Budget prognosis

It appears that the rapid growth of the Georgian state budget is over. In the first quarter of 2009 the country had a GEL 500,000 budget deficit. However despite this the authorities are still full of optimism and predict a growth of budgetary revenues.

The state prognosis is that in 2009-2011 the country’s budgetary revenues will increase. Indirect revenues now take a larger share of budget accruals and direct revenues a smaller one, but according to the state prognosis there will be no budgetary deficit in the next two years.

Ever since Georgia regained its independence in 1991 the budget deficit has influenced the country’s economy, but since the Rose Revolution things have been slightly better. The country has taken on extra external loans and considerable amount of the country’s budget revenues have come from privatising property. But this process has now slowed, and Minister of Economy Lasha Zhvania has recently stated that the Ministry recently wanted to sell at auction property worth GEL 12 million but assets worth only GEL 155,000 were sold.

Zhvania said that the failure to sell this property was caused by the political tension in the country. Economic analysts however challenge this statement, saying that almost all the saleable state facilities have already been sold off. In 2006-2007 privatisation accounted for 12% of budget income whereas the 2009 figure might be around 2-3%, the levels of 2004.

Economist Davit Narmania thinks that the number of facilities which can be sold has been decreased. Lado Papava reckons that privatisation has not brought positive results for the country and most of the privatisations have been against the country’s interests.