking and extortion, take place on a very wide scale and at all military ranks, negatively influencing combat operations and generating turf battles between various military and security agencies for control of lucrative routes and territorial enclaves, which are treated as captive markets providing opportunities for racketeering.

The last defense budget to be released, in 2017, accounted for 19 percent of the general budget, but total military spending is certainly considerably higher. The constant worsening of the state’s financial position and steep devaluation of the national currency makes proper budget planning for the defense sector difficult or impossible, and increases reliance on foreign military assistance to meet equipment needs, in particular.

Spending mostly reflects Ministry of Defense requests and ad hoc increases decreed by the president in response to immediate political and operational needs in the ongoing conflict. This does not constitute a real budget planning process, and appears unrelated to any clear spending plan based on long term force maintenance and development requirements. Aside from the president, civilian authorities have no known role in this process, and there is no evidence that an institutional mechanism exists to integrate relevant government agencies in development and negotiation of defense funding needs. However, the Ministry of Finance almost certainly enables the practice of charging significant defense sector costs to other categories of the general budget.

Military pay, in-service benefits and allowances, pensions, and social security have become somewhat higher than for equivalent levels of the civil service and public sector during the ongoing conflict, but do not differ substantially. Pay scales and pensions are not discussed or decided by civilian authorities, but are made public in the official gazette. Foreign military assistance focuses on actual defense needs, although political agendas, parochial interests, and personal enrichment among local actors may influence how it is distributed.