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According to the statement of the Minister of Finance of Georgia, Nodar Khaduri, the revenue line of the state budget was implemented with excess and this happened thanks to the efforts of the Ministry of Finance of Georgia and the Government of Georgia in general.

FactCheck

looked into the state budget implementation data.

According to the information of the State Treasury of Georgia, the revenue line of the 2015 state budget was implemented by 101.2% and amounted to GEL 9,866 million whilst the spending line of the budget was implemented by 100.6%, amounting to GEL 9,678 million. All of the main budget lines (both in the revenue as well as in the income line) were implemented with excess (see Table 1).

Table 1:

Implementation of the 2015 State Budget, GEL Million

Budget Lines Plan Fact Difference Implementation, %
Revenues 8,048.9 8,146 97.1 101.2%
Taxes 7,520 7,550 30 100.4%
Grants 238.9 291 52.1 121.8%
Other Revenues 290 305 15 105.2%
Spending 8,090 8,133 43 100.5%
Administrative 2,296 2,323 27 101.2%
Servicing Loans 327 327 0 100.0%
Subsidies and Grants 1,512 1,517 5 100.3%
Social Care 2,802 2,802 0 100.0%
Other Expenses 1,153 1,164 11 101.0%
Operational Balance -41.1 13 54.1 -31.6%
Capital Expenses 681 680 -1 99.9%
Decrease in Non-Financial Assets 280 287 7 102.5%
Overall Balance -401 -393 8 98.0%
Changes in Financial Assets 343.5 373 29.5 108.6%
Budget Deficit -785.6 -753 32.6 95.9%
Loans 1,331 1,362 31 102.3%
Domestic 315 315 0 100.0%
External 1,016 1,047 31 103.1%
Servicing Loans 420 444 24 105.7%
Changes in Balance 125 188 63 150.4%
Source: State Treasury of Georgia

It should be pointed out, however, that the implementation of the budget was due to two amendments performed during the year. The latter of the amendments was performed at the end of the year, in December 2015. The fields in which the implementation of the budget were lower than expected (for example, the capital expenses line decreased by GEL 93 million) saw their plans decreased whilst those lines in which the implementation proceeded better than expected saw their plans increased (for example, the budgets of healthcare programmes increased by GEL 96 million). Despite this, the Ministry of Health, Labour and Social Affairs of Georgia concluded the year with a deficit of GEL 24 million which was covered from the 2016 budget.

The excess implementation of the revenue line of the budget was due to the growth of inflation and the depreciation of GEL. Tax revenues depend upon the real growth of the economy as well as the growth of prices for goods and services (inflation). Despite the fact that the government forecast a 5% growth at the beginning of 2015, it later dropped its forecasts to 2.7%. The decrease in the growth rate had a negative influence upon tax revenues. However, the prices increased more than anticipated (by 6% according to the GDP deflator) which increased tax revenues as well. In total, the factual tax revenues fell GEL 50 million short of the initial version of the state budget whilst they exceeded the final version by GEL 30 million.

The grants plan was exceeded by GEL 52 million which was due to the depreciation of GEL (grants are transferred in USD) and additional grants attracted in order to eradicate the effects of the Tbilisi flood. The plan of other incomes was exceeded based upon voluntary transfers and donations received after the flood. The revenues from the sales of general assets (privatisation) were planned to be GEL 127 million; however, the plan was implemented by 81% and only GEL 102.5 million was added to the budget. The plan for revenues from licenses for using radio frequencies was implemented with a 20% excess. A total of GEL 182 million was added to the budget from these licenses. The revenue plan from the decrease in financial assets was implemented by 84.6%. This means that a total of GEL 72 million, instead of GEL 85 million, was covered from the loans distributed by the state.

Georgia attracted GEL 31 million more from external loans which is definitely due to the depreciation of GEL as no additional loans were taken in USD. In addition, it should also be noted that the excess implementation of the income line of the state budget ultimately decreased the planned amount of the budget deficit by GEL 32.6 million.

Conclusion

Overall, both the revenue and income lines of the 2015 state budget were implemented with excess, by 101.2% and 100.6%, respectively.  The revenue line of the budget was implemented by 101.2%. The excess implementation of the income line of the budget was mainly due to the growth of the inflation rate, the depreciation of GEL and the Tbilisi flood.

The state budget changed twice at the end of the year and money was deducted from the fields which were falling short of the original plan and added to those fields which were over-spending. This definitely indicates bad planning for budget spending.

The Minister of Finance of Georgia rightly presents the statistical implementation of the state budget; however, given the reasons for such an implementation, we cannot say that it happened thanks to the excellent work of the government. Hence, Nodar Khaduri’s statement is HALF TRUE.

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