INSTRUMENTS FOR IMPROVING THE EFFECTIVENESS OF THE FINANCING OF THE DEFENCE AND SECURITY SYSTEM OF THE REPUBLIC OF SERBIA

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Financing the defence system determines the size of the gross domestic product, as a product of total socio-economic activity. This conclusion logically concludes, having in mind the fact that the defence system is part of the social system and that it forms a segment of the socio-economic structure, and hence the source of its financing must be stimulated from the source of financing the overall social reproduction. The aim of the paper is to determine the aspects of budgetary funds treatment in the Ministry of Defence and the Serbian Armed Forces through systematic analysis of the financing of the Ministry of Defence and the Army of Serbia, as well as the realized revenues from the activities of the defence system, as well as the degree of economy, efficiency and effectiveness of disposal of funds. In an integral sense, the determination of the needs relation and the ability to finance tasks and activities that are being put before the Ministry of Defence and the Serbian Armed Forces is also expressed through the economic aspect of the research. By identifying the treatment of financial resources in the Ministry of Defence and the Army of Serbia and by examining the impact on the sustainability of financing of the Ministry of Defence and the Army of Serbia through budget instruments, the possible economically feasible conditions for realization of certain activities and activities and models for improving defence financing have been demonstrated. On the basis of an analysis of the current state of financing of the expenses of the defence system of the Republic of Serbia, the paper highlights the previous theoretical knowledge and experience of the budget as an instrument for financing defence expenditures, defining the advantages and disadvantages that existed and existing, but also highlighting the improvements that arose by introducing a program budget in the Ministry of Defence. By implementing new theoretical knowledge on innovative allocative mechanisms for financing the defence system and improving the efficiency of the budget in practice, much more efficient and effective financing of defence expenditures would be achieved. A purposeful distribution of limited financial resources and the transparency of using available resources for the purpose of sustainability of the required level of readiness and capabilities of the entities of the defence system would result in a high degree of operationality and significant progress in the functioning of the Ministry of Defence. For the purpose of more systematic approach to defence financing issues, a comparison of the Serbian defence system with the defence systems of the surrounding countries was performed.