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Pluses and minuses of increased budget

By Messenger Staff
Wednesday, April 22
With the opposition protest rallies underway the administration is energetically reminding us of the successes the country has achieved under the Rose Revolution leadership.

One of the major arguments the authorities are using is that the state budget has increased almost fourfold since the Saakashvili administration came to power. This is true, however opposition representatives highlight the non-purposeful expenditure of the increased budget and the lack of transparency in this expenditure, actions which mean an increase in the budget is no benefit to the country.

The authorities say that since the Saakashvili administration took over the Government has stopped the previously annual practice of cutting the budget. In previous years the budget was not fulfilled because not enough revenues were being collected, and deficits arose. Budget cuts mostly affected the most vulnerable layers of the population: pensioners, the unemployed etc. Amounts earmarked to assist the socially vulnerable were “frozen” and pensions were not paid for months, sometimes years. At the same time high ranking officials and businessmen who had good relations with the powers-that-be never suffered financial problems. Since the Rose Revolution the “frozen pension” concept has disappeared and pensions have actually increased several fold, as the authorities are quick to point out.

The opposition says that in spite of the fact that budgetary revenues have increased and the budget itself is now four times larger, the people cannot control how well this money is spent. Clearly there is some inappropriate behaviour going on, but it is not sufficiently investigated. The Chamber of Control has become just a formality and is no longer involved in monitoring budget expenditures. The law enforcement bodies mostly detain and arrest low-ranking bureaucrats or people politically unacceptable for the officials, rather than others who might be equally guilty. For instance, Irakli Okruashvili was only accused of misusing state money after he joined the opposition while all his alleged misconduct was committed, if it was, while he was Minister of Defence.

Many state-initiated projects lack transparency. For instance, nobody knows exactly how much money is in the so-called President’s Fund. People still don’t know how much money is being spent on the construction of the President’s Avlabari Residence in the centre of Tbilisi. The list can be prolonged. Although pensions have increased there is also a corresponding increase in the prices of everyday products and poverty still remains the number one problem for Georgian society, a problem which is more difficult to address when you do not know how much money there is, where it is now and where it is going.

Economic analyst Professor Jakob Meskhia states that although the budget’s volume has increased almost fourfold the living standards of the population have not increased accordingly. He gives different reasons for this. Much of the budgetary revenue goes in servicing external debts, and expenditures have increased immensely, in particular managerial expenditures, while issues concerning the development of the country are being neglected. Development projects are those which should provide jobs for the population. Professor Meskhia considers that serious mistakes have been made in selecting priorities. When the budget had doubled nearly one third of revenues were spent on defence and law enforcement. From an economic point of view this is lost money. The opposition has also asked many questions about expenditures which have been made which were not laid out in the budget.

The opposition has been irritated by Kakha Bendukidze, the former Economy Minister under Saakashvili, who said that due to the protests the month of April will be a “dead month” with no budgetary revenues accruing. His argument is challenged by the former President of the National Bank under Shevardnadze, Nodar Javakhishvili, who thinks that it is better for the country if the budget is half the size it is now but targeted to the country’s welfare rather than the caprices of the leadership. It could also be said that there are shortcomings in the methodology of compiling the budget and in calculating inflation rates and the consumer basket and the poverty margin.

“The country has no long-term strategy. The appropriate structures have not learned how to make prognoses about even short-term developments, let alone long-term ones,” states Professor Meskhia. He also highlights that budget changes are adopted by Parliament several times a year, which is a negative factor. The administration however insists on a positive interpretation of its budgetary policy and one of the architects of the current budget, Nika Gilauri, has been promoted to Prime Minister. So in this respect as in others Government and opposition are in an intellectual deadlock, with the people unable to do very much about it.