How many milliards reflect the government’s ambition

SOPHICO SICHINAVA

Compared with previous budgets, budget of 2004 was the most ambitious one. Significant growth is planned, but the question is how effectively the new government will manage to break through the close circle that has for long existed in the mobilisation of country’s finances.

Given the January-February budget implementation trends, a beginning of new phase can easily be expectable. Budget 2004 was implemented by 106% in January-February, finance minister Zurab Nogaideli says. For these two months more than 10 362 200 laris were mobilised in the budget contrasted to the prognosis indicator. He also says that more than 16 553 400 laris are mobilised in the budget compared with the Y2003 indicators, which totals 126,1. Compared with the last year, budget receipts were by 10 550 00 laris more that last year.
Zurab Nogaideli, minister of finance, says: In fact, there was nothing to negotiate about with the International Monetary Fund mission in Washington as we already came to agreement in Tbilisi and the size of joint budget’s tax revenues were set at 1 billion 540 million laris, while expenses were set at 1 960 millions. The budget envisages 1,6% growth of tax revenues against GDP and 2,2% decrease of budget deficit.
The finance minister does not deny that parameters are optimal and moreover, ambitious. He says that his as well as the government’s work are guarantee for such ambitious parameters. However, one thing is principal parameters, but another thing is budget drawn in accordance with different articles. The Cabinet Ministers works on distribution of budget amounts to departments.
What reserves are there in the state for implementing such ambitious budget? First after the formation of financial police, the Finance Ministry undertook full responsibility for budget implementation. If the service manages to discharge its responsibilities, the state will have significant lever for realising financial law in the country. The law have, certainly, faced much opposition and criticism, but if tax liberalisation is implemented in Georgia, the structure might bring much good to the country.
It is also noteworthy that for the purposes of budget adjustment budget revenues will be put on the joint account of the Treasury in the National Bank. Thus, revenues from the whole of Georgia will be put on this account before being transferred to the accounts of local budgets. Up to 14 000 transit accounts of the Customs Department will be closed. This makes it possible for the Finance Ministry to optimally control financial resources, Zurab Nogaideli says. The treasury will be responsible for the accurate calculation of revenues. The previous government’s budget 2004 did not provide for revenues from Ajara. This step forms institutional grounds for solving the problem of non-transferred amounts from Ajara to the central budget. Nogaideli made a sharp statement on this account: “We will not admit that transfer of amounts to the budget should be dependent on one’s good will. So I do not care how regions, as well as Ajara, react to this! The government representatives say the decision was to be taken immediately in order to regulate budget relations of the Centre and regions. Amounts from regions will be transferred from accounts mechanically without any delay. It is also noteworthy that Georgia’s cool relations with international finance institutions became warmer and the ice was broken. Strained negotiations with IMF produced results. It became known that the Fund’s three-year assistance programme is supposed to be restored. Meanwhile, Georgia will have to fulfil the agreement achieved after 2-week negotiations with the Fund’s mission. The IMF memorandum envisages the following recommendations for Georgia: reforms in fiscal sphere, struggle against smuggling, passing of money laundering law package by the Parliament, reforms in energy sector, inspection, etc. The Fund’s board of directors should take appropriate decision in May. After this the Fund will give its final reply about the restoration of the programme. If the programme is restored, the Georgian National Bank will receive approximately 36 million dollars for reinforcing currency reserves so external debts restructuring will become possible in the “Paris Club”. Nogaideli says the Georgian Government was shown “green light” for beginning talks with donors. This year Georgia will receive 240 million laris’ loan and 160 million laris’ grants from financial organisations.
The Finance Minister makes principal stress on tobacco and oil products as well as on large business. Work is performed on other trade groups, but cigarettes and oil products are the greatest business, he says. Last year profit from cigarettes and oil products made 150 million laris. This year 270 million laris are expected to come from the two sectors. The Finance Ministry is content with trends in cigarettes business. As for oil products, there are less grounds for optimism.