Georgia will receive nearly $150 million annually if it becomes EU candidate - TI on the 2024 budget
Georgia’s budget for 2024
Transparency International Georgia says in its assessment of the country’s draft budget for 2024 that implementing the 12 recommendations that the EU has stipulated and obtaining the status of EU candidate country is important for Georgia not only from political point of view, but also from the budgetary point of view. If Georgia receives candidate status, grants of up to 400 million GEL [about $148.5 million] will be available to the country annually.
Georgia’s state budget for 2024 is planned based on a forecast of 5.2 percent economic growth. The country’s Prime Minister, Irakli Garibashvili, said that the total budget in 2024 will amount to 27 billion 800 million GEL [about $10.3 billion].
Both revenue and expenditure in the state budget have been increased for next year. The largest amount will go to the Ministry of Health, and substantial sums will be allocated to social areas.
The opposition claims that the 2024 budget is an “election budget”, when the government is trying to win the hearts of voters, although experts expect that various expenses will be added to the budget.
TI’s recommendations on the draft budget for 2024:
● It is encouraging that the budget deficit is declining, although it is still high, and the government should try to reduce it before the budget law is passed. Reducing the deficit would contribute to price and exchange rate stability of the lari.
● In order to significantly increase the reduced foreign grants, the government must fulfill the recommendations necessary to obtain EU candidate country status by the end of the year. Based on the experience of EU candidate countries for 2014-2021, if status is obtained, Georgia will be able to receive an additional grant of up to GEL 400 million [about $148.5 million] annually from the EU;
● In order to increase the efficiency of budget spending, it is necessary to tighten control over program budgeting.
● According to the draft budget, Georgia’s economy will grow by 6.5 percent in 2023 and by 5.2 percent in 2024. Since the economy grew by seven percent in January-August of this year, maintaining the annual growth rate of 6.5 percent looks realistic. Achieving economic growth of 5.2 percent next year will depend significantly on the course of the Russia-Ukraine war;
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● Compared to 2023, in 2024, the Government of Georgia will receive 44 million GEL less [about $16.3 million] in grants from the European Union.
● Total expenditures (payments) of the 2024 state budget will amount to 24.2 billion GEL [about $9 billion], which is 1.8 billion GEL [about $668 million] more than the expenditures of the 2023 budget;
● The budget of three ministries will increase the most: the budget of the Ministry of Health by 627 million GEL [about $232 million] to 7.7 billion GEL [about $2.8 billion], the budget of the Ministry of Education by 262 million GEL [about $97 million] to become 2.3 billion GEL [about $854 million], and the budget of the Ministry of Defense by 100 million GEL [about $37 million] to become 1.4 billion GEL [about $520 million];
● Funding for the State Security Service will increase by GEL 25 million [about $9.2 million] to reach GEL 205 million [about $76.1 million]. The increase is mainly due to the growth of salaries.
● Salaries of budgetary employees will increase by at least 10 percent. Among them, the salaries of police officers and soldiers will increase by 20 percent.
● From 2024, the pension for people under 70 will increase by GEL 20 [about $7.5] to GEL 315 [about $117], and the pension for people 70 and older by GEL 50 [about $18.5] to GEL 415 [about $155].
● The budget deficit will be GEL 2.3 billion [about $854 million] (2.7 percent of GDP).
● In 2024, the government will take on up to GEL 3.5 billion [about $1.3 billion] in debt. At the end of 2024, the government’s debt will reach GEL 32.6 billion [about $12.1 billion].
● In some cases, proper preparation of budget programs remains a challenge. For example, despite the fact that the poor quality of school education is one of the important problems in Georgia, the goal of the school financing subprogram is not to improve the quality of education and is not accompanied by relevant indicators.
Georgia’s budget for 2024
How experts assess the budget-2024
According to economist Ramaz Gerliani, high social payments indicate that the country’s social situation is very problematic.
“When citizens cannot provide for themselves independently, low-income families remain tied to budget funds and receive assistance,” the expert told Radio Liberty.
Economist Egnate Shamugia, a researcher at the Gnomon Wise research institute, told Radio Liberty that in the draft budget, growth rates indicate the state of the economy, and in this case it doesn’t look good.
As Doctor of Economic Sciences Soso Archvadze noted, the budget and the Georgian economy have such a potential that the development is not in one direction, but in an integrated way.
“The size of the budget and its dynamics depend on the well-being of the economy and its growth rate. The year 2023 is not over yet, and this year the budget has increased by another 500 million, and we expect quite a significant increase next year. This means that there is a strong correlation between economic growth and budget revenues.
The budget is not just a column of numbers, it is a concrete plan according to which the government implements certain social and economic policies.
The budget has several directions, these are purely social expenditures, infrastructure projects, development of regions, expenditures aimed at economic development and a number of other aspects, i.e. in essence our budget and economy have such a great potential for development and breakthrough not in one direction, but in an integrated way, i.e. in exchange for segmental development we have an opportunity for systemic development,” Archvadze told Business Rezonans.
Financier Giorgi Tsutskiridze draws attention to the fact that the budget is balanced in all directions:
“Since the funds are invested in infrastructure, it helps economic growth and employment to some extent. Many people think that it only contributes to economic growth, but investment in infrastructure plays a direct role in creating new jobs and increasing employment.
Quite a significant amount of money is spent on defense and security of the country as a whole. It turns out that the budget is balanced in all parameters and the economy is supported.”
