State budget 2011 looks optimistic and non-transparent
28 October, 2010
State budget 2011 looks optimistic and non-transparent

The main fiscal document of Georgia looks optimistic in its income part, predicting GEL 770 million revenue growths in 2011. But the paper lacks transparency in expenditures part, as it provides with no detailed scheme how more than GEL 900 million of the state budget will be spent actually next year.
Non-transparency and exuberant optimism became indispensable epithets describing Georgian state budget in the post-rose-revolution epoch. The draft of the main fiscal document of Georgia put under parliamentary procedures starting October

4, 2010 prognosis 4.5% of GDP growth, GEL 6.960 billion is supposed to be spent on expenditures, and tax-based revenues are supposed to make GEL 5.3 billion that makes 76% of the entire budget. Government plans to keep state outlays within the frames of 20% of GDP next year and hopes to cut down expenditures to 25% of GDP by 2013.  The current budgetary deficit of 6.3% [of GDP] is supposed to drop to 4.3% next year in line with the governmental policy to reduce the deficit to 3% by 2013.
Apart of this figures the draft project does not provide any other detailed analysis where the state-budget allocated finances will go exactly. Economic analysts fear lack of transparency bespeaks of lack of political ideology.


“When the state budget does not provide with detailed analysis on which sector the money will be spent it is impossible to find out which sector is the priority to government actually and what political ideology and portfolio they have. The more detailed is the budget the clearer is the political standpoint,” Davit Narmania, an economic analyst with the Center for Economic Policy Research, said.
However he hopes that the draft project is still too “fresh” and it will provide with more detailed expenditure picture after revision at government.


Oppositionist political parties whipped the draft budget project however. Irakli Alasania, leader of Free Democrats, dubbed the paper drafted by irresponsible government that relieved itself of taking care after population for the budget does not envisages increase of pensions and allowances to socially vulnerable people [number of which exceeded 1.8 million lately] against the backdrop of price hike. On the other hand, financing of medical programs [including insurance program] as well as other social programs reduced. He believes that the budget project envisaging growth in revenues is excessively optimistic while about GEL 900 million is defined as “other expenses” that means  it is impossible to find out where the money will go.


Giorgi Targamadze, the Leader of the Christian-Democrats Faction at parliament, asked for the withdrawal of the state budget 2011. According to him, the serious discussion on the budget draft is not reasonable for the paper is a “semi-finished” product.
Kakha Baindurashvili, Minister of Finances of Georgia, assures the draft paper of the state budget 2011 is based on “tightened belt” policy undertaken by Georgian government in 2008 and aimed to cut down administration-related outlays of government to reduce government’s share in the economy and divert money in the private sector.


And irrespective there is a GEL 31 million drop in the state budget of 2011 financing of priority sectors including education, social and health care, as well as infrastructure increases.
According to Baindurashvili, the funding of agriculture increases four-fold and will be used for implementation of the programs and the big share of the budget will be used for infrastructure projects.  The funding of education increases by GEL 16 million. He does not provide with more detailed information on spending part. Baindurashvili advises those interested in “other expenses” chapter to find out where exactly the money [defined in the questioned chapter] goes at ministries separately. Although finance minister pledged that the revised draft project of the main fiscal document of 2011 will include detailed analysis of healthcare programs. 
Some economic analysts also fear that not GEL 900 million but almost entire state budget expenses are unclearly distributed.
“Yes, we have figures how much will be allocated to this or that sector but there is no detailed analysis on what projects the money exactly will be spent that means the entire state budget can be defined as “other expenses” actually,” Nodar Javakhishvili, an economic analyst, said.
Economic analysts also fear that the GEL 770 revenue growth prognosis has no economic ground and it means increase of crack-down on business.


“The economic picture of the country does not lay ground to such revenue growth,” Narmania told Georgian Journal. “The investment inflow is sluggish, privatization process also goes at slow pace and most probably incomes got from privatization will reduce.”
He believes that the tax-based revenues of the state budget 2011 will be implemented through stronger administration as well as on expense of enhanced taxation area. According to the new tax code that enters into effect in 2011, excise on spirit drinks increases; also cell communication will be taxed by excise. Moreover income tax rate on rent increases from 12% to 18%, and the penalty rates go higher.
Narmania fears that the stronger administration means focus on penalties and duplicates this year practice as the revenue prognosis of this year is implemented thanks to stronger administration pressing on business in fact.
“If you take a look at the dynamic of tax-raise speed you will witness that the curve of GDP growth lags much behind the tax-raise curve,” He said.

Print
Other Stories
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.
Equivalent to buried treasure – resources that are underused in Georgia
For 2018 the IMF Commission has forecast an annual economic growth for the Georgian economy of about 5,5%.
Does the quality of Georgian wine increase and how the export affects it
If we look at the data collected about modern Georgian wine, we will find out that the Georgian wines produced between 2015-2017 are much better in terms of their quality and Oenologic features rather than the wines produced between 2009-2011.
Japan simplifies the visa requirements for Georgian citizens
Diplomatic and economic relations between Georgia and Japan are now moving to a new phase. Recently Japan has decided to simplify the visa requirements for Georgian citizens.
M&S (Marks and Spencer) and H&M collections to be produced in Georgia
Garments manufacturer MGMTEX will start production of the M&S and H&M trendy collections from this September.
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
20.11.2018
21.11.2018
USD
1
USD
2.6593
2.6741
EUR
1
EUR
3.0369
3.0581
GBP
1
GBP
3.4199
3.4421
RUB
100
RUB
4.0356
4.0707
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
2.6741
EUR
1
EUR
3.0581
GBP
1
GBP
3.4421
RUB
100
RUB
4.0707