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Resume: In 2019, the planned budget of the Ministry of Regional Development and Infrastructure is indeed GEL 2 billion and it is the highest figure of the last years.

In 2018, the planned budget of the Ministry of Infrastructure and Regional Development was GEL 1.815 billion which was decreased to GEL 1.58 billion as a result of adjustments. Therefore, the planned budget of 2019 exceeds the same figure of 2018 by GEL 185 million instead of GEL 420 million as claimed by the Deputy Prime Minister. Maia Tskitishvili compares 2019’s planned figure to 2018’s adjusted figure which is not appropriate. The planned figure for 2019 exceeds 2018’s planned figure and 2018’s adjusted figure by 10% and 20% (GEL 420 million), respectively.

In regard to the second part of the statement, the expenses of the Ministry of Infrastructure and Regional Development were GEL 964 million under the cash method as of 1 September 2019 according to the Ministry’s information and which exceeds the same figure of the previous year (GEL 627 million) by GEL 337 million (54%) as stated by the Minister. Of additional note is that the spending of funds allocated for infrastructural parts was problematic in 2018. Nevertheless, the 2018 budget of the Ministry of Regional Development and Infrastructure was executed by 104.89%. On the one hand, this was stipulated by cuts in the planned amount and, on the other hand, by the formal transfer of significantly large sums (42% of the adjusted budget) from the budget which raised reasonable suspicion that the budget plan was artificially executed.

Analysis

The Minister of Regional Development and Infrastructure, Maia Tskitishvili, spoke about the current year’s budget and the state of infrastructural projects at the plenary session of the Parliament of Georgia. Ms Tskitishvili stated: “Money allocated in 2019 is unprecedentedly high. The Ministry has never had GEL 2 billion which is GEL 420 million more as compared to the previous year. As of 1 September 2019, we provided funds for GEL 964 million of work which is 54% more as compared to the same period of the previous year. This year, projects worth GEL 337 million more as compared to 2018 have already been implemented.”

In 2019, the planned budget of the Ministry of Regional Development and Infrastructure is indeed GEL 2 billion and it is the highest figure of the last years.

In 2018, the planned budget of the Ministry of Infrastructure and Regional Development was GEL 1.815 billion which was decreased to GEL 1.58 billion as a result of adjustments. Therefore, the planned budget of 2019 exceeds the same figure of 2018 by GEL 185 million instead of GEL 420 million as claimed by the Deputy Prime Minister. Maia Tskitishvili compares 2019’s planned figure to 2018’s adjusted figure which is not appropriate. The planned figure for 2019 exceeds the planned figure for 2018 and 2018’s adjusted figure by 10% and 20% (GEL 420 million), respectively.

Given the previous experience, it is possible that 2019’s planned amount will be adjusted again. Therefore, it should be compared with 2018’s planned amount instead of the factual figure.

Table 1: Budget of the Ministry of Regional Development and Infrastructure (Planned and Adjusted) and Execution Rate

Year

Budget

(Plan)

Budget

(Executed)

Fact

Execution Rate

Share in Total Budget

2012

717,115,100

767,980,011

655,075,159

85.29%

8.86%

2013

901,000,000

1,003,599,800

798,595,100

79.57%

10.29%

2014

875,000,000

935,734,500

904,963,100

96.71%

9.63%

2015

869,501,000

880,149,200

898,398,000

102.07%

9.03%

2016

950,000,000

967,461,900

971,817,600

100.45%

9.22%

2017

1,288,047,000

1,323,847,000

1,355,150,200

102.36%

10.98%

2018

1,815,000,000

1,584,100,000

1,661,664,448

104.89%

14.56%

2019

2,000,000,000

-

-

-

15.27%

Source: Ministry of Finance

In regard to the second part of the statement, according to the information of the Ministry of Infrastructure and Regional Development (appendix), the Ministry’s expenses under the cash method were GEL 964 million as of 1 September 2019 which exceeds the same figure of the previous year (GEL 627 million) by GEL 337 million (54%). In the first eight months of 2019, GEL 565 million was spent on improvements of the road infrastructure. In the last year, spending for such projects was GEL 375 million (34% less).

In the third quarter of 2019, the budget of the Ministry of Regional Development and Infrastructure was executed by 101.7% whilst the road infrastructure budget was executed by 108%. In the same period of the previous year, the budget of the Ministry of Regional Development and Infrastructure was executed by 79.8% whilst the road infrastructure budget execution rate was 76.1%.

Table 2: Ministry of Regional Development and Infrastructure and Road Infrastructure Nine Month Budgets in 2018-2019 and their Execution Rate

Year

Ministry’s Budget

(Nine Month Plan)

Fact

Execution Rate

Road Infrastructure

(Nine Month Plan)

Fact

Execution Rate

2018

1,010,882,500

806,237,600

79. 8%

661,599,000

503,796,500

76.10%

2019

1,309,509,000

1,332,737,000

101.70%

833,267,000

843,695,828

108%

Source: State Treasury

As we see, the nine month budget of the Ministry of Regional Development and Infrastructure in 2019 was executed in surplus as compared to the previous year.

Of additional note is that in accordance with the State Audit Service’s budget monitoring data, less than 80% of the allocated funds were spent for 22 of 64 capital projects in 2018 whilst there was no spending for 12% of those projects (spending at 0%).

FactCheck has written multiple times (see article 1, article 2) about the problematic nature of the spending of funds allocated for infrastructural projects in 2018. Nevertheless, the budget of the Ministry of Regional Development and Infrastructure was executed by 104.89% in 2018. In 2018, the planned expenses of the Ministry of Regional Development and Infrastructure were GEL 1.8 billion which was adjusted in December and cut to GEL 1.58 billion. Had this adjustment not taken place, the budget would not have been fully executed. The budget adjustment took place precisely to execute the budget plan. In addition, GEL 658.4 million (41.56% of the adjusted budget) was spent from the budget in the last month, or more precisely, that money was transferred from the budget to companies mostly as advance payment. Therefore, it can be concluded that the 2018 budget of the Ministry of Regional Development and Infrastructure was executed only on paper.

In accordance with the State Audit Service’s capital projects implementation monitoring, ten capital projects have not spent anything from the budget in the first nine months of 2019; that is, their budget execution rate is 0% whilst 20 projects have less than a 50% budget execution rate and 41 projects have budget execution rates within the margin of 50%-100%.

FactCheck will come back to the Ministry of Regional Development and Infrastructure’s budget execution topic by the end of this year and offer our readers updated information.


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