According to the detailed content of the Public Budget Law for Fiscal Year 2025, which was presented by the Executive and approved by the Congressthe financing of four large Armed Forces projects for a total of S/12,970 million. At the change planned by the Executive (S/3.79 per sol), The figure would be higher than US$3,422 million.
At the top of the list is the acquisition of 24 combat aircraft for S/7,580 million, which represents 58% of the total of the four projects. The purchase of two military transport aircraft for the Air Force for S/222.6 million has also been included.
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For both contracts, the FAP will receive S/7,803 million. That is, 61% of all projects defined for the next budget year.
In the case of the Navy, it has been assigned S/4,872 million for a first phase of the construction of a multirole ship, an OPV-type ocean patrol vessel and two auxiliary logistics transport units, carried out by the company Servicios Industriales de la Marina (SIMA Perú) and Hyundai Heavy Industries (HHI).
In reality, the project is broader, as will be seen later. Regarding the Armythe execution of the JUCRAM artillery system program, valued at S/294.9 million, was given approval.
This is one of the largest acquisition investments in defense equipment in almost 30 years. And it is an expression of the good relations between the Government of President Dina Boluarte and the military institutes, since she assumed the mandate with the support of the Congress, after Pedro Castillo’s frustrated coup.
A first advance
The S/7,580 million allocated in the 2025 budget represent 57% of the total planned (S/5,685 million would remain pending) for the fleet of 24 new fighters that will replace the French Mirage M2000 and the Russian MiG-29 and Sukhoi Su-25.
In exchange, the S/7,580 million would reach US$2,000 million. The budget for the purchase is US$3.5 billion. US$1.5 billion would be missing to pay.
While the terms of the Public Budget Law for Fiscal Year 2025 were being debated in Congress, Air Force officials and authorities from the Vice Ministry of Defense Resources held several meetings with representatives of the manufacturing companies of the three aircraft in which it is the FAP interested: Dassault, from France; Lockheed Martin, from the United States; and Saab, from Sweden.
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In addition to knowing precisely the qualities of each war aircraft (F-16 Block 70 Viper, from Lockheed Martin; Rafale F3R, from Dassault; and Gripen E/F, from Saab), Peruvian officials expressed special interest in knowing the terms of the Industrial and Social Offset Compensations derived from the contracts offered by construction companies.
A few months ago, on September 11, the Ministry of Defense precisely modified some terms of the compensation policies, including technology transfer. Not all companies are enthusiastic about the idea of manufacturing some of their components in contractor countries.
Regarding the two military transport planes, The FAP has planned for the Boeing 737, either 700 or 800. The approved amount of S/294.9 million corresponds to second-use aircraft.
The Ministry of Defense will sign an agreement with the International Civil Aviation Organization (ICAO), with the purpose of granting it the power to organize a tender and study the offers of bidders. The contract will be carried out by the Armed Forces Procurement Agency (ACFFAA).
The other major contracts
In 2013, the Army purchased from the Chinese company Norinco, as part of the JUCRAM program, an artillery system composed of 27 vehicles with launchers and 580 rockets with a range of 40 kilometers. In 2024, it will receive S/222.6 million to complete the project that includes 40 vehicles with multiple short-range launchers, 4,200 rockets with a range of 40 kilometers and another 600 rockets with a range of 50 kilometers. But the supplier will not necessarily be Norinco.
Other companies from the United States and Israel – the Russian Federation and Ukraine were ruled out due to the conflict in which they find themselves –, among others, will be invited to present their offers. The contracting will be in charge of the ACFFAA, whose owner is, by coincidence, a former officer of the Army War Material Service (SMGE), Brigadier General EP (r) Aldo Cornejo Valverdeappointed by President Boluarte.
For the Navy, the S/4,872 million allocated for 2025 represents a boost to the shipbuilding project between SIMA and Hyundai Heavy Industries (HHI). The complete plan includes six multirole vessels, three ocean patrol vessels, four maritime patrol vessels, four littoral auxiliary vessels, four submarines and two oil tankers. The execution of the project has begun with a multirole ship, an ocean patrol vessel and two auxiliary logistics transport units.
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With the significant amounts of these four projects by 2025, a before and after will be marked in the investment dedicated to military equipment.
Exploded view
The Comptroller’s Office must redouble its antennas
● During the current Government, the Comptroller General of the Republic has issued reports on potential irregularities in the execution of contracts.
● It has happened in the case of the Army in compliance with the helicopter major maintenance program.
● Deficiencies have also been found in the purchase of 10,000 Arad 7 assault rifles that the Army Weapons and Ammunition Factory (FAME)
acquired from the Israel Arms Industries (IWI) company.
● The Comptroller’s Office also reported the alleged increase in the budget for the modernization of four submarines, which it considered an “adverse situation.”
● When supporting the budget for the Defense sector, the Executive guaranteed the transparency of the processes as a prevention for eventual
acts of corruption.
