Parliament approved by 146 votes to one on December 28, what the government calls, “a socially-oriented” 2008 state budget.

“This budget is a very important step towards overcoming poverty and creating new jobs,” Prime Minister Lado Gurgenidze told lawmakers on December 28 after the budget was approved.

The 2008 state budget sets revenue at GEL 5.155 billion and expenditure at GEL 5.705 billion. Finance Minister Nika Gilauri told lawmakers on December 28 that fiscally there is a budget surplus of GEL 275,000, although in monetary terms there is a 2% deficit.

The economic growth rate is forecast at 6%; GDP is expected to reach USD 12 billion and inflation is forecast at 8% for next year.

Gilauri said that the conservative economic growth forecasts were as a result of, what he called, “the investment pause” caused by the November unrest in Georgia. The economy grew by 12% in 2007, he said.

Defense funding has been cut from GEL 1.495 billion in 2007 to GEL 1.1 billion next year. The figure represents slightly over 19% of all state spending and about 5.7% of the country’s expected GDP next year.

A breakdown of funding for individual ministries for 2008 is as follows:

• Ministry of Labor, Healthcare and Social Welfare – GEL 1.284 billion; GEL 996.9 million in 2007;

• Ministry of Defense – GEL 1.1 billion; GEL 1.494 billion in 2007;

• Ministry of Finance – GEL 1.064 billion; GEL 781.9 million in 2007;

• Ministry of Economic Development – GEL 387.7 million; GEL 406.7 million in 2007;

• Ministry of Energy – GEL 61.4 million; GEL 226.4 million in 2007;

• Ministry of Justice– GEL 129.6 million; GEL 144.5 million in 2007;

• Foreign Ministry – GEL 59 million; GEL 57.5 million in 2007;

• Ministry of Interior – GEL 600 million; GEL 467.4 million in 2007;

• Ministry of Education and Science – GEL 490 million; GEL 418.7 million in 2007;

• Ministry of Culture and Sport – GEL 70.3 million; GEL 74.8 million in 2007;

• Ministry of Refugees and Accommodation – GEL 60.2 million; GEL 60.9 million in 2007;

• Ministry of Agriculture – GEL 78.1 million; GEL 78.8 million in 2007;

• Ministry of Environment – GEL 38.7 million; GEL 40.3 million in 2007;

• State Ministry for Conflict Resolution Issues – GEL 610,000; GEL 1 million in 2007;

• State Ministry for Euro-Atlantic Integration Issues – GEL 1 million; GEL 1 million in 2007;

• State Ministry for Reform Coordination Issues – GEL 440,000; GEL 240,000 in 2007;

• State Ministry for Civil Integration Issues – GEL 242,000; GEL 200,000 in 2007;

• The Tbilisi-backed South Ossetian provisional administration - GEL 17 million; GEL 13 million in 2007.

A draft budget for 2008 was submitted to Parliament for consideration in October; however, the cabinet, led by incoming Prime Minister Lado Gurgenidze, withdrew the draft after the November 7 events and revised it in order to, as the PM said, “make it more people-friendly.”

The change has meant an increase in funding fot the Ministry of Labor, Healthcare and Social Welfare from GEL 951.8 million to GEL 1.284 billion. GEL 74 million of this will be spent on healthcare programs and GEL 991 million on various social programs. Mikheil Saakashvili, seeking re-election, has been emphasizing the need for such spending.

Starting from October 1 2008, the minimum monthly pension will increase from the current GEL 55 to GEL 76. A total of GEL 240 million will be allocated for this purpose. Before December the minimum pension was GEL 38.

GEL 38 million has been allocated for a health insurance package for 733,000 socially vulnerable people.

The state will allocate GEL 15 million for a program, which will also be co-funded by the business community, envisaging GEL 1,000 for every newborn child from a socially vulnerable family.

GEL 253 million is envisaged for public school teachers’ salaries and additional social programs for them. This year’s comparative figure was GEL 200 million.

The state funded employment program, which started in December, will receive GEL 41.1 million. The program envisages three month internships in private businesses. Each participant will receive GEL 600 from the state over the three-month duration of the internship. Professional retraining for unemployed people aged 25-65 is the objective.

A total of GEL 293 million will be allocated to fund a ‘cheap credit program.’

The 2008 state budget will also see a two-fold increase for the Georgian Orthodox Church, which will receive a total of GEL 9.5 million from the state.

The Georgian Public Broadcaster will be financed to the tune of GEL 20 million next year.

The state plans to spend GEL 308 million on road infrastructure rehabilitation next year, as opposed to GEL 350 in 2007.