According to studies published by the United States Arms Control and Disarmament Agency (ACDA), Nicaraguan military spending totaled US$10 million in 1979, the year in which the Somoza administration was overthrown. This amount constituted 0.8 percent of the gross national product (GNP--see Glossary). Under the Sandinistas, military expenditures rose rapidly from US$53 million in 1980 to US$192 million in 1985. The latter figure was more than 17 percent of GNP and more than 26 percent of total government expenditures. ACDA was unable to estimate defense spending for the years 1986-89.

Valid comparisons of defense outlays between the Ortega and Chamorro administrations are difficult because of hyperinflation, the precipitous drop in value of the córdoba (see Glossary), and the chaotic exchange rate structure in the late 1980s. The United States Department of State estimated that military expenditures in 1989 were between US$76 million and US$90 million, a reduction of 44 percent from the previous year. In 1989 defense outlays constituted 36 percent of the entire budget. The announced defense budget figure for 1990 was US$166 million, corresponding to 25 percent of the total government budget that year. As military cutbacks continued, Chamorro's military budget proposal for 1991 of US$78.6 million was reduced by the National Assembly by US$20 million, or to about 16 percent of the national budget.

To some extent, the EPS has been able to compensate for these drastic curbs on spending by selling excess equipment. In 1992, for example, the EPS sold Soviet helicopters, APCs, cannons, and antiaircraft missiles to the Peruvian armed forces for US$25 million. All receipts from such sales went directly to the EPS.

United States concern over Sandinista control of the police and security forces precluded extending military aid to the Chamorro government and prohibited transactions under the United States Department of Defense's Military Sales Program. In fiscal year (FY--see Glossary) 1994, however, the United States Department of Defense proposed allocating a small amount of money to the EPS for military orientation tours and English language training.

Data as of December 1993