The 2015 Budget is for social rather than economic means
27 November, 2014
The 2015 Budget is for social rather than economic means
Georgia’s 2015 state budget duplicates trends of the current year and will stick to social care policy similar to the current year. The negative aspect of this trend is that very likely it will be implemented at the expense of an increased tax burden on Georgian business. Another concern is the increasing state debt. The Georgian government will continue to borrow and to follow its current tendency of taking loans.

More social care means less care for economic growth, analysts
say. This is the same framework of the Georgian state budget that began in 2012 when the Georgian Dream coalition entered office. They want to keep their pre-election promises about increased pensions, more social and healthcare benefits, and more spending on education and agriculture. This trend will likely continue in 2015 according to the amended draft budget for 2015 in its second presentation to Parliament on November 14th. The second hearing is one of the most crucial as the key macro-economic indicators are already approved by central bank of Georgia and the main budgetary parameters are already settled.
According to Nodar Khaduri, Minister of Finance for Georgia, the budgetary revenues’ projection makes 8.090 billion lari and tax-based incomes are predicted to fund almost 99 percent of that figure. Tax-revenue projections stand at 8.030 billion. This is 800 million more compared to the 2014 projection and makes up 25.2 percent of GDP and roughly 35 percent of the budget project for 2015. Irakli Lekvinadze, an economic analyst, believes that this means an increased burden on business, that very likely end up financing the ambitious social and healthcare obligations assumed by the state.
The Ministry of Labor, Health and Social Affairs gets 2.775 billion lari, which is 117 million more than in 2014 and comprises 29 percent of total budgetary outlays. It includes a pension increase of 10 lari from the current 150 to 160 lari beginning in September of 2015, along with the overall healthcare that will be financed by 475 million lari and cover all citizens of Georgia.
“I believe the recent governmental initiatives to increase excise taxes on alcoholic drinks [except for locally-produced wines] as well as cigarettes beginning in 2015 is largely defined by increased social expenses assumed by the state,” Lekvinadze told Georgian Journal.
According to Soso Archvadze, an economic analyst, with its socially oriented budget Georgia is among the most developed nations of the world but it is far behind in income them.
“Only 42 countries around the globe cover overall healthcare. Their GDP per capita is 12-20 times more than Georgia’s. According to the current budget project, Georgian GDP per capita is $1,100, while similar figures in Israel and US, for example, are $13,000 and $20,000, respectively. On the other hand by its development rate, Georgia ranks 110th. That means there are almost 70 countries that have higher potential but do not allow themselves the overall healthcare luxury. This is a political gesture that victimizes the economic growth,” Archvadze said in an interview with GJ.
But both analysts acknowledge that the current trend of social care is an optimal solution for the socially vulnerable Georgian population and that by this, Georgia paves its way toward European society, which spends around 68 percent of its budget on social care.
Priorities of the 2015 Georgian state budget draft also include education, infrastructure and agriculture, which also are in line with the current budget and European policy, Archvadze indicates. One billion lari will be spent on infrastructure projects, 850 million on education (that means almost 100 million lari more than in 2014) and 291 million on agriculture. In the meantime, 640 million is drafted to be allocated for defense – that is just a 24 million increase compared to the current year.
“The fact that for the last three years education gets more financing than defense indicates a European way of thinking. It means we will be solving our problems by brainstorming rather than arms,” Archvadze said. However, he thinks the agriculture funding is inadequate compared to its portion in the economy. Agriculture makes up nine percent of Georgia’s GDP and its budgetary funding should not be less than nine percent of the state budget spending. Based on this analysis, the funding must be at least 400 million yet the current layout on agriculture is roughly half this figure.
Analysts do not like the government’s tendency to take more state loans [both foreign and internal] but acknowledge that government needs this money to finance the increased obligations it has assumed. In 2015 the government plans to borrow around 1.3 billion lari, which is roughly 300 million less than in 2014. But the bad news about the state debt is that it is not quite clear how effectively this money will be spent. Also the frequency of taking loans is higher than the frequency of paying off these loans.
“We take three lari but pay back only two. Therefore despite the government taking less loans in 2015, the total state debt will be a little bit higher by the end of 2015 than in 2014 because the debt-paying frequency is behind the loan-taking intensity,” Archvadze said.

Print
Other Stories
Anaklia Port and its importance for Georgia
In 2016, Anaklia Development Consortium was authorized to launch the construction of Anaklia Port.
Cryptocurrency mining threatens electrical network in Abkhazia
In the breakaway region of Akbhazia rampant cryptocurrency mining is threatening the shaky electrical network, reports an article of the news portal EuroNet.
Caucasus Wine University to be opened in Gurjaani
In the Kakheti region a new viticulture campus of the Caucasus University is in the process of planning.
Photos describing life of the poorest in Georgia
Fight with poverty should be among top priorities of every government in every country.
Training farmers to rescue the organic hazelnut production in Georgia
Even drizzling rain and unpleasant gusts of wind can’t prevent the farmers from coming and participating in the agricultural training.
Bleak times for organic farmers in Georgia – but there is hope
Organic hazelnut production is a delicate plant in Georgia that has emerged just a couple of years ago. Various pests, among them the Asian stink bug Parosana, trouble hazelnut farmers and menace their livelihood – even before their businesses could really take off.
Hybrid car imports are going through the roof in Georgia
Thanks to their fuel economy, the popularity of hybrid cars is increasing in Georgia, where fuel affordability is low and prices for fuel are unstable.
The New Year offer from MAQRO Construction - Apartments with unbelievable discounts and the parking spaces for FREE!
Location, green yard, spaces for various needs, experience of the construction company and parking space are the main important criteria for potential buyers of apartments.
Interview with the co-founder of Kiwi Vegan Café – the first vegan place in Tbilisi
Behind the Kiwi Vegan Café stands a group of activists who wants to raise Georgian’s awareness for animal rights and welfare.
Biblusi opens first shop for tourists - Georgian
The largest book shop in Georgia Biblusi opens the first shop specially designated to the needs and interests of tourists and named it Georgian.
Georgia improves by five ranks in the Prosperity Index
In the overall Prosperity Index rankings, Georgia has climbed by 5 positions from 85 to 80 when compared to last year. As such, Georgia is the best performing country in the CIS zone.
The future is bright for electric cars in Georgia
The numerous hybrid cars in the streets of Tbilisi cannot be overlooked. Entrepreneur Sulkhan Gvalia calls them “pagers”, referring to the predecessor of mobile phones.
Georgia’s fight against the big tiny enemy – Asian Parosana
It’s a tiny creature, but the harm it did to the Georgian agriculture sector was and still is immense.
New cable route: from Kobi to Gudauri in 15 minutes
On the 15th of December, cable transport is scheduled to be opened connecting Kobi and Gudauri.
Tourist boom in Gudauri – majority of hotels are booked by foreigners
Gudauri is among the most popular winter resorts in Georgia.
Medical tourism increases in Georgia
In the last 9 months, Georgia was visited by 19 500 foreigners for medical and recovery purposes.
Doing business in Georgia has become easier than in America
According to the Doing Business 2019 report published by the World Bank, Georgia ranked 6th among 190 countries in terms of simplicity of doing business. This was an improvement over two ranks compared to last year.
Problems that foreigners frequently face in Georgia
The importance of Georgia as a tourism hub is growing year after year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Bitcoin.com Head Speaker List featuring Circle, DEX.top and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23
GAZELLE FINANCE GEORGIA AND TBC BANK HELP THE WESTERN REGIONAL CENTER OF MODERN MEDICAL TECHNOLOGIES EXPAND ACCESS TO QUALITY HEALTHCARE SERVICES IN KUTAISI, GEORGIA
TBC Bank and Gazelle Finance have teamed-up to support Medical City, a leading healthcare provider in the western region of Georgia to launch the Western Regional Center Of Modern Medical Technologies.
PHOTO OF THE DAY

Exchange Rates
GEL Exchange Rate
Convertor
20.01.2019
21.01.2019
USD
1
USD
2.6629
2.6629
EUR
1
EUR
3.0368
3.0368
GBP
1
GBP
3.4463
3.4463
RUB
100
RUB
4.0103
4.0103
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.6629
EUR
1
EUR
3.0368
GBP
1
GBP
3.4463
RUB
100
RUB
4.0103
January 2019
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31