Where is money of the Georgians?25.06.2009 | 14:00
Delays in salaries are again discussed in Georgia. Acute shortage of budget funds was reported by a local newspaper in Poti. The Finance Ministry had to save the situation. But the government itself is facing budget deficit.
Public sector employees in Poti have received their April and May salaries after a two-month delay. The problem was caused by a sharp decrease in budget revenues. Because of the crisis the budget shrank twofold as compared to last year and was a bit more than GEL12 mln (USD 7.3 mln), radio Kommersant reports with reference to Free Word newspaper.
However in March the income part of the budget was not executed with the core of it being privatization revenues in accordance with this plan.
The Finance Ministry was forced to provide GEL1.5 mln financial assistance to the city. However in April and May the income shortfall was repeated. As a result over the last five months the budget deficit has reached GEL 1.6 mln. The country's government had to lend money to local authorities again.
In order to avoid further problems the head of local budget and financial service Vasily Todua suggests leaving the amounts derived from collection of income tax in the regions.
Budget shortage in tandem with the current economic downturn may affect other localities in Georgia except for the capital where it has already been announced about GEL 64 mln budget increase. The experts however believe the Finance Ministry should not be so extravagant with the funds and should not refuse to collect taxes to please the local authorities. Otherwise the state budget will not be executed.
Expert David Narmania told Kommersant radio many regions have faced the problem of budget execution and did their best to mobilize funds. Otar Konjaria advised that local officials plan revenues in a better way. He explained the revenues of local authorities should not depend solely on privatization. "The local authorities have their own income, from property tax for instance, - Konjaria reminded, - if these funds are not mobilized a residual debt is formed meaning the tax authorities are not efficient".
It is quite doubtful that tax authorities will manage to recover debts from Georgians who lost their jobs. Konjaria can equally direct his reproaches to the central government. Though Georgia's budget was supposed to be reconsidered and increased by GEL 312 mln it was not due to the rise in tax proceeds. On the contrary this budget item has not been executed for several months on end.
According to Banks&Finance reduced collection of income tax indicates Georgian economy's intricate situation. The issue of treasury securities and foreign grants can save the budget but will not change the situation in the real sector where incomes of common people are created. Shota Gvenetadze, a leader of Movement for Fair Georgia believes the economic growth will drop by 7 % at a minimum this year and not by 1.5% as the government forecasts. In autumn the country might face the threat of default on salaries and pensions, he warned.
His words are confirmed by "pilot" delays in salaries to public sector employees in Poti and post offices clerks, as the Labor Party reported earlier. Its leaders urged to auction the president's aircraft and Mikheil Saakashvili's residence in Tbilisi to pay salaries to public employees. "Millions of dollars are spent on foreign trips of Mikheil Saakashvili and his team. And this is budget money", - Soso Shatberashvili, Labor Party Secretary General stated live on TV.
"We need a feasible budget - not the figures on paper. We call on the authorities to bring the budget in compliance with the reality", - Shota Gventadze is quoted by Trend IA. According to him the envisaged incomes from grants amounting to GEL 555 mln and tax revenues will not be executed. According to ex Prime Minister Zurab Nogaideli's estimations this year's budget will have a billion lari deficit. The politician believes the solution is to ease the tax burden for business community in order to stimulate real economy recovery.
Georgian Finance Minister Kakha Baindurashvili does not share the pessimism of oppositionists. As he told Kommersant radio now it's not the time to cut taxes in excess of what was planned with a 6% budget deficit. As for pensioners and public sector employees they can sleep well as long as Saakashvili is in power. "I can definitely say the pensions, salaries and social expenses are not and will not be in jeopardy with the current government", - the Finance minister promised. Hardly those whose wallets have been without salaries for months will believe him.