DETAILS of the State Budget 2011

From the Editorial Board

The Georgian Parliament has been reviewing the draft of the budget 2011 introduced by the Ministry of Finance for several weeks.

However, the draft is too general yet and has many aspects to be made more exact, but we will try to pay your attention on some trends of the most important financial document of the next year.
According to the basic financial document of the next year incomes and expenditures are determined by 6 960 000 000 GELs, where 5 300 000 000 GELs are incomes. That means that about 75% of 2011 budget will be filled with tax incomes and the rest of it with non-tax incomes, or with international grants and credits. It must be mentioned that the amount of the deficit is shortening about to 4% that diminishes the need of public debt.
According to the represented plan with the draft of the budget 2011 budgetary incomes toward the GDP will be reducing from 27.6% to 25.5% during the next 4 years.
Since 2008 up to now the budgetary incomes has been reduced from 30.7% to 28.3%. The GDP growth is planned to be 4.5%. The governmental budgetary expenditures is planned 29% of the GDP.
According to the draft the government of Georgia expects budgetary incomes to be reduced in 2011. Incomes and expenditures foreseen by the draft of the budget of 2011 are less by 30 million GEL than they were in current year”s one.
The minister of Finance Kakha Baindurashvili said that despite of the reducing budget there is a trend of growth in financing priorities and it means that the main resources of the government budget 2011 will be used for financing education, social, and infrastructure projects as well as projects of health care. Also he stated that according to the state budget 2011 financing of agricultural programs is increased by 40 million GEL, educational ones by 16 million GEL as for the rehabilitation of water systems there will be resource for 150 million GEL. The Minister estimated the agriculture sector as the main lever of growing Georgian economy and accordingly to that financing programs of agriculture will be 4 times more than it was this year but the administrative expenditures of the Ministry are the same.
As for the resources of financing the deficit Baindurashcili said that one of the main resources remain investment projects.
In 2011 Georgian government expect to receive 150 million GEL from the privatization process of the state objects only 70 million GEL will be included in the state budget, the rest will be distributed among the local self-governments’ budgets. In order to finance the state deficit, the government plans to issue state treasury obligations, which will be worth 100 million GEL.
The Ministry of Labour, Health and Social Affairs of Georgia has been financed by 1,605 billion GEL (last year it was 1.607 billion GEL) also pension expenditures are decreased from 916 million GEL to 908 million GEL, less finances are for social aids.
In contrast to all the reductions in financing, some ministries will have their budgets increased in 2011. Ministry of Regional Development and Infrastructure of Georgia will receive an increased budget and it will be 971.371 million instead of 782.378 million GEL. The Ministry of Justice of Georgia will also receive a larger budget for the next year. It will increase from 45,300 to 68,700 million GEL. An increase of 3.9 million Gel will be allocated to the Ministry of Foreign Affairs of Georgia – from 69,244 to 73,174 million GEL. Another ministry which will receive an increased budget is the Ministry of Internal Affairs of Georgia – from 548 million it will be increased to 566 million GEL.
The only institution which will have an identical budget for the next year is the Intelligence Service, which will again be allotted 5 million GEL.
The budget of the Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia will be reduced from 40,357 million to 30,315.4 million GEL, while the budget of the Ministry of Labor, Health and Social Affairs of Georgia will be increased from 7,995.7 million to 8,605.3 million GEL.
The Ministry of Energy of Georgia will receive 74,954.1 million Gel instead of 23,829.4 million GEL and the Ministry of Agriculture of Georgia will get 69,154.0 instead of 40,287 million GEL. They both will receive increased budgets while the Ministry of Environmental Protection and Natural Resources of Georgia will receive less then this year – it will be 3,443.1 instead of 3,860.3 million GEL.
Sport has been given priority as the budget of this newly established Ministry of Sport and Youth Issues of Georgia will reach 30,927.6 million GEL. In 2010 the budget of this Ministry was 29,236.4 million GELs. Together with sport, great attention is being paid to the Georgian Public Broadcaster. From 22,000.0 million GEL, its budget will increase to 25,000.0 million GEL.
There are not some state programs for which the society is waiting for; however, maybe it is because the budget is not written out in details yet. The economic expert Davit Narmania said: “the draft is not ripe yet and it needs to be written out in details. For example, there are not exact expenditures for health care and social projects because the new minister of health care asked to have time to find out details. Also the budget needs to be written out more in aspect of program and capital expenditures as it has already transitioned to program and capital financing and other expenditures are needed to be written out in details. There is time for the final approval of the draft and I hope the government will write out it in details. As for how realistic is the budget 2011 planned I think that the budget of 2011 is done in more realistic way and the budget of 2010 was too optimistic.”
The budget of 2010 was done in too optimistic way this is proved by the fact that if not the very strict administration toward business the government would have serious difficulties in executing budget 2010. That is why the tax administration became stricter and we were the witnesses of it every day. There is less fear of it in 2011 and there is planned more state objects to be privatized so more additional incomes will be mobilized”.
According to the legislation the draft introduced to the Parliament in the beginning of the month goes back to the government again until 22-th of October which will introduce the corrected one to the parliament again until 5-th of November. After the above mentioned procedure the Parliament approves the final version up to the third Friday of December.