Anatomy of a budget

A research center for economics and politics has published an analysis of the 2011 state budget. Behind the figures there are certain achievements – a matter of pride for the country’s leadership – but also serious problems.

The structure of state budget revenues and expenditures show the problems this country is facing. Any problems should be addressed adequately by government economic policy; however, it appears as though the current leadership cannot respond to those challenges. Post-Rose Revolution politicians are proud of the fact that, compared to the previous leadership, revenue has increased and administration of this revenue has been improved; however, analysts still consider the tax system to be far from perfect. Our so-called liberal economy is still not free from the sometimes clumsy interference of state bodies.

Aggregated budget revenues for 2011 reached almost 7 billion GEL. As for expenditures, the largest was in social assistance (about 30% of the total). Next are government services at 21%, and salaries for state employees (also 21%). Approximately 833 million GEL (15% of the budget) are a variety of expenses that were not open to analysis.

Analysts noted that the social assistance category has increased in recent years, growing at a pace faster than GDP. There is a potential correlation between social assistance expenditures and the increase in foreign loans, giving ground to the conclusion that the major source of social assistance money comes from loans taken by the state. Analysts also suggest that social expenditure growth mostly depends on different ideological factors rather than planned economic calculations.

There is no visible data concerning investment in the private sector, or in support of basic infrastructure, healthcare and education. It is clear that only financing social assistance and salaries do not give the country enough opportunities to increase economic development. As for the country’s current situation, most of the revenue has come from privatizing different state properties. In Georgia, budgetary expenditure per capita is far ahead of general economic growth. So what the country really needs is thoughtfully-designed, well-calculated budgetary politics, rather than a chaotically ideological budget.