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Parliament Confirms 2013 State Budget
Civil Georgia, Tbilisi / 21 Dec.'12 / 13:48

The Parliament approved on December 20 the 2013 state budget, which makes increased emphasis on social spending.
 
The next year budget sets revenues at GEL 7.42 billion and expenditures at GEL 7.25 billion.

Tax revenues are forecasted to be GEL 6.92 billion in 2013, up from this year’s GEL 6.3 billion; targeted revenue from value added tax is GEL 3.38 billion; personal income tax is set at GEL 1.81 billion; profit tax - GEL 924 million; import tax (customs) – USD 104 million; excise tax – GEL 665 million.

The 2013 budget expects to receive GEL 202.5 million in foreign grants and revenues from privatization are set at GEL 100 million.

Like 2012, next year’s budget projects real GDP growth to be 7% with nominal GDP estimated to reach GEL 29.28 billion.

The fiscal deficit is projected to decline from 3.5% to 2.8% of GDP in 2013.

The government said that additional GEL 630 million has been allocated for funding of various social programs.
 
Credit ratings agency Fitch, which in December reaffirmed Georgia’s sovereign-credit rating at ‘BB-‘, three short of investment grade, said that while 2013 budget was increasing social, agriculture and education spending by 2%-3% of GDP, it was also reducing some investment spending items.

“Reducing the share of capital spending could reduce growth potential and make the budget less flexible over the medium term,” the credit rating agency said on December 12.

IMF said Georgia’s 2013 budget “is socially oriented yet prudent.” IMF said on December 18 that next year’s budget was increasing “social spending to protect the most vulnerable, while continuing with the path of fiscal consolidation."

According to IMF Georgia’s high current account deficit is “a source of vulnerability and its reduction is a key macroeconomic challenge.” The current account deficit is projected to fall to 10% of GDP in 2013 from 12.7% in 2012.
 
The lawmakers from the United National Movement (UNM) were not present in the Parliament during the hearings on December 20 as day earlier they staged a walkout in protest over an incident in Kutaisi and arrests of several former officials, including current head of Rustavi 2 TV station.
 
Funding of the ministries, according to the 2013 budget, is as follows:

  • Ministry of Healthcare and Social Protection – GEL 2.345 billion in 2013 (2012 – GEL 1.821 billion);
  • Defense Ministry - GEL 660 million (2012 – GEL 730 million; 2011 – GEL 711 million; 2010 – GEL 728 million);
  • Interior Ministry - GEL 570 million (2012 – GEL 587.8 million; 2011 – GEL 568 million; 2010 – GEL 549.2 million);
  • Ministry of Regional Development and Infrastructure – GEL 901 million (2012 - GEL 717.1 mln);
  • Ministry of Education and Science – GEL 670 million (2012 – GEL 625.7 mln);
  • Ministry of Agriculture - GEL 241 million (2012 – GEL 229.9 million);
  • Finance Ministry – GEL 100 million (2012 – GEL 108.2 mln);
  • Ministry of Economy and Sustainable Development – GEL 82.5 million (2012 - GEL 145.4 million);
  • Ministry of Energy and Natural Resources - GEL 118.7 million (2012 - GEL 310.9 mln);
  • Justice Ministry - GEL 67.6 million (2012 - GEL 56.5 mln);
  • Ministry in charge of prison system – GEL 174.3 million (2012 – GEL 128.3 mln);
  • Foreign Ministry - GEL 80 million (2012 – GEL 82.8 mln);
  • Ministry of Culture and Protection of Monuments – GEL 80 million (2012 – GEL 93 million);
  • Ministry of Sport and Youth Affairs - GEL 47.2 million (2012 – GEL 59.4 million);
  • Ministry of Environment Protection - GEL 27.2 million (2012 – GEL 19.3 million);
  • Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees - GEL 48 million (2012 – GEL 39.2 million);
  • Office of the State Minister for Reintegration Issues – GEL 1.3 million (2012 – GEL 1.2 million);
  • Office of the State Minister for Integration into European and Euro-Atlantic Structures – GEL 2.3 million (2012 – 2.3 mln);
  • Office of the State Minister for Diaspora Issues – GEL 850,000 (2012 - GEL 850,000).

Starting from April 1, 2013 minimal monthly pensions will increase to GEL 125 for those who are under the age 67. Currently only those pensioners who are over 67 receive minimal monthly pension of GEL 125. The retirement age for women is 60 and 65 for men.

Starting from September 1, 2013 minimal monthly pension for all the pensioners of retirement age will be increased to GEL 150.

The 2013 budget also envisages increase in monthly allowances for various categories of socially vulnerable families.
 
Government plans to allocate GEL 163 million starting from July, 2013 for “universal health insurance” program.
 
Funding of the Parliament and some other institutions under its subordination (like National Library) is increased from this year’s GEL 41.1 million to GEL 60 million in 2013. Some portion of increased funding will go for rehabilitation of the Parliament’s old building in Tbilisi. Georgian Dream wants to relocate the legislative body from Kutaisi back to the capital city. Some of the increased funding will go for maintaining offices of majoritarian MPs in various provinces; until now these offices were financed from respective local self-government bodies.   
 
The President’s administration will receive GEL 8.9 million in 2013, down from GEL 14.1 million in 2012 and the government’s administration will be funded with GEL 11.8 million, down from GEL 12.5 million in 2012.

The government’s reserve fund will be reduced from current GEL 70 million to GEL 50 million in 2013.

President’s discretionary fund will see a significant cut and will receive only GEL 10 million instead of this year’s GEL 50 million.
 
There will also be a significant reduction in funding of the National Security Council (NSC) at the President’s office.

NSC will receive GEL 1.8 million in 2013 instead of GEL 21 million in 2012.

This year GEL 19.3 million in NSC’s funding was allotted under the line item “measures for national security policy.” Finance Minister, Nodar Khaduri, told lawmakers on December 20 that “about 80% of these funds” were spent on hiring foreign consultancy and lobbying firms.

GEL 449 million will be allocated for various regional projects; funding of the rural development program will remain unchanged - GEL 50 million.
 
The amount of transfers for the autonomous republics and local self-government bodies from the central budget is GEL 769.7 million with GEL 448 envisaged for Tbilisi, GEL 3 million more than in 2012.

The Central Election Commission will receive GEL 47.5 million next year, when presidential elections are scheduled.
 
The initial draft envisaged reduction of funding of the Public Defender’s Office; however, according to the final version, PDO’s funding will remain unchanged at GEL 2.1 million in 2013.

Funding for the Georgian Orthodox Church will increase from this year’s GEL 22.8 million to GEL 25 million in 2013.

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