Issue 36: State Budget Performance – 2014

In 2014, state budget revenues are expected to be fully executed, while budget expenditures will reach 98% of the planned level. Moreover, tax revenues will exceed the planned indicator nearly by 70-80 mln. GEL.

In January-November 2014, the most significant increase in the revenues was from VAT (15.5%; 445.7 mln. GEL), excise tax (12.3%; 80.6 mln. GEL) and grant revenues (45%; 62.4 mln. GEL), compared to the same period last year. Social expenditures (24%; 445.7 mln. GEL) and expenses on goods and services (17%; 106.7 mln. GEL) have increased as well.

Source: Ministry of Finance of Georgia

In January-November 2014, budget revenues have been executed better (10.0%; 593 mln. GEL), compared to the same period in 2013. Among them, tax revenues were executed by 89.6%, grants – 139.6% and other revenues only by 65.8%. In total, budget revenues reached 89.4% of the planned indicator (7319 mln. GEL) and comprised 6544.8 mln. GEL.

Assuming that only 11.3% of the total revenues will be accumulated in December as it used be during last years, 830 mln. GEL will be added to the state budget revenues. Hence, the state budget revenues will be executed by 101%.

In January-November 2014, the state budget expenditures have been executed better (14.5%; 821.6 mln. GEL), compared to the same period last year. They reached 86.7% (gap 997.2 mln. GEL) of the planned state budget expenditures (7478.7 mln. GEL) and comprised 6481.5 mln. GEL mln. GEL.

With the given dynamics of the budgetary bodies, approximately 2% (150 mln. GEL) of the budget expenditures will not be executed. For instance, The Ministry of the Regional Development and Infrastructure will not utilize 50-60 mln. GEL, as well as Ministry of Education and Science will not utilize 20-25 mln. GEL.

Source: Ministry of Finance of Georgia

Source: Ministry of Finance of Georgia

In January- November 2014, tax revenues from VAT (2998.6 mln. GEL) reached 91.6% (gap 275 mln. GEL) of the annually planned amount (3274 mln. GEL).

According to VAT accumulation rate last year, in December 2014 revenues from VAT will amount to approximately 310 mln. GEL and comprise 101% of the planned level.

In the January – November 2014, Revenues form Income Tax (1579 mln. GEL) reached 89.2% (gap 191 mln. GEL) of the annually planned amount (1770 mln. GEL).

Based on last year’s experience, in December 2014, revenues from income tax will increase by 260 mln. GEL and reach 104% of the planned level.

Source: Ministry of Finance of Georgia

Source: Ministry of Finance of Georgia

In January – November 2014, budget revenues from profit tax (690.1 mln. GEL) reached 75.7% (gap 221.8. mln. GEL) of annually planned amount (912 mln. GEL).

The gap is too large and even with accumulation of 15% of total Profit Tax Revenues in December, budget revenues from profit tax will amount to 120 mln. GEL. Accordingly, only 89% of Profit Tax Revenues will be executed.

In January – November 2014, Revenues from import tax (86.9 mln. GEL) reached 86.9% (gap 13.1 mln. GEL) of the annually planned amount (100 mln. GEL).

Given that, in December 2013, import increased by 4.3%, compared to November 2013. In addition, in December 2014, GEL drastically depreciated against USD (6.7%), making imports more expensive. As a result, in December 2014, import is expected to increase by only 1.5% and generate 5 mln. GEL revenue from import tax. Hence, revenue from import tax will be executed by 92% of annually planned amount.

 Source: Ministry of Finance of Georgia

Source: Ministry of Finance of Georgia

In January – November 2014, the revenues from excise tax (735 mln. GEL) reached 99.5% of the annually planned amount (739 mln. GEL).

With the given dynamics of the revenues from excise tax and decrease of import growth rate in December 2014, nearly 78 mln. GEL will be accumulated in December resulting in 110% execution of the revenues from excise tax.