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Staff Cuts and Growing Salaries

The 2019 State Budget Grows Pensions by 20 GEL, as well as Salaries of Policemen, Rescuers and Firefighters.

 The 2019 state budget is planned to amount to 12 729 700 000 GEL. This is the initial variant of the main financial document of the country that the Government has already submitted to the Parliament. Under the document, the 2019 economic growth forecast is 4.5%.

“In the coming years economic growth indicators will rise gradually and it will rise to 5% by 2020, 5.5% by 2021 and 6% by 2022”, the state budget bill explanatory card reads. According to the document, the 2019 nominal GDP will be 45.1 billion GEL, while the figure is expected to rise to 57.9 billion GEL by 2022. The Ministry of Finance expects that the 2018 tax revenues will be fulfilled in excess. Consequently, the renewed prognosis makes up 10 500 million GEL.

The state budget expenditures will rise by 270 million GEL, namely the figure was 12.459 billion GEL in 2018 and იტ will rise to 12.729 billion GEL in 2019. It is also noteworthy that the 2019 budget bill’s initial variant does not comprise radical changes. As to pensions, it will increase by 20 GEL from January 1, 2019, as announced by the Government. In 2019, 1.925 billion GEL is included in the budget (1.7 billion GEL in 2017) to this end. contributory pensions will be financed by 170 million GEL. Infrastructure expenditures will also increase by about 140 million GEL, mainly for road infrastructure development.

The income tax forecast indicator makes up 3 365 million GEL, including the state budget ratio is 3 115 million GEL and the ratio of Autonomous Republics amounts to 250 million GEL.

Profits tax forecast indicator is 786 million GEL, VAT – 4 482 million GEL. As of 2019, the excise tax forecast indicator is 1 505 million GEL. Imports tax forecast indicator is 83 million GEL and all other taxes amount to 40 million GEL;

“In 2019 excessive payments made in previous years will be actively refunded (mainly VAT) and we expect that more than 400 million GEL will be returned in 2019. According to the document, budget expenditures from the state budget summary assignments make up 11 268.2 million GEL, grants – 96.5 million GEL and credits – 1 365 million GEL.

From total amount of the budget expenditures, social allowances account for 3 773.1 million GEL, salaries 1 473.8 million GEL, goods and services – 1 194 million GEL and so on.

According to the state bbudget bill, in 2019 the government will decrease the current liabilities by 933.9million GEL, of which 893.8 million GEL will be directed to covering external state liabilities and 40.1 million GEL will cover domestic state liabilities and debts.

It is interesting that, according to the 2019 state budget bill’s initial variant, number of employees at budget-funded offices will be reduced. In 2018, the number of employees was 113 613 persons, while the figure will decrease to 112 100 persons in 2019. This signifies 1 513 persons will be fired. At the same time, expenditures on salaries in 2018 amounted to 1.413 billion GEL, while under the 2019 budget bill, this amount is 1.473 billion GEL.

According to the 2019 budget bill, salaries will increase to the staff of border police and emergency management office. Interior Ministry allocations will be 643.5 million GEL. Salaries of inferior policemen that increased in 2018 will be fully financed. At the same time, salaries inferior policemen will increase by averaged 250 GEL starting January 1, 2019.

Emergency Management Office will receive 87.6 million GEL, including increased salaries of firefighters and rescuers will be financed by additional 5.5 million GEL.

Seemingly, the budget-funded organizations do not care for cutting expenditures, however, the bill discussion process may outline several corrections. As a result, initial and final versions of budget bill radically differ from each other.

“The year of 2019 will see an essential growth in financing of several directions. We have full support from international finance institutions. We are waiting for their recommendations and I do not rule out that the budget will be considerably cut in both parts of revenues and capital expenditures. This is a normal process”, Prime Minister Mamuka Bakhtadze noted.

By Merab Janiashvili
Economic Analyst
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