“We did not make any corrections in the budget. The previous government used to regularly correct the budget and portray it as if they had fulfilled it 100%.”
On 26 December 2014 at a press conference, Irakli Gharibashvili declared that the previous government used to regularly correct the budget and show a fulfilment rate of 100%. As for the budget of 2014, no such corrections have been made and, therefore, real numbers were displayed.
FactCheckverified the accuracy of the statement.
To begin with, we have to note that whilst talking about “correcting” the budget, the Prime Minister implied amending the Law on Budget. Indeed, this did not in fact happen in the years 2013-2014.
At the beginning of 2014, planned budgetary expenditures were not fully absorbed which rendered a significant gap in the budget. However, the revenue part of the budget was eventually fulfilled with a surplus and the expenditures part of the budget was fulfilled by 98.9%. The unequal spending during 2014 gave rise to some questions of whether or not the budget was truly fulfilled; namely, the amount of money transferred from the budget in December amounted to GEL 1.235 billion whereas on average approximately GEL 600-700 million was spent monthly during the rest of the year. The largest sum of money was spent in the period of December 25-31 when the respective spending institutions were transferred GEL 489 million. It is logical to assume that the implementation of those projects for which that money was allocated has been postponed for the next year. However, to fulfil the budget means not only transferring the respective funds but also implementing the projects planned throughout the year.
FactCheckverified the state budgets of the years 2004-2012 and their rate of fulfilment. According to the data of the Ministry of Finance of Georgia, some changes were in fact introduced into the state budgets for the years of 2004-2012. However, it needs to be mentioned that those changes were mostly related to the rise of revenues and expenditures, especially in the period of 2004-2007 when the actual revenues of the budget exceeded the originally projected number by almost half a billion. As for the budget of 2007, the revenues had a surplus of GEL 2.320 billion which was the result of a high economic growth at that time.
Table 1: State Budgets for the Period 2004-2007
|
2004 |
||||||||
|
Initial Plan |
Amended Plan |
Fulfilment Rate |
With Regard to the Initial Plan |
With Regard to the Amended Plan |
||||
|
Revenues and Grants |
1,742.2 |
2,216.2 |
2,283 |
131.0% |
103.0% |
|||
|
Tax Revenues |
1,293 |
1,746.2 |
1,811.2 |
140.1% |
103.7% |
|||
|
Expenditures |
1,926.2 |
1,731.6 |
1,926.2 |
100.0% |
111.2% |
|||
|
2005 |
||||||||
|
Revenues and Grants |
1,945.8 |
2,497.6 |
2,607.9 |
134.0% |
104.4% |
|||
|
Tax Revenues |
1,554.8 |
1,726.2 |
1,836 |
118% |
106.4% |
|||
|
Expenditures |
2,260.7 |
2,842 |
2,618.5 |
115.8% |
92.1% |
|||
|
2006 |
||||||||
|
Revenues and Grants |
3,068.6 |
3,601.4 |
3,773.2 |
123.0% |
104.8% |
|||
|
Tax Revenues |
2,263 |
2,536.4 |
2,633.1 |
116.4% |
103.8% |
|||
|
Expenditures |
2,260.7 |
3,878.5 |
3,822.5 |
169.1% |
98.6% |
|||
|
2007 |
||||||||
|
Revenues and Grants |
3,712.2 |
5,948.6 |
6,032.5 |
162.5% |
101.4% |
|||
|
Tax Revenues |
2,968.1 |
4,324.8 |
4,391.1 |
147.9% |
101.5% |
|||
|
Expenditures |
4,077.8 |
5,469.8 |
5,469.8 |
134.1% |
100.0% |
|||
In the same manner, changes into the budgets of 2008-2012 were related to increased revenues and expenditures. The year 2008 needs to be singled out when, despite the war budget revenues including grants and tax revenues were increased by GEL 362 million. The fulfilment rate was 107% with regard to the amended plan and 125.8% with regard to the initial plan.
Table 2: State Budget of 2008 in GEL million
|
Initial Plan |
Amended Plan |
Fulfilment Rate |
With Regard to the Initial Plan |
With Regard to the Amended Plan |
|
|
Revenues and Grants |
5,155.3 |
5,463.6 |
5,517.6 |
107.0% |
101.0% |
|
Tax Revenues |
4,506 |
4,552 |
4,541.5 |
100.8% |
99.8% |
|
Expenditures |
5,705 |
6,929.5 |
6,758.8 |
118.5% |
97.5% |
Table 3:
State Budgets of 2009-2012 in GEL million
|
2009 |
|||||
|
Initial Plan |
Amended Plan |
Fulfilment Rate |
With Regard to the Initial Plan |
With Regard to the Amended Plan |
|
|
Total Receipts |
6,334.1 |
6,465.4 |
6,362.4 |
100.4% |
98.4% |
|
Revenues and Grants |
5,510.1 |
4,945.6 |
4,916.9 |
89.2% |
99.4% |
|
Expenditures |
6,856.3 |
6,956.6 |
6,754.1 |
98.5% |
97.1% |
|
2010 |
|||||
|
Total Receipts |
6,759.7 |
7,088.2 |
7,097.8 |
105.0% |
100.1% |
|
Revenues and Grants |
5,188.1 |
5,363.5 |
5,421.4 |
104.5% |
101.1% |
|
Expenditures |
6,759.7 |
7,085.2 |
6,972.3 |
103.1% |
98.4% |
|
2011 |
|||||
|
Total Receipts |
6,995.1 |
7,658.7 |
7,447.7 |
106.5% |
97.2% |
|
Revenues and Grants |
5,995.8 |
6,471.5 |
6,442.3 |
107.4% |
99.5% |
|
Expenditures |
7,107 |
7,569.7 |
7,459.2 |
105.0% |
98.5% |
|
2012 |
|||||
|
Total Receipts |
8,015.3 |
8,158 |
8,004 |
99.9% |
98.1% |
|
Revenues and Grants |
6,839.3 |
7,158.2 |
7,115.3 |
104.0% |
99.4% |
|
Expenditures |
7,915.4 |
8,091.5 |
7,806.8 |
98.6% |
96.5% |
As illustrated by the tables, in the period of 2004-2012 the fulfilment rate of the amended budget fluctuated in the margins of 96%-111% and with regard to the initial plan of the budget the fulfilment rate equalled 115%-169%. Therefore, the Prime Minister is right to say that correcting (i.e. changing) the budget has been done to approximate the fulfilment rate to the 100% mark. However, the Prime Minister’s assertion that the previous government was falling behind the initial schedule and, consequently, trying to cover it up by amending the budget, is simply wrong. Quite the contrary, the need to change the initial plan was caused by the increased revenues and budget surplus. Accordingly, instead of slashing the initial plan of the budget, it was actually increased.
Conclusion
The plans of the budgets for the period of 2004-2012 were indeed changed whereas there were no changes in the Law on Budget for 2013 and 2014.
The changes in the budgets for the period of 2004-2012 were introduced due to increased revenues. This in turn resulted in having a revenue fulfilment rate of 25%-30% more than was originally scheduled. The changes have not been done to show an ostensible 100% fulfilment rate but, on the contrary, to deal with increased revenues and budget surplus. Therefore, instead of slashing the initial plan of the budget, it was actually increased. Hence, considering the above mentioned, the Prime Minister is wrong to assert that the previous government was changing the budget to show a false fulfilment rate of the budgetary plan.
According to FactCheck, Irakli Gharibashvili’s statement is FALSE.
