The parliament approved the 2024 state budget in December 2023. The country’s primary financial document projects a 5.2% economic growth, plans for a 2.5% budget deficit, expects the government debt-to-GDP ratio to be 38% and allocates GEL 25 billion to state budget expenditures – an amount higher by GEL 800 million than initially stated. The consolidated budget is expected to total GEL 28.8 billion, encompassing the budgets of autonomous republics and municipalities.
Whilst almost all institutions will receive larger finances, the priorities remain unchanged. The Ministry of Labour, Health and Social Defence of Georgia has been allocated GEL 7.8 billion, a figure GEL 700 million higher than 2023, and constituting almost a third of the entire expenditure side of the budget.
The government plans to mobilise GEL 19.1 billion for 2024 expenditures which is GEL 2.4 billion higher than the 2023 plan. Additionally, the new debt is planned to be a total of GEL 3.3 billion. The revenues of grants, privatisation, reduction in financial assets and other sources of income are expected to amount to GEL 1.9 billion, contributing to the combined income account of GEL 24.6 billion.
Almost 78% of the central budget will be comprised of expenditures. In particular, the majority of these expenditures will be made up by VAT at GEL 7.4 billion. Due to Georgia’s free trade agreement with most of its trade partners, the import tax constitutes less than one percent of the total expenditures.
Graph 1: National Taxes (GEL million)
Source: Ministry of Finance of Georgia
Property taxes could not be included on the graph above as they are a sub-type of local taxes, contributing to the municipal budget. Property taxes are set to finance the 2024 municipal budgets with GEL 650 million according to the explanatory note.
The government allocates the accumulated wealth from taxes and other income sources to ministries and agencies. The ruling party has declared social assistance as its priority; thus GEL 3.9 billion will be spent on pension provision whilst GEL 1.4 billion will be utilised to finance defence. For comparison, the Ministry of Defence was financed with GEL 1.5 billion whereas pension allocations were at GEL 455 million in 2023. Despite a nominal reduction in the finances of the Ministry of Defence, pension expenditures grew eight and a half times. Apart from the fact that the pension for individuals below the age of 70 years grew eight-fold from GEL 38 to GEL 315 and 11-fold for individuals above 70 years of age from GEL 38 to GEL 415 (the pension amount was GEL 38 from January to November in 2007, later increasing to GEL 55 in December), the number of pensioners also increased by 23% from 680,000 to 838,000 in 2012-2023 (data before 2012 cannot be found on the webpage of the Social Service Agency). Almost 10% of pensioners live in mountainous regions and, therefore, receive an additional 20% since the implementation of the policy in 2016.
The aforementioned ministry plans to spend GEL one billion in 2024 for universal healthcare provision with an additional GEL 1.5 billion allocated for social assistance to target groups.
Infrastructure and education remain priorities in addition to social services with the respective ministries receiving GEL 3.4 billion and GEL 2.5 billion for their expenditures. The majority of the infrastructure budget, at GEL 1.2 billion, will be utilised to build expressways, followed by an expected expenditure constituting GEL 550 million on the restoration and the rehabilitation of water supply systems. The Ministry of Education’s budget allocates GEL 1.3 billion to financing public schools. Moreover, following the legislative changes in the latter part of 2023, the youth department has moved from the Ministry of Culture and Sports to the Ministry of Education and Science, further increasing the institution’s financing.
Five ministries are set to receive respective shares from the state budget higher than GEL one billion in 2024.
Graph 2: Ministry Financing Plan (GEL million)
Source: Ministry of Finance of Georgia
The other six ministries (Ministry of Environmental Protection and Agriculture, Ministry of Economy and Sustainable Development, Ministry of Culture and Sports, Ministry of Justice, Ministry of External Affairs and Ministry of Finance) will collectively receive GEL 2.7 billion from the 2024 central budget.
Additionally, the following institutions will be allocated financing exceeding GEL 100 million: the pension plan, State Security Service of Georgia, CEC, courts of Georgia and the Public Broadcaster. The aforementioned six institutions will receive approximately GEL 1.2 billion in total with the co-financing of the pension system receiving GEL 430 million – the largest share amongst them.
Although the budget has already been approved, adjustments are nevertheless legally permissible. Given that the economic growth exceeds projections, the budget is likely to increase and vice versa - if growth is lower than expected, the budget will be reduced. The allocated finances of certain institutions may also be subject to alterations. In recent times, the most drastic adjustments were made to the 2020 budget when the government debt exceeded the predicted figure by GEL 5 billion. However, the approved budgets for 2021-2023 were corrected to account for growth trends.
