The revised draft of the 2017 state budget, which is expected to be discussed at the Parliament’s plenary session next week, sets revenues at GEL 9.489 billion and expenditures at GEL 9.121 billion.
Compared to the initial draft, revenues have increased by GEL 774 million and expenditures by GEL 334 million.
The 2016 state budget sets revenues at GEL 8.555 billion and expenditures at GEL 8.543 billion.
The revised draft sets GEL 8.82 billion in tax revenues next year, up by GEL 84 million compared to the 2016 figure of GEL 7.98 billion.
Revenues from income tax are set at GEL 2.57 billion (in 2016 – GEL 2.086); value added tax – GEL 3.779 billion (in 2016 – GEL 3.802 billion); import taxes - GEL 76 million (in 2016 – GEL 75 million) and other taxes – GEL 87 million (in 2016 – GEL 25 million).
The government estimates revenues from corporate profit tax to decline from this year’s target of GEL 980 million to GEL 681 million next year due to corporate income tax reform, which is set to go into force from January, 2017, when corporate income tax will only apply to distributed profit; undistributed profits, reinvested or retained, will not be subject to income taxation.
Coverage of the expected gap is envisaged by the amendments to the tax code, which along with increasing other taxes envisage increase of excise taxes on tobacco, cars and oil products starting from January 1, 2017. According to the revised draft, revenues from excise tax are expected to increase from GEL 1.012 billion this year to GEL 1.627 billion in 2017.
Forecasted revenues from foreign grants have also been revised upwards to GEL 284.46 million; “other revenues” will also increase by GEL 65 million to GEL 385 million. The government expects GEL 90 million from privatization next year.
The government projects 4% economic growth next year. Although the budget forecasted 3% GDP growth in 2016, the draft of 2017 state budget sets 2.7% economic growth this year following 2.9% growth in 2015. The revised draft sets inflation rate at 4% and Lari exchange rate against USD is set at 2.5.
The revised draft, compared to the initial one, allocates by GEL 273 million more for the Ministry of Economy; it also increases funding of the Ministry of Regional Development and Infrastructure by GEL 172 million; Ministry of Education – by GEL 91 million; Healthcare Ministry – by GEL 85.8 million; Ministry of Sport and Youth Affairs – by GEL 38 million; Agriculture Ministry – by GEL 19 million; Energy Ministry – by GEL 11 million; Defense and Foreign Ministries – by GEL 5 million each and Ministry of Culture – by GEL 3 million.
Funding of the prison system ministry has been cut by GEL 7 million; Finance and Justice Ministries – by GEL 3 million each and Ministry of Environment – by GEL 2 million.
Breakdown of funding per ministry in the revised draft is as follows:
- Ministry of Healthcare and Social Protection – GEL 3.415 billion (GEL 3.162 billion in 2016);
- Ministry of Regional Development and Infrastructure – GEL 1.258 billion (GEL 950 million in 2016);
- Ministry of Education and Science – GEL 1.116 billion (GEL 971.3 million in 2016);
- Defense Ministry – GEL 743 million (GEL 670 million in 2016; GEL 679.7 million in 2015; GEL 667.4 million in 2014; GEL 610.4 million in 2013; GEL 730.6 million in 2012);
- Interior Ministry – GEL 585 million (GEL 595 million – in 2016);
- Ministry of Economy and Sustainable Development – GEL 370.4 million (GEL 95.1 million in 2016);
- Ministry of Agriculture - GEL 257.9 million (GEL 321.3 million in 2016);
- Finance Ministry – GEL 82.3 million (GEL 90 million in 2016);
- Ministry of Energy – GEL 132.3 million (GEL 135 million in 2016);
- Justice Ministry - GEL 62 million (GEL 70.5 million in 2016);
- Prison system ministry – GEL 139.1 million (GEL 153.8 mln in 2016);
- Foreign Ministry - GEL 110 million (GEL 110 mln in 2016);
- Ministry of Culture and Protection of Monuments – GEL 99.6 million (GEL 97 million in 2016);
- Ministry of Sport and Youth Affairs - GEL 136.8 million (GEL 90 million in 2016);
- Ministry of Environment Protection - GEL 35.7 million (GEL 42.1 million in 2016);
- Ministry for Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees - GEL 84.79 million (GEL 85 million in 2016);
- State Ministry for Reconciliation and Civic Equality Office of the State Minister for Reintegration – GEL 1.215 million (GEL 1.35 million in 2016);
- Office of the State Minister for European and Euro-Atlantic Integration – GEL 2.845 million (3.1 million in 2016);
According to the revised draft, the State Security Service will receive GEL 118 million next year that is by GEL 18 million more compared to this year.
The government’s administration will receive GEL 16.5 million that is by GEL 3.5 million less compared to 2016; the President’s administration will again receive GEL 9.8 million next year and the President’s discretionary fund will receive GEL 5 million, the same as this year. The funding of the government’s reserve fund will be reduced by GEL 10 million to GEL 40 million.
The State Audit Office will again receive GEL 14.5 million; the revised draft increases funding of the Public Defender’s Office by GEL 300,000 and sets its total funding for next year at GEL 4.8 million. Funding of Georgian Public Broadcaster (GPB) will also increase from this year’s GEL 44.1 million to GEL 46.4 million next year.
Funding of the Georgian Orthodox Church remains unchanged at GEL 25 million.
Next year, when local elections are planned in October, the Central Election Commission will receive GEL 60.5 million; CEC’s funding this year is set at GEL 58.5 million.
Transfers from the central budget to the autonomous republics and local municipalities will increase from current GEL 621.7 million this year to GEL 675 million next year that is by GEL 30 million more compared to the funding envisaged by the initial draft.
The revised draft involves a new article envisaging allocation of a GEL 65 million one-time subsidy in frames of the program administered jointly by the government and the National Bank of Georgia. The program involves a voluntary conversion of U.S. dollar-denominated bank loans of individuals collateralized by real estate, into Lari.