State expenditure is due to increase by GEL 450 million, with the lion’s share going on defense, bringing an already record high defense budget up to GEL 1.3 billion (about USD 783 million).

The sum amounts to 7.8% of country’s GDP. PM Nogaideli said GDP was expected to reach USD 10 billion at the end of the year.

The proposal, which has yet to be approved by Parliament, presumably in September, will mean a total state budget for 2007 of over GEL 5 (over USD 3 billion).

Most of the additional funding, GEL 320 million (about USD 193 million), will be allocated to the Ministry of Defense (MoD) as part of Georgia’s drive to integrate into NATO, Prime Minister Zurab Nogaideli said on August 29.

“We will continue to implement defense reforms to get closer to NATO standards and to fulfill one of our major foreign policy goals – accession to NATO,” he told reporters after a government session.

This will be the second major amendment to the state budget in less than three months. Parliament approved an earlier increase in state spending of almost GEL 600 million on June 8. The MoD was also the major beneficiary then, receiving an additional GEL 442 million.

It is expected that the additional funds will be used to purchase weaponry and ammunition, as happened with the previous defense budget hike in June.

Information on military procurements is classified, much to the chagrin of the opposition. President Saakashvili, however, said on August 10 that Georgia planned to procure fighter aircraft “to patrol our airspace.”

The statement was made four days after Georgia alleged that a Russian SU-24 aircraft had violated Georgian airspace and dropped an anti-radar rocket near the South Ossetian conflict zone. Georgia currently possesses SU-25 Frogfoot aircraft, which are designed to attack ground targets.

The Czech deputy defense minister, Martin Bartak, said in May 2007, after visiting Georgia, that his country was in talks over a possible deal with Georgia to sell at least ten L-159 advanced light combat aircraft. It, however, remains unclear whether or not the deal has been finalized.

Last year Georgia reportedly purchased an OSA self-propelled anti-aircraft system with missiles, as well as 60 AGS-17 automatic grenade launchers and 20,000 Kalashnikov AK-47 and AKM assault rifles from Ukraine.

Speaking at a government session on August 29, PM Nogaideli said the increased state spending was made possible by impressive economic growth. He said growth this year would be “at least 12%”, instead of the initially forecasted 7-7.5%.

The Interior Ministry and Ministry of Justice will also benefit from the planned increased spending, officials said.