Presentation of the publication “Monitoring of the State Budget of Georgia”

25 May, 2010

The presentation of the publication “Monitoring of the State Budget of Georgia” was held in the “Open Society Georgia Foundation” office on May 14. The Economic Problems Research Center, with the assistance from OSGF, has been working on the project “Increasing the transparency and accountability of Georgia’s state budget for 2009 by means of monitoring” since August, 2009. The project was aimed at supporting active engagement of the civil society in budget processes, ensuring the budget transparency and active collaboration with the Economic Problems Research Center in planning the budget for 2010.

Within the framework of the project, the monitoring of the budget was implemented in the following directions: Georgia’s macroeconomic situation and main directions; analysis of the state budget of Georgia for the years 2009 and 2010; state foreign debt; budget code of Georgia; analysis of the budget priorities’ adequacy to social-economic situation.

Different meetings were held with the economy experts, journalists, students and civil society representatives during the project implementation.

The conducted study revealed the faults made in budget planning that caused two major changes in the budget for 2009 and the amount of the budget tax income was reduced twice. According to the experts’ assessment, the wrong macroeconomic forecast and government’s exaggerated optimism became the main reason for budget shortening.

“It is a sad fact but we should mention that in the history of independent Georgia there has never been a budget that would not become subject for major changes. This study gives us the possibility to conclude that lack of mechanisms needed for adequate forecast, macroeconomic situation in the country, experience gained through 2009 and analysis of the world’s economical situation do not guarantee that the state budget for 2010 will not undergo the same changes as the budget for 2010” – stated expert David Narmania.

In regards to the foreign debt component it was mentioned that its amount has been significantly growing during the last 3 years. This major increase is a result of the agreement of Brussels Donors Conference that tried to compensate tragic events of August, 2008. The experts note that: “the year of 2013 will be quite complicated, since this will be the period for paying debts and to cover the main part of it our country will need USD 771, 7 million. This amount equals to 25,2 percents of total budget income. These debts might be covered in the future by the profit gained from other assets issued by that time”.

The activity of the Chamber of Control is also in need for substantial modernization since currently it is clear from the accounts and budget applications of this organization that the Chamber of Control is not oriented at leading international standards.

Leval Alafishvili, representative of the Chamber of Control does not agree with the given assessment and states that “the Chamber of Control is undergoing reforming processes and from 2012 the efficiency audit will be established in the country”.

 Attached please find the full version of the study.