The government in Georgia plans 140 million of budget cuts, about USD 60 million with today’s currency rate.
The finance minister on Monday presented an adjusted budget to the cabinet of ministers.
He said that the state budget, which is eight billion laris (about USD 3,5 billion) will be reduced by 1.8 percent, but that the cuts won’t touch social expenditure.
The budget sequestration applies to ongoing expenses mostly in the implementation of capital projects.
Khaduri said that the adjusted budget includes expenses necessary to cover the losses and clean-up work after the recent flood. Money will be allocated for the Ministry of Regional Development and Infrastructure to cover damages caused by the disaster in Tbilisi and surrounding villages.
“Capital and social expenses have not been reduced but [what has been] reduced is only ongoing resources. We have the resources to increase capital expenses this year,” he said. “We are working with donors and most of their financing will be directed to capital expenses.”
Most of the reduced expenses apply to law enforcement bodies: the Interior Ministry and the Ministry of Defense.
“I want to thank my colleagues who understood our problems. Both the Interior Ministry and the Defense Ministry were quite understanding,” he added.
The finance minister had a deadline for introducing a sequestrated budget before June 10, following an order by the prime minister in the beginning of the month. However, Khaduri asked to extend the term for one week, but during this time Tbilis was hit by a disastrous flood, which is why the adjusted budget wasn’t presented until Tuesday.
Talk began early this year of a need to cut the budget, following a drop in the value of the national currency, lari. Government opponents and financial analysts advised the government to correct the budget, but the government for a long time denied that there were any problems. In June, the PM finally said that the budget had to be reduced.
After the bill was presented, PM Irakli Garibashvili said the adjustments are a ‘normal process’ as there is a serious crisis in the region.
“This is normal and I can say that we should have done it earlier, but it is better late than never. Almost every state in the region has adjusted its budget. Of course, this is the result of a serious crisis in the region. There is a difficult situation everywhere, in Ukraine and in Russia as well. So we also adjusted to the new reality,” Garibashvili said.
The revised budget will now be handed to parliament for approval.