Government Sets 2006 Budgetary Targets

According to the draft 2006 budget, which was recently submitted to the Parliament for consideration by the government, expenditures for next year are set at GEL 3.2 billion (approximately USD 1.7 billion) and revenues – GEL 2.9 billion (approximately USD 1.6 billion). The 2006 draft budget marks a increase of budgetary expenditures and revenues 12 and 17%, respectively, over 2005 figures.

Next year, GDP growth rate is set at 7.5% and is expected to exceed GEL 12.9 billion (USD 7.1 billion); while the Georgian currency’s exchange rate against the US dollar is forecasted at 1.85 Lari per USD and inflation rate at – 5%. The government also expects GEL 335 million (USD 186.1 million) from the privatization next year.

The education, defense and security systems are expected to benefit most from the increased budgetary targets in 2006. According to the draft, GEL 392.6 million (USD 218.1 million) will be allocated for the Georgian Ministry of Defense, which is an increase of GEL 24.5 million over 2005. If fulfilled, the Georgian defense spending will total more than 3% of the country’s GDP.  

According to the draft budget, defense funds are envisaged for: personnel and hardware maintenance; gradual increase of salaries for servicemen; allowances for the personnel whose dismissal is planned in 2006; training of reserve forces; increase skills of personnel; and military exercises.
 
A significant increase in funding for the Education Ministry is also planned. The draft budget allocates GEL 286.3 million (USD 156 million) for the education system, which is GEL 210.8 million more than in 2005.
 
Funding of the Georgian Interior Ministry will increase by GEL 59.5 million and will amount to GEL 221.5 million (USD 123 million).

GEL 40.8 million will be allocated to the Foreign Ministry. Georgia plans to open 7 new diplomatic posts abroad in 2006.

According to the 2006 draft budget, financing of other ministries will also be increased and will be as follows:

The Ministry of Labor, Health Care and Social Welfare – GEL 708.7 million;
Ministry of Agriculture – GEL 74.2 million;
Ministry of Justice– GEL 45.5 million;
Ministry of Culture, Protection of Monuments and Sport – GEL 45.0 million;
Ministry of Environment – GEL 43.2 million;
Office of the State Minister for Conflict Resolution Issues – GEL 489,000;
Office of the State Minister for Coordination of Reforms – GEL 464,300;
Office of the State Minister for Euro-Atlantic Integration Issues – GEL 587,600.

However, compared with the 2005 budget, the following ministries will receive less fundsing the Ministry of Energy – GEL 247.5 million; the Finance Ministry – GEL 676.8 million; the Ministry of Economic Development – GEL 167.5 million; the Ministry for Refugees and Accommodation – GEL 60.2 million; and the Office of the State Minister for Civil Integration Issues – GEL 211,100.

GEL 119.6 million (USD 66.4 million) will be allocated for rehabilitation and construction of roads. Next year the Georgian President’s reserve fund will amount to GEL 15 million, while the government’s reserve fund – GEL 10 million.