about the fulfilment of the six-month 2016 state budget plan, a member of the United National Movement, Roman Gotsiridze, responded at the briefing. Mr Gotsiridze stated: “The six-month revenue plan for the 2016 state budget was GEL 4.636 billion whilst, in fact, only GEL 4.428 billion was mobilised to the budget. The deficit constitutes GEL 208 million. The amount of six months of revenue this year is GEL 366 million less as compared to the same period of 2015. At that time, the six-month revenue amount was GEL 4.794 million.”FactCheck
took interest in the accuracy of the statement.
Theoretically, the fulfilment of the budget means that every separate component is fulfilled according to the plan. However, of particular interest is the fulfilment of the budget in larger sections such as incomes and expenses, revenues and expenditures, and liabilities and tax revenues.
The difference between budget revenues and budget incomes is that the revenues are an integral part of the incomes, together with borrowed money and revenues from privatisation. At the same time, if the larger section of the budget is fulfilled, it does not mean that every sub-section of this larger section was fulfilled as well. On the contrary, it is possible to have budget revenues fulfilled but the larger income section to be unfulfilled if some other parts of the overall income section fall short. In this case, this is the cause of the difference between the positions of Roman Gotsiridze and the Ministry of Finance.
The information of the Ministry of Finance does not contain factual inaccuracies and is true. Roman Gotsiridze is also right to mention that specific components of the budget were not fulfilled. However, there are some factual inaccuracies in the data analysis. Table 1 illustrates the fulfilment indicators for the first six months of the 2015 and 2016 budgets.
State Budget Incomes and Revenues (First Six Months)
As illustrated by Table 1, according to the six-month data, the revenue section of the 2016 state budget was fulfilled in surplus with its factual fulfilment at GEL 3.96 billion which is GEL 128.8 million more as compared to the same period of 2015. However, the budget was not fulfilled in the section of incomes with a factual fulfilment of GEL 4.34 billion which is GEL 201.4 million less as compared to the planned amount and GEL 360 million less as compared to the same period of the previous year. Of note is that tax revenues, as another important section of the budget, were fulfilled in surplus and reached GEL 3.74 billion which is GEL 163.5 million more as compared to the same period of 2015.
The reason why the budget’s income part was not fulfilled was that the liabilities part of the budget increased but in an amount GEL 230 million less than was scheduled in the plan. Of further note is that if we look at long-term preferential investment loans, their fulfilment rate has a deficit of only GEL 8.9 million whilst the actual increase in domestic liabilities rose by GEL 54 million more than was planned. Therefore, the reason for the budget’s income part not being fulfilled is the failure to absorb foreign loans aimed at supporting the budget.The Ministry of Finance released a statement
in this regard and declared that the state budget borrowed the necessary amount of money which was enough for budget needs and said that the issue of the liabilities part not being fulfilled was because of problems occurring in the expenses section of the budget. However, in light of the refusal to increase foreign borrowing, the actual domestic borrowing constituted 811% of the planned amount which raises some questions.
In the first six months of the 2016 state budget, the fulfilment rate of the expenses sections lags behind the planned amount by GEL 238 million. This was caused because the money planned for the following directions was not spent: general state services (GEL 58.6 million), education (GEL 69.3 million), economic activity (GEL 54.2 million) and public order and safety (GEL 33.5 million).
According to the data of the first six months of the 2016 state budget, the revenues section of the budget was fulfilled by 100.5%. The numbers named by Roman Gotsiridze refer to indicators of incomes and not revenues. The deficit in the incomes part is GEL 201 million whilst, as compared to the same period of 2015, the incomes part is GEL 360 million less in the first six months of 2016. However, the refusal to take loans directed toward budget assistance is a decisive factor for the incomes part of the first six months of the state budget for 2016 not having been fulfilled. If we take into account the lagging behind in the expenses section, this was a correct decision.Therefore, FactCheck concludes that Roman Gotisiridze’s statement is HALF TRUE.