The Budget and Finance Committee discussing the initial version of the Draft State Budget 2021

16 Oct 2020
The Budget and Finance Committee discussing the initial version of the Draft State Budget 2021

The Committee discussed the initial version of the draft state budget 2021 today.

The Chair, Irakli Kovzanadze outlined the issues related to the budget stating that the budget for 2021 is planned with 5% economic growth, GDP in nominal expression constitutes 54 bl. 525 ml GEL, inflation is at 3%, budget deficit is 5.2% and will hopefully further reduce. The macro-economic parameters will be maintained while all other indices may be altered.

According to the initial version, 17 bl. 07 ml GEL is to be consumed from the budget. The tax incomes are planned to increase to 10.45 bl. GEL – exceeding the index for 2020 with 1.1 bl. GEL. The draft reveals that the debt in USD in the amount of 500 ml in EURO bonds is to be covered, which I hail. The state debt is increased and reaches the upper ceiling (60%) as established under the law, which may pose the risks to the monetary, fiscal and macro-economic stability. Hence, we need an effective strategy to reduce state debt parameters. However, it is noteworthy that according to the draft, the state debt in nominal in regards to GDP is reduced by 2%. All social liabilities assumed by the state are maintained in 2021, including the increased pensions and salaries for the pedagogues, military personnel and the police. The school pedagogues will enjoy the salaries increased by 100 GEL, similar to the kindergarten pedagogues. The draft reflects the legal initiative related to the pension indexation – the pensions for the pensioners under 70 will be increased by 20 GEL as of January 1, and by 25 GEL over 70”, - he noted and stressed several important programs, namely the gas supply envisaging the consumption of 70 ml GEL, as well as the accommodation of IDPs envisaging the consumption of 109.8 ml GEL.

The Regional Development Ministry will receive the assignments increased by 600 ml GEL to be consumed on road infrastructure etc. including Rikoti Pass modernization, Khevi-Ubisa section reconstruction etc. envisaging the consumption of 130 ml GEL.

It is the initial version without the provision on the pandemic-related costs. The pandemic is a global problem characterized with vagueness. This is an important part of the budget and needs to be specified and reflected in the revised version, which is scheduled to be submitted to the Parliament no later than November 5”, - he added.

The Deputy Finance Minister, Giorgi Kakauridze, introducing the draft, dwelt on the parameters like GDP, mixed budget tax incomes, budget deficit, state debt, capital costs etc.

He touched upon the costs envisaged for the Ministries and answered the questions.

The meeting was attended by the representatives of the Ministries to also answer the questions of the Committee.

The Deputy Secretary General of the Parliament Shota Goshadze spoke about the necessity to amend the budget 2021 for the Parliament stating that “the Constitutional changes increase the number of MPs elected by the proportional list. Hence, the number of assistants to the MPs is also increased by 50, which entails the change in the provision on the salaries as salaries are increased by 960 000 GEL”.

The common parameters remain unchanged, he noted, but are distributed amongst the articles.

The Committee heard the conclusions by the State Audit Service, and the National Bank.

The Deputy Auditor General, Ekaterine Ghazadze introduced the conclusion of the SAS on “State Budget 2021” and the report on Fulfillment of the State Budget 2020; and the Vice President of the NB, Archil Mestvirishvili introduced the conclusion on State Budget 2021.

According to I. Kovzanadze, the Committee has the remarks to the draft, which will be merged with the received remarks and submitted to the Parliament. With this reservation, the Committee approved the draft budget and expressed their expectation for the revised version on November 5.

The Deputy Defense Minister, Rati Bregadze introduced the Quantity of the Defense Forces for ratification stating that the quantity of the defense forces (military staff) shall be determined by 37 000 persons in 2021.

The restriction shall not apply during the state of war and to the number of conscripts and temporary staff.

The Committee approved the issues.