On 14 November 2014, Minister of Finance of Georgia, Nodar Khaduri, presented the 2015 state budget project to the Parliament of Georgia. During his speech, the Minister stated: “You want to know why ‘other incomes’ have decreased? I would like to tell you that it is due to the decrease of fines. The amount of fines has decreased.”FactCheck
took interest in the statement and attempted to verify its accuracy.
Nodar Khaduri made this statement as a response to one of the MPs, Nana Keinishvili. Ms Keinishvili’s question was about the implementation of the income part of the 2014 state budget. The MP was interested in the reason for the decrease of one of the sub-sections of the income part – “other incomes.”FactCheck
compared the January to October 2014 “other incomes” of the income part of the state budget to that of the same period of the 2013 state budget. The “other incomes” of the 2013 state budget equalled GEL 232,153,000 whilst it amounted to 216,729,000 in the same period of 2014. Thus, “other incomes” have indeed decreased by GEL 15,424,000. The aforementioned section of the budget consists of five major components:
- Income from property
- Sale of goods and services
- Sanctions (fines and penalties)
- Voluntary transfers
- Mixed and other non-categorised transfers
Nodar Khaduri said that the decrease of the amount of sanctions was the main reason for the decrease of “other incomes.” Sanctions equalled GEL 94,831,500 from January to October 2013 whilst they amounted to GEL 61,190,200 in the same period of 2014. Hence, there was a GEL 33,641,300 decrease in sanctions in 2014. It is curious that the decrease is greater in the sanctions part than in “other incomes” as a whole.
|Other Incomes||2013 (10 Months)||Implementation of Annual Plan||2014 (10 Months)||Implementation of Annual Plan|
|Income from Property||44,827.1||62.3%||23,301.6||26.0%|
|Sale of Goods and Services||48,761.5||79.5%||48,646.1||70.8%|
|Sanctions (Fines and Penalties)||94,831.5||94.8%||61,190.2||61.2%|
|Voluntary Transfers (Not Including Grants)||1,900||0.1%||15, 793.7||929.0%|
|Mixed and Other Non-Categorised Transfers||43,730.8||67.3%||67,797.2||71.4%|
Apart from sanctions, FactCheck
also looked into the other components of “other incomes.” We tried to find out whether or not the decrease of “other incomes” was due to the decrease of the amount of sanctions only. It should be pointed out that there were practically no changes in the sale of goods and services. It equalled GEL 48,761,000 in the first ten months of 2013 whilst it was GEL 48,646,100 in the same period of 2014.
An increase was observed in mixed and other non-categorised transfers. They amounted to GEL 43,730,800 in the first ten months of 2013 whilst reaching GEL 67,797,200 in the same period of 2014. There has been an unprecedented increase in the amount of voluntary transfers. It amounted to GEL 1,900 (0.1% of the plan) in 2013, GEL 0 in 2012 whilst it reached GEL 15,793,700 (929% of the plan) in 2014.
Apart from the category of sanctions, there has been a decrease in incomes from property. There was a GEL 21,525,500 decrease by October 2014 as compared to the same period of the previous year. Incomes from property consist of three components: interests, dividends and rent. There has been a decrease in the last two in 2014.
|Income from Property||2013 (10 Months)||Implementation of Annual Plan||2014 (10 Months)||Implementation of Annual Plan|
According to the data of the first ten months of 2014, the income from sanctions decreased by GEL 33,641,300 as compared to the same period of the previous year whilst the income from property is down by GEL 21,525,500. In addition, “other incomes” as a whole decreased by GEL 15,424,000 only as the decrease in sanctions and property incomes has been partly balanced by the growth in transfers and mixed incomes. Hence, it is incorrect to say that the decrease in “other incomes” is mainly due to the decrease of the amount of fines and penalties.
It should also be noted that the initial “other incomes” plan of the first nine months of 2014 has been implemented by 71.6% and the deficit amounted to GEL 78 million.Hence, the statement of the Minister of Finance of Georgia that the decrease of “other incomes” in the state budget is mainly due to the decrease of the amount of fines is HALF TRUE.