With 102 votes in favor and 10 against, the Parliament endorsed the 2017 state budget of Georgia. The budget, approved on December 14, sets revenues at GEL 9.489 billion and expenditures at GEL 9.121 billion.
The Finance Minister Dimitri Kumsishvili said at the Parliament’s plenary session on December 14 that this document “is a guarantee of the country’s economic growth” and “will ensure welfare and stable life for our citizens.”
UNM lawmakers did not support the proposed bill. “We will not support this budget not because we represent the opposition, but because it does not meet public expectations… This budget is a clear recipe for increasing prices next year… This budget will not contribute to the country’s rapid economic development,” UNM lawmaker, Sergi Kapanadze explained.
Lawmakers from the Alliance of Patriots did not support the 2017 state budget as well, which, as MP Irma Inashvili put it, “is focused not on ordinary people, but on asphalts and fountains.”“We should save our nation physically – I did not see it in this budget and therefore I will not support it,” she added.
The budget sets targeted tax revenues at GEL 8.82 billion, up from the 2016 figure of GEL 7.98 billion.Revenues from income tax are set at GEL 2.57 billion; value added tax at GEL 3.779 billion; import taxes atGEL 76 million and other taxes at GEL 87 million.
The government estimates a drop in revenues from corporate profit tax from current year’s target of GEL 980 million to GEL 681 million next year due to the corporate income tax reform, which is set to go into force from January, 2017. Under the reform, corporate income tax will only apply to distributed profit; while undistributed profits, reinvested or retained, will not be subject to income taxation.
The government plans to fill this gap through increasing excise taxes on tobacco, cars and oil products starting from January 1, 2017. Revenues from excise tax are expected to increase from GEL 1.012 billion this year to GEL 1.627 billion in 2017.
Revenue forecast from foreign grants are set at GEL 284.46 million; “other revenues” will increase by GEL 65 million and reach GEL 385 million. The government expects GEL 90 million from privatization next year.
Government forecast for economic growth stands at 4% next year – up from the forecasted 3% GDP growth in 2016. The amendments proposed to the 2016 budget, to be approved by the Parliament as well, will see the 2016 forecast reduced to 2.7%. The 2017 state budget sets inflation rate at 4% and GEL exchange rate against USD at 2.5.
The government intends to allocate GEL 65 million one-off subsidy for funding the voluntary conversion of U.S. dollar-denominated bank loans of individuals secured by real estate, into GEL. The program will be administered jointly by the government and the National Bank of Georgia.
UNM lawmakers said that subsidizing the conversion of loans is equal to “embezzlement.” They also called for decreasing taxes along with cutting bureaucratic expenses. UNM accused the government of “cheating” to the electorate,since they unveiled the plans of tax increases only after the government was confirmed.
Breakdown of funding per ministry in the 2017 state budget is as follows:
• Ministry of Labor, Health and Social Affairs of Georgia – GEL 3.415 billion (GEL 3.202 billion in 2016 as a result of proposed budgetary amendments);
• 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 952 million in 2016 as a result of proposed amendments);
• Ministry ofDefense – GEL 748 million (GEL 750.4 million in 2016 as a result of proposed amendments);
• Ministry of Internal Affairs– GEL 585 million (GEL 595 million – in 2016);
• Ministry of Economy and Sustainable Development – GEL 370.4 million (GEL 95.4 million in 2016 as a result of proposed amendments);
• Ministry of Agriculture – GEL 257.9 million (GEL 311.1 million in 2016 as a result of proposed amendments);
• Ministry of Finance – GEL 82.3 million (GEL 86.5 million in 2016 as a result of proposed amendments);
• Ministry of Energy – GEL 132.3 million (GEL 204.5 million in 2016 as a result of proposed amendments);
• Ministry of Justice – GEL 62 million (GEL 70.5 million in 2016);
• Ministry of Corrections – GEL 139.1 million (GEL 144.8 million in 2016 as a result of planned amendments);
• Ministry of Foreign Affairs – GEL 110 million (GEL 110 million in 2016);
• Ministry of Culture and Monument Protection – 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 and Natural Resources 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);
• Office of the State Minister for Reconciliation and Civic Equality– 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).
The State Security Service will receive GEL 118 million next year, up by GEL 18 million compared to this year.
The Parliament of Georgia will receive GEL 52 million next year; the government’s administration will receive GEL 16.5 million; the President’s administration - GEL 9.8 million and the President’s Reserve Fund - GEL 5 million, the same as this year. The funding of the government’s reserve fund will be reduced by GEL 10 million and stand at GEL 40 million.
The State Audit Office will receive GEL 14.5 million again; funding of the Public Defender’s Office will increase by GEL 300,000 and reach GEL 4.8 million next year. Funding of the 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.
The Central Election Commission, will will administer the municipal elections in October, 2017, will receive GEL 60.5 million; up from this year’s GEL 58.5 million.
Transfers from the central budget to the autonomous republics and local municipalities will increase from GEL 621.7 million to GEL 675 million.