Resume: The 2019 budget of the Ministry of Regional Development and Infrastructure has been increased by the factor of 2.6 as compared to the 2012 budget (adjusted) whilst it is also 20% larger as compared to the 2018 budget (adjusted). In 2012-2019, the share of infrastructure funding in the total budget assignments increased from 8.9% to 15.3%.

An increase in budget funding itself is, of course, a positive development but the budget execution is also important. It is true that the budget for 2018 was executed by 104.89% according to official data. However, of note is that the budget of the Ministry of Regional Development and Infrastructure was adjusted and cut by GEL 230.9 million. The budget would not have been fully executed if not for the budget adjustment. There is a suspicion that the budget adjustment happened precisely to fulfil the budget plans. In addition, GEL 658.4 million (41.56% of the adjusted budget) was spent from the budget in the last month of the year or, more precisely, these funds were transferred from the budget. Based on this information, it is possible to claim that the 2018 budget of the Ministry of Regional Development and Infrastructure was only formally executed and the spending of funds allocated for infrastructural projects remains problematic.

It is also known that the construction of several sections of one of the most important infrastructural projects – the high-speed highway – is being carried out with problems. The high-speed highway construction budget was corrected in December 2018 and cut by GEL 149.3 million (to GEL 674.5 million). In addition, GEL 491.2 million was spent from the budget in December.

Therefore, we see that both the nominal amount of funds allocated for infrastructure as well as its share in the budget are on the rise. However, the Prime Minister’s figures are somewhat exaggerated. In addition, budget spending is a significant problem.

Analysis

The Prime Minister of Georgia, Mamuka Bakhtadze, spoke about the budget of the Ministry of Regional Development and Infrastructure and stated: “We in fact trebled the budget for regional development as compared to 2012 whilst the 2019 budget for our regions and for the development of their infrastructure was increased by 20% as compared to the previous year. This is nearly GEL 2 billion.”

In 2012, the adjusted budget of the Ministry of Regional Development and Infrastructure was GEL 768 million. In 2019, funding for this Ministry constitutes GEL 2 billion. Therefore, the budget of the Ministry increased by the factor of 2.6 (by 38.39%) as compared to the 2012 budget (adjusted). In regard to 2018, the budget of the Ministry was GEL 1.58 billion (adjusted) which is almost 20% less as compared to the 2019 budget (GEL 2 billion). The Ministry’s budget to GDP ratio increased from 2.5% to 4.5% in the period of 2012-2019. FactCheck also studied the figures of the Ministry of Regional Development and Infrastructure’s budgets and their execution in the previous years.

Table 1: Adjusted Budgets of the Ministry of Regional Development and Infrastructure and their Execution Figures in 2012-2019

Source: Ministry of Finance

In the last years, the highest amount of the Ministry of Regional Development and Infrastructure’s budget was registered in 2018-2019. In addition, the share of infrastructure funding in the total budget is the highest in these same years. In 2019, the Ministry’s budget to GDP ratio is 15.3% and it is increased by 6.41 percentage points as compared to 2012 which is significant growth.

In regard to budget execution, the Ministry of Regional Development and Infrastructure’s budget has always been executed in surplus since 2015. However, the picture became different in 2018. In 2018, the Ministry’s 12-month budget execution was 104.89%. Therefore, the budget was executed in surplus; however, this happened as a result of cutting the planned amount of budget spending after changes were enacted in December 2018. In fact, the budget’s spending component was executed only formally whilst there are significant flaws in spending. In particular, the planned amount of the Ministry’s budget was GEL 1.82 billion. In December 2018, the budget was adjusted and cut by GEL 230.9 million (to GEL 1.58 billion). If not for the adjustment, the budget would not have been fully executed. In addition, GEL 1 billion was spent in the first 11 months of 2018 whilst GEL 658.4 million was spent (41.56% of the adjusted budget) in the last month of the year. This is a very high figure and sets objective ground to have suspicions about making transfers from the budget to have it formally executed. Of note is that GEL 177.4 million was spent in the last month of 2016 and GEL 214 million was spent in the last month of 2017. These figures are much lower as compared to last month spending in 2018.

Of further importance is that the adjusted budget of the Ministry of Regional Development and Infrastructure increased vis-à-vis the planned amount in 2012-2017 and budget funds only decreased in 2018. There were problems in certain sections of the high-speed highway construction project. The planned budget for the construction of the high-speed highway in 2018 was GEL 823.8 million. The budget was adjusted in December 2018 and cut by GEL 149.3 million (to GEL 674.5 million). GEL 491.2 million was also spent in December.


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