For army chief, liquidity bottleneck in the army is “no drama”
Published: Thursday, Feb 1st 2024, 18:11
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According to its head Thomas Süssli, the army does not have a billion-euro shortfall, but a liquidity bottleneck. This is why payments in the current and coming years will have to be postponed to the following year. This is "not a drama", but a problem that can be solved.
According to a report by Swiss Radio and Television (SRF) on Wednesday, the Swiss Armed Forces will lack over one billion Swiss francs by the end of 2025 to pay for armaments purchases already made. On Thursday, Süssli therefore had to answer questions from the Security Policy Committee of the Council of States (SIK-S).
The head of the army then put the initial situation into perspective. "No mistakes have been made," said Süssli. "We have no financial shortfall and we can pay all our bills."
The situation is due to political decisions that he does not wish to comment on. The army leadership is constantly analyzing the financial situation and has therefore recently decided, for example, to cancel planned major events. The army had decided to cancel in order to focus on its defense capabilities.
1.4 billion franc payments postponed
The postponement of the increase in the army budget to one percent of gross domestic product (GDP) from 2030 to 2035 means that there is a lack of money for the modernization of the troops. The army had communicated transparently from March 2023 what the delay in the budget increase meant, said Süssli. Compared to the budget for 2023, when there was still a faster increase, the army was 11.7 billion Swiss francs short.
According to the head of the armed forces, the Swiss Armed Forces had outstanding financial obligations of around CHF 13 billion at the end of 2022. All payments are secured for the current year. However, obligations amounting to CHF 800 million would have to be postponed from 2024 to 2025.
In 2025 - due to the expected slightly higher budget - CHF 400 million would then have to be postponed to 2026 and in 2026 another CHF 200 million to 2027. Then the army will be able to invest in strengthening its defense capabilities again, said Süssli.
"Different situation than before"
Over the next few years, the army will have to negotiate with the manufacturers and suppliers of armaments as to how and when payments can be made, said Süssli. Delayed deliveries cannot be ruled out. The strengthening of the army's defense capability will be delayed by several years due to the delayed increase in the army budget.
According to the army chief, the liquidity bottlenecks are not a new phenomenon. There has long been a "financial mountain that is being pushed in front of us". The aim is for this mountain to get smaller and smaller. Parliament's financial decisions are decisive in this respect.
If military spending had already been increased to one percent of gross domestic product (GDP) by 2030, the "problem of liquidity management" would have been alleviated, as Süssli explained.
According to Süssli, it is clear that there will be gaps in the army because many systems are reaching the end of their lives at the same time. "This is a different situation than in the past." If nothing is done, the army will no longer have any operational tanks at the beginning of the 2030s, for example.
Süssli is convinced "that our specialists did what was necessary". In addition, the army communicated transparently at all times, both to the parliamentary committees and to the Minister of Defense, Viola Amherd.
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