Beka Liluashvili: “[The government] has projected GEL 400 million in grants for the upcoming year’s budget.”

Verdict: FactCheck concludes that Beka Liluashvili’s statement is MOSTLY TRUE.

Beka Liluashvili’s views regarding the importance of grant funding is accurate and relevant to the context under which the statement was made. However, The claim referred to the projections for the “upcoming year 2024”, which align with the projected grant revenue of GEL 400 million, outlined in the document – Main Economic and Financial Indicators for 2024-2027 (for which the “upcoming year” was 2024). However, the “upcoming year” is 2025 as of today, for which the initial projected grant revenue (according to the document “Main Economic and Financial Indicators for 2024-2027”) amounted to GEL 350 million, but this figure has been revised to GEL 300 million in the updated version of the document “Main Economic and Financial Indicators for 2025-2028”.

Considering the aforementioned, FactCheck concludes that Beka Liluashvili’s statement is MOSTLY TRUE.

Analysis

During an appearance on the TV Pirveli show Dghis Ambebi (News of the Day), a member of the parliament and one of the leaders of the For Georgia political party, Beka Liluashvili, stated: “Do you know what the grants to be received in the upcoming year amount to? Grants totalling GEL 400 million are projected for the upcoming year’s state budget, to be allocated as a part of budget financing.” Liluashvili made this statement whilst addressing comments by ruling party representatives, including Irakli Kobakhidze, who had downplayed the importance of grants.

For context, it is essential to clarify that the statements minimising the importance of grants by members of the ruling party have become more prominent following the adoption of the Russian-style law. On one hand, there have been suggestions of double standards (the government receives foreign grants itself, whilst still labelling Georgian non-governmental organisations and media outlets that receive grants as “agents”); on the other hand, several donors have announced the suspension of grants allocated for the government. Therefore, these statements by government representatives intend to dismiss the impact of the government’s actions by suggesting that this impact is insignificant and focusing on the volume of grant amounts. In reality, the substantial damage is the deteriorated relationships, represented by the suspension of grants, which is a factor that cannot be quantified unlike the volume of grants.

Furthermore, it is crucial to note that the share of foreign grants in the budget of a well-functioning economy should not be excessively high. Grants are just one component of international partnerships. Foreign direct investment typically only makes up an important source of funding for the budgets of incomplete or quasi-state countries with certain exceptions.

Whilst the share of grants in the overall budget may not be high in the case of Georgia, they represent tens of millions in absolute values which fund specific objectives. These grants are reflected in both the state budget and also the budgets of autonomous republics and municipalities. The total amount of grants is indicated in the consolidated budget.

The consolidated budget is projected to receive GEL 400 million in grants in 2024 (constituting 1.64% of total revenues) according to the accompanying document (Baseline Scenario of the Main Economic and Financial Indicators for 2024-2027) of the approved draft of the 2024 state budget for Georgia. Furthermore, the grant amount was projected at GEL 350 million annually from 2025 to 2027.

The projected grant revenues in the consolidated budget for 2024 are still set at GEL 400 million (1.61% of the total revenue) in the revised version of the document – Main Economic and Financial Indicators of 2025-2028 – Baseline Scenario. However, the volume of grants has been reduced to GEL 300 million annually from 2025 to 2028.

Refer to the graph below for the volume of grant revenues and their shares in the consolidated budgets for recent years.

Graph 1: Grant Revenues in Consolidated Budgets

Source: Ministry of Finance of Georgia

The total volume of grant revenues that Georgia has received from 2013 to 2023, under the governance of the Georgian Dream, exceeds GEL 4 billion and constituted 2.9% of the total consolidated budget income for the aforementioned period. Moreover, an additional GEL 1.6 billion in grant income is forecasted for the period from 2024 to 2028 by the Ministry of Finance.

It is essential to refer to particular examples to illustrate the projects and their sources of funding that are set to be implemented using the aforementioned grant revenues. Grants received in 2024 constitute the following sources and objectives:

The European Union supports various projects with a total funding of GEL 108 million. This figure includes GEL 63 million for integrated territorial development, GEL 16.9 million for agricultural and rural development under the programme ENPARD, GEL 5 million for the water supply and drainage project in Ajara villages, GEL 3 million for energy reform in Georgia (EU-NIF), etc.

The German Credit Institution for Reconstruction (KFW) has allocated GEL 20 million for improving communal infrastructure in Imereti and Kazbegi municipalities, as well as Batumi, and projects aimed at supporting biodiversity and sustainable local development across the country.

The Eastern Europe Energy Efficiency and Environment Partnership Fund (E5P) is financing the rehabilitation and energy efficiency improvement of public schools in Tbilisi and mountainous regions by GEL 5.3 million and GEL 2 million, respectively.

The Eastern Partnership Technical Assistance Trust Fund (EPTATF) is funding the Kutaisi sewage project with GEL 1.2 million.

Given the limited resources despite the volume of the budget, it is wrong to dismiss the importance of the aforementioned aid allocated for specific objectives. For instance, Georgia could allocate GEL 5 million from its own budget for improving the water supply systems in Ajara villages[1] by reallocating funds from other programmes. However, many other regions face the same issue. Therefore, the same volume of such reallocations in grants could have funded addressing the same issue in other regions whilst also continuing the original programme that necessitated the adjustments of the budget, rather than the adjustments acting as a way to minimise the adverse impact of the government’s actions.