Security sector budgeting, also called resource management, allocation, or financial management, is embedded in the overall resource management of a country. Security sector budgeting is the process of allocating financial resources to security sector activities. As a comprehensive process, it encompasses budget planning, execution, reporting, and auditing. Transparent security sector budgeting and accountable financial management are key to ensuring the integrity of all security sector activities and reducing the potential for corruption in the security sector.
What is Security Sector Budgeting?
Resource management in the Security Sector corresponds to the final steps in the process of development and implementation of national security and defence policies. That is, the phase where financial and other resources are distributed among the different entities of the security sector, in order to spend on required capabilities and cover core defence and security needs. At this point of the process, oversight and the evaluation of results are crucial. Both serve to improve resource management and, consequentially, make the security sector more efficient.
Why is it important?
Non-transparent financial management in the security sector, combined with the lack of accountability, is a powerful enabler of corrupt practices. Even if there are no obvious cases of corruption, poor planning, a disruption between policymaking, planning, and budgeting, and poor control of expenditures severely undermine performance in the defence sector and de-motivate both military and civilian personnel.
How does it work?
Security sector budgeting is an integral part of overall state budgeting. Security sector budgeting corresponds to short-term security planning and is the technical and financial aspect of security and defence programming. Budgeting cycle is usually developed on annual or bi-annual basis and within a Medium-term expenditure framework. The aim of medium-term security and defence budgeting is to forecast the financial needs of the state’s security providers within a medium-term timeframe of generally two to five years.
Annual budgeting cycle can be divided into four phases: the preparation phase (policy and planning); the approval phase (Parliamentary review); the execution phase (implementation); and the evaluation phase (reviewing and auditing). In the policy development and planning phase, overall state budget is debated and drafted by the executive authorities. In this process, the security and defence component of the budget is developed by the core security and justice providers. They are responsible for converting strategic plans into itemised, quantifiable budget inputs. These inputs usually include: personnel expenditure (salaries, allowances, etc.); administrative expenses; stores including ammunition, spares and components for maintenance, construction and building material, office supplies, fuel, etc.; equipment (vehicles, weapons, machinery, furniture); rental of land and buildings; professional and specialist services, research and development. In the approval phase, the government’s draft of the budget is submitted to the Parliament. The draft is then reviewed, scrutinised, and, eventually, amended by the parliamentary committees. Once the budgeting document is enacted into a law in the execution phase, the executive authorities and spending agencies (security and defence providers) spend the funds allocated to their operations. During the budget evaluation phase, Supreme Audit institutions, Parliament and civil society organisations (CSOs) perform audits and evaluations of the public spending agencies, including the security and defence institutions.
The allocation of money, people, equipment, and infrastructure to security sector activities should clearly support the attainment of security and defence objectives and implementation of national security strategy. Some of the key principles for sound budgeting are listed in the box below.
Who is involved?
Core security and defence providers and the ministries that have financial oversight functions, mainly the Ministry of the Interior, Finances, Defence, Ministry of Justice etc., participate in the preparation phase of the defence budgeting cycle. The approval phase is mainly conducted by the Parliament and its specialised committees. The execution, or implementation, phase involves spending agencies, that is, defence and security actors and their management and oversight bodies, such as the Ministry of Defence. The evaluation phase is carried out by Supreme Audit institutions, the Parliament, civil society organisations, and other groups of interest.
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 Source: « Defence Budgeting and Financial Management » Building Integrity and reducing Corruption in Defence: A Compendium of Best Practices. DCAF (2010) p 57.
 « Defence Budgeting and Financial Management » Building Integrity and reducing Corruption in Defence: A Compendium of Best Practices. DCAF 2010. p 57.
 Nicolas Masson, Lena Andersson, Mohammed Slah Aldin, DCAF (2013) Strengthening Financial Oversight in the Security Sector. Guidebook 7.1, Toolkit: Legislating for the Security Sector. p 15.
 Ibid. p 14.
 Nicolas Masson, Lena Andersson, Mohammed Slah Aldin, DCAF (2013) Strengthening Financial Oversight in the Security Sector. p 12-13.
 DCAF (2013) Strengthening Financial Oversight in the Security Sector.