In absolute terms the budget allocation for defence in 2006 is nearly 70 million leva lower than the budget for 2005.

Instead of 2.6 per cent of the GDP the national defence sector gets 2.44 per cent. As a result a shortage of money for army modernisation occurs, Deputy Defence Minister Simeon Nikolov said.

The allocated budget is not small but is significantly lower than the sum discussed initially, Nikolov said. Some of the restriction came as a result of the International Monetary Fund (IMF) regulatory policies, the Bulgarian news agency reported.

Having 70 million leva less in the budget decreases funds for modernisation with 35 to 40 per cent, Nikolov said.

The Defence Ministry is expected to sign soon a delivery contract for five transport aircraft with the Italian Alenia Aeronautica. Another priority modernisation project focuses on the purchase of nearly 100 armoured vehicles.

Only 0.1 per cent of the defence budget would be allocated for research and development. As a result a number of expensive project will be postponed by at least two years, Nikolov said.