Georgia’s tax revenue will fall short of the 2013 target as economic growth is far below forecasted 6%, according to official figures and government ministers.
The government, which has been slammed by opposition for months already over its economic policies, will face even more criticism from UNM parliamentary minority group, which says that the authorities will be forced to request the Parliament budget cuts before the end of the year because of shortfall in revenues.
Finance Minister, Nodar Khaduri, said on November 9 there will be no “budget sequestration”. He declined to elaborate, but told journalists that he will speak about the details next week when the issue will be discussed in the parliament.
Economy Minister, Giorgi Kvirikashvili, said on November 6 that there will be shortfall in targeted revenues because economic growth was projected at much higher level than it actually will be by the end of the year. Annual growth in the first nine months of 2013 was 1.7%.
Tax collection data from the first nine months of 2013 show that tax revenues stood at GEL 4.58 billion, representing 66.1% of GEL 6.92 billion of targeted total tax revenues for the full 2013 fiscal year.
Value added tax (VAT) makes almost half of Georgia’s total tax revenues.
GEL 2.05 billion was collected in VAT in January-September 2013, accounting 60.4% of targeted level of GEL 3.4 billion for the full year. Over 71% of full year targeted VAT was collected in the first nine months of last year.
Data of the first nine months also show that the government is spending less than projected.
Expenditures stood at GEL 4.38 billion in January-September, accounting up to 60.5% of targeted GEL 7.24 billion total expenditures for the full year.
According to IMF, Georgia’s economic slowdown in 2013 is due to weak investor confidence reflecting political and policy uncertainties and shortfalls in government spending, especially in capital expenditures.
Economy Minister Kvirikashvili, who is also a deputy PM, said that failure to meet the economic growth target was caused by “tense politics” and “numerous destructive actions by the opposition”. He, however, also said that “lack of coordination” within the government on the initial stage was also partly to be blamed; but the government has already “completely overcome” this problem of lack of coordination, Kvirikashvili added.