Economy
Posted: 1 month ago

The 2020 State Budget is a Pre-election Promise

Parliament of Georgia will finish discussions on the 2020 state budget bill on October 18.

“The 2020 economic growth has been planned at 5%. This is a very ambitious plan. In 2020, we will have an unprecedented amount of the state budget - 16 billion GEL. Current expenditures will constitute 11 billion GEL, infrastructural expenses will make up 3.7 billion GEL. The main things are related to the indicators, correlation of current expenditures and capital costs over the past years. The current expenditures will be 23% and capital expenses will be about 7%-8%. On the one hand, this budget is oriented on social responsibility aspects, but at the same time, it ensures economic growth without hampering development.

These parameters have been agreed with the International Monetary Fund (IMF). The budget deficit is also a healthy indicator that will be 2.7% in 2020 and this figure was agreed with IMF in 2018”, Minister of Finance Ivane Machavariani said.

The parliament’s agrarian committee did not put the 2020 budget bill to vote. The committee chairman Otar Danelia noted he has remarks regarding the bill, because allocations for some directions are lower compared to the demand and he cannot put the bill to vote.

He urged Deputy Finance Minister Grigol Kakauridze to hold consultations with the Government and submit the revised bill to the committee with new figures.

“Naturally, we welcome any growth in any sector, but we represent the agrarian committee and consequently we make focus on this field. In general, the bill cuts the village development program by 4 million GEL. Moreover, Food Safety and Plant Protection allocations also declined. I understand that the country may not need the same budget allocations for fighting marmorated stink bug as in 2019 and 2018, but, at this stage, we have no clear figures yet and I believe similar contractions are untimely without final reports. Moreover, state control and monitoring on veterinary medicines also weakens. This is a very difficult issue. The demand as part of the joint agro project was 265 million GEL and the parties agree on only 129 million GEL. I am also interested why the Plant the Future program is ignored. The most important thing is that we had the co-funding program for harvesting machines and the demand was 35 million GEL and only 5 million GEL has been allocated. In this case, what happens with the remaining 17 million GEL that the Government has promised to about 500 beneficiaries? Thus, there are a lot of issues that cannot be put to vote and therefore, I ask you to revise these figures, hold consultations with the government and submit the revised bill to the committee”, Danelia pointed out.

The Caucasus Business Week (CBW) has inquired how the field specialists appraise the 2020 state budget bill.

“For some reasons pensions or salaries grow only in the pre-election period for certain categories of our citizens. These promises could be openly called as a generous or irresponsible decision. The 2020 state budget is the pre-election promise”, economic expert Zviad Khorguashvili noted when appraising the Prime Minister’s statement on plans for increasing pensions by 20-30 GEL starting 2020.

“We can say that the 2020 state budget calls for growing pensions by 20 GEL to all categories of pensioners and underage persons with disabilities of the first and second categories.

Moreover, starting July 1, 2020, pensioners over 70 years old will receive 30 GEL in addition and this signifies that pensions for this category will finally increase by 50 GEL ”, Giorgi Gakharia said.

Over the past years, government officials openly say that budget deficit does not enable to grow pensions, but in the 2020 pre-election period important promises were voiced at the Government’s meeting.

How will the mentioned promises be reflected in the state budget? Is it possible to correct the expenditures part? And are the mentioned promises related to the 2020 elections? Zviad Khorguashvili says that taking into account the state budget deficit the current Authorities have impressive experience of efficient employment of expenditures.

“Government can attract financial resource any time, but the source of these finances matters. On the one hand, we know that Georgia suffers from budget deficit and only variant is to grow state debts and fund the liabilities in this way. Another mechanism is to reduce expenditures. The budget analysis shows that a lot of money is spent erroneously and inefficiently. Therefore, we can save considerable funds in this way, but it is questionable whether the current Authorities are able to take similar steps, because all previous efforts have failed.

We remember that all statements on cutting costs have brought no results. On the contrary, expenditures have grown anyway, including expenditures of bureaucratic character. On the one hand, promises regarding salaries and pensions are realistic, on the other hand, the main question is whether the Government has real resources. We are accustomed to unrealistic promises that are not fulfilled. For example, the Authorities  promised to write off debts of 600 000 citizens before the runoff presidential elections”, Khorguashvili said.

Doctor of economics Rati Abuladze explains that the state budget allocations made p 14 211.9 million GEL. I welcome that the 2020 state budget is more oriented  on social responsibility direction, compared to previous years. We have impressive budget forecasts, parameters and planned projects, Rati Abuladze said.

It should be noted that the budget reflects the existing reality, it is  to stabilize the country, fulfill public objectives, respond the expected challenges and ensure viability of long-term perspectives. We should also take into account that in the pre-election period the budget-funded social programs and determined forecasts represent a political instrument for ensuring public trust and sympathy. 

Research works prove that the budget reflect plans for strengthening political power, maintaining peace in the political life, fulfilling election promises, prolonging political lifespan and growing public trust.

“Actual factors prove that social-political institutions and political systems ensure an efficient growth in budget resources and its expenditures. .The country with constant social and economic problems considers the budget in the political context. And the key problem of the country is related to a lack of professional personnel and staff (not only a lack of money).

It should be stressed that despite an impressive composition of budget policy, the document reflects high life costs, social risks, inequality, inefficiency of management, instable balance and vulnerability to global challenges.

Finally, I would like to note that the 2020 state budget should be oriented on social and global challenges (the Defense expenditures should grow)”, Rati Abuladze said.

Parliament of Georgia keeps discussing the 2020 state budget bill. The parliament committee for environment protection and natural resource has already approved the document.