After steadily declining defense spending during the early 1980s, the defense budget grew in the latter half of the decade. Military spending in 1988 totaled 14.14 billion pesos (for value of the peso--see Glossary), or US$680 million, about 1.7 percent of the country's gross national product (GNP--see Glossary). The 1988 budget represented a greater than 50 percent increase in real spending for defense (adjusted for inflation) over 1985, the last full year Marcos was in office. Defense spending as a proportion of national government expenditures also grew during Aquino's tenure, from a 1985 low of 7.7 percent, to 9.1 percent in 1989. Still, the military's share of the national budget, like total military spending, did not approach the peaks reached during the Moro wars of the 1970s. In 1979 the Philippines spent more than P17 billion (US$806 million) in comparable 1988 pesos for defense, a figure that represented almost 17 percent of the government's budget.

Budget figures do not include United States security assistance, which represented a substantial portion of total spending on the Philippine military. United States military aid increased significantly after Aquino came to power, accounting for 80 percent of military spending on procurement, operations, and maintenance in 1989. United States military aid that year amounted to US$127.6 million. Most of the assistance--US$125 million--was provided as a grant under the Military Assistance Program whereas the US$2.6 million balance funded training for Filipinos under the United States International Military Education and Training Program. During the 1988 review of the Military Bases Agreement, the United States pledged its best efforts to increase grant aid to the Philippine military to US$200 million annually in 1990 and 1991.

The thrust of United States security assistance efforts in the late 1980s was to help the Philippine armed forces better combat the communist insurgency. Improved tactical mobility and communications and better equipped soldiers were top priorities. Between 1986 and 1989, the United States sent the Philippines almost 2,900 military vehicles, nearly 50 helicopters, more than 1,650 radios, approximately 225,000 military uniforms, and more than 150,000 pairs of combat boots. Other assistance items included assorted infantry weapons and ammunition and medical equipment.

The Self-Reliant Defense Posture (SRDP) program, initiated in 1974, took the development of a domestic defense industry as its objective. Defense officials contracted SRDP projects with the government arsenal and local manufacturers, encouraging the use of indigenous raw materials and production capacity. Projects included domestic production of small arms, radios, and assorted ammunition. One of the most significant SRDP operations was the manufacture of the M-16A1 rifle under license from Colt Industries, an American company. According to a 1988 statement by the Philippine armed forces chief of staff, the SRDbc7 RDP not only increased Philippine self-reliance, but also cut costs, provided jobs, and saved much-needed foreign-exchange funds.

Despite growing budgets and increased foreign military aid, the armed forces still was described in 1989 as one of the most poorly funded militaries in Asia. Philippine defense spending on a per capita and per soldier basis remained the lowest of the Association of Southeast Asian Nations (ASEAN) countries, despite an active communist insurgency. One study of the military concluded that the armed forces suffered from major resource problems. The author cited serious shortages of vehicles, helicopters, radios, basic infantry equipment, and spare parts. Food, medicine, and clothing also were said to be in chronically short supply. Shortages were compounded by an inefficient logistics system hobbled by red tape and corruption. Soldiers' poor living and working conditions often were mentioned as underlying factors in the military's discipline problems. Top AFP leaders acknowledged many of these shortcomings and were attempting to correct the mismanagement of resources.

Plans in 1990 called for modernizing the military, particularly the air force and navy--services whose forces had received relatively little funding because of the army's extended counterinsurgency campaign. Many of the navy's major ships and craft were World War II-era, and the aging fleet was increasingly difficult to maintain. Modernization plans called for phasing out inefficient ships, refitting others, and acquiring more patrol craft. Using United States military aid, the navy contracted in 1989 for thirty-five fast patrol craft, thirty of which were to be assembled in the Philippines by 1997. The air force inventory, described as one of the most primitive in the region, likewise was to be enhanced by major purchases under a ten-year modernization scheme. The United States was scheduled to deliver twenty-nine MD-520 attack helicopters between 1990 and 1992. The air force also was hoping to add two squadrons of modern fighters such as the United States F-16 to its fleet of nine F-5s.

Data as of June 1991