To cut military service to 14 months
Cyprus can hope for significant benefits in the form of additional economic growth and public revenues under the Democratic Rally (DISY) proposal for upgrading the National Guard and turning it in to a semi-professional army, according to research by the independent economic research company, S. Platis Economic Research.
According to conservative estimations, the positive impact on GDP is expected to exceed CYP 1.1 bln in today’s values, equivalent to 15% of this year’s expected GDP, or CYP 57 mln yearly for the period 2006-2025.
At the same time, the government budget will benefit, keeping tax rates unchanged, to the tune of an additional CYP 455 mln, or 5.5% of this year’s expected GDP.
Furthermore, the Republic of Cyprus will be in position to spend additional CYP 27 mln in today’s values for defence purposes, by keeping defence expenditure at today’s levels, of 2.4% of GDP.
As a result of the internal redistribution of defence expenditure, following the implementation of the proposal, an additional CYP 46 mln can be spent for purchasing new military equipment.
A semi-professional army
Turning the National Guard in to a semi-professional army will upgrade its operational capabilities. This will allow the National Guard to carry out its duty, if needed, with fewer casualties as a result of the better training and additional capital invested in modern weaponry.
In addition, the National Guard will be in position to meets its obligations in the area of search and rescue operations.
Many NATO and EU countries, the latter subject to the budgetary restrictions of the Stability and Growth Pact, have either completed or decided the switch to all-volunteer armies, as professional armies are more cost effective compared to conscription.
These findings are the result of a study carried out by the independent economic research company, S. Platis Economic Research, which studied the economic impact of the Democratic Rally proposal.
The results of the study were officially presented at a press conference on Tuesday.
DISY’s proposal provides for the hiring of an additional 2,500 volunteers on a five-year service contract, known as EPYs, and the reduction of the military service for draftees from 25 months to 14.
This will result in a reduction of the draftees’ number from 9,000 to 4,500. Additionally, the proposal provides for a reduction of the number of reservists, from 90,000 to 45,000 and the gradual reduction of the number of permanent of officers and non commissioned officers from 2,800 to 1,400.
Why the boost to growth?
The positive impact on GDP growth will result from both the earlier entry of recruits into economic activity via the reduction of time served, and the limitation of working hours lost through reservists’ service.
This impact on GDP will lead to an increase both in public revenues and defence expenditure.
The additional cost in the defence budget for hiring the 2,500 volunteers is estimated by S. Platis Economic Research at CYP 573 mln for the whole of the 20-year period in today’s values. This sum is offset by:
1. The additional defence expenditure resulting from the positive impact on GDP growth of a total of CYP 27 mln in today’s values.
2. The saving of CYP 299 mln in today’s values that would be otherwise spent for salaries of permanent officers and non commissioned officers whose number would be reduced.
3. The saving of CYP 230 mln in today’s values as a result of reduced spending for the conscripts’ allowances, subsistence and uniforms.
4. The saving of CYP 4 mln in today’s values resulting from the closure of a number of barracks.
5. The saving of CYP 58 mln in today’s values resulting from a better maintenance of equipment.
The difference between the sum of the amounts conserved and the additional expenditure of hiring the 2,500 volunteers is CYP 46 mln in today’s values for the whole of the reference period which can be invested in additional equipment.
