Parliament Approves ‘Ambitious’ Budget

The Parliament approved the 2004 state budget on May 11th with a 161 to 16 vote. The provisions of the budget were described as “ambitious,” as an increase of 520 million Lari over 2003 expenditures, is set for this year.

Revenues in the 2004 budget are set at 1.7 billion Lari (USD 850 million), and expenditures at 1.4 billion Lari (USD 700 million). GDP growth in 2004 is set at 6%. As a result of  discussions in the Parliament, the budgetary provisions were slightly changed and both revenues and expenditures were each increased by GEL 3.5 million GEL.

The budget was approved after a five month delay. Georgia did not pass the 2004 budget until now because of the political turmoil of late last year.

The 2004 budget is unprecedented, since a significant part of the revenues –521 million GEL – comes from foreign funding – grants and soft loans.

“In 2004 the government will have to focus attention on following its international commitments in order to avoid problems in foreign aid,” MP Roman Gotsiridze, Chairman of the Parliamentary Committee of Budget and Finances, told Civil Georgia.

The opposition deputies are skeptical over the new budget, as they doubt that the government will be able to meet the budget’s increased targets. The government must collect 114 million Lari per month to avoid a shortfall year’s end.
 
“Only 20% of the revenues were mobilized in the budget for the past four months. I doubt that the remaining 80% will be fulfilled until the end of this year,” Davit Saganelidze, of Rightist Opposition parliamentary faction, told Civil Georgia.

The opposition is also critical about the revenues generated by state-owned enterprises and companies that are expected to enrich the coffers by 13 million Lari (USD 6.5 million).  
 
“The profit from state-owned enterprises are planned to be the same, as it was in the 2003 budget – 13 million Lari.  That raises serious doubts. If the fight against corruption has started, the results of the anticorruption drive should be reflected in the budget by an increase in revenues by the state-owned enterprises,” non-partisan opposition MP Levan Gachechiladze told Civil Georgia.
 
Prime Minister Zurab Zhvania admitted that the provisions of the budget concerning the revenues from the state-owned companies do not “reflect new realities in the country.”

“The provisions of the budget were agreed upon by the International Monetary Fund in February, so we had no time to reconsider this part of the budget,” Prime Minister Zurab Zhvania explained.

Prime Minister Zhvania told deputies, while presenting the budget on May 10, that the social and energy spheres, as well as the sphere of defense, are priorities in the 2004 budget.

Defense funding is increased by 4,5 million over 2003 figures, boosting it to 79 million Lari. However, last year the Defense Ministry received only 58 million out of proposed 74.5 million Lari.

Funding of pensions and the issue of increasing of these pensions was cause for heated debates during the parliamentary discussion about the budget. The government increased pensions by a mere 4 Lari for those pensioners whose arrears were already fully covered by the state. While, for those pensioners who still wait for their pensions, this 4 Lari per month will be a gradual repayment of debt for previous months
 
“This is a violation of the Constitution which says that Georgian citizens are equal and all the pensioners should be treated equally; hence pensions should be increased equally for all of them,” non partisan opposition MP Koba Davitashvili told Civil Georgia.

Mr. Davitashvili tried to sue the government in the Constitutional Court, but failed, as many MPs who initially signed the appeal later withdrew their signatures. “This happened because of the pressure from the ruling party and the government,” MP Davitashvili said.

In total, the 2004 budget allows for 95 million Lari for the paying back of pensions and salaries withheld in recent years. The budget allocates 189 million Lari (USD 94.5 million) towards servicing the country’s $1.7 billion foreign debt.