Issue 79: State budget compliance – 2016, I-II Quarters

 In the first half of 2016:

• State budget revenues are executed by 100.5%, while expenditure – by 95.8%.

• Expenditure on social benefits significantly increased (12.1%; 161.8 mln GEL) compared to the corresponding period in 2015. This might be due to the increase the expenditure on public health (23.4%; 62.5 mln. GEL).

Source: Ministry of finance

Source: Ministry of finance

In the first half of 2016 state budget revenues increased (3.4%; 128.8 mln GEL) and reached 46.2% of the planned revenue (8.5 bln GEL) for 2016. In the given period, state budget revenues were in line with the six-month plan, reaching 100.5%. Breaking this down further, tax revenues were at 100.8%, grants at 92.4% and other revenues at 99.4%.

In the first half of 2016 state budget expenditures increased (7.4%; 277 mln GEL) and reached 47% of planned expenditures (8.5 bln GEL). This indicates that this year’s budget expenditures will be more balanced. According to the six-month plan, state budget expenditures have been carried out as planned up to 95.8%. Looking in more detail, expenditure on remuneration was at 97.9%, goods and services at 91.7%, subsidies at 94.6%, grants at 95.2%, social care at 99.9% and other expenditures at 87.7%.

Source: Ministry of finance

Source: Ministry of finance

In the first two quarters of 2016 tax revenues increased (4.6%; 163.5 mln GEL). This increase was mostly due to the growth of revenue from unclassified taxes (30-fold; 315.6 mln GEL)* and excise tax (31.8%; 118.9 mln GEL). It is important to note that revenues reduced from VAT (-11.2%; -186.6 mln GEL), income tax (-2.7%; -24.7 mln GEL), profit tax (-10.0%; -56.8 mln GEL) and import tax (-8.4%; -3.0 mln GEL).

Revenues from VAT in 2016 exceeded the corresponding indicator of 2015 only in February (3.3%; 8.3 mln GEL). In all other months, there was a significant reduction: January – 25.1%, March – 17.2%, April – 4.5%, May – 6.1% and June – 13.1%.

* This can be explained by the fact that in 2016 the method to distribute collected tax revenue between specific tax categories changed. More specifically, the total tax revenue is now accumulated in a general account before being distributed.

Source: Ministry of finance

 Source: Ministry of finance

In the first half of 2016 compared to the corresponding period of 2015, state budget expenditures increased in the following categories: social benefits (12.1%; 161.8 mln GEL), remuneration (6.0%; 40.2 mln GEL) and subsidies (33.5%; 36.9 mln GEL), while expenditure on grants reduced (-25.1%; -137.2 mln GEL).

The volume of social expenditures, in the first half of 2016 exceeded the corresponding indicator of 2015 in all months. The highest increase was in June (21.5%; 46.4 mln GEL). This might be due to the increase the expenditure on public health (23.4%; 62.5 mln. GEL).

Source: Ministry of finance

In the first half of 2016 the state budget deficit reached 211.5 mln GEL, which is significantly higher (194.1 mln GEL) than the corresponding indicator in 2015 (17.4 mln GEL) and on the other hand significantly lower  (268.1 mln. GEL) than the 6 months plan for 2016 (479.6 mln. GEL). The increase in budget deficit can be explained by the negative operational balance (revenues – expenditures) (-61.4 mln GEL) in the first half of 2016, while this indicator was positive (86.6 mln GEL) in 2015.

        Source: Ministry of Finance of Georgia                                                                                                                                           * Forecasted 
                         National Statistics Office of Georgia
                         National Bank of Georgia