New state budget emphasizes social spending

Parliament passed a state budget for 2008 on December 28, putting into ink many of the promises made by Mikheil Saakashvili, the incumbent presidential candidate, to alleviate poverty and joblessness in Georgia.

Prime Minister Lado Gurgenidze told journalists after the parliament session that next year’s budget will be more socially-oriented; the finance minister added that social spending would account for GEL 1 billion of the 2008 budget, a GEL 400 million increase from 2007.

The budget predicts state revenue of GEL 5.1 billion. By the government’s numbers, expenditures will total GEL 4.6 billion.

The finance minister informed MPs that money for social spending would be taken out of the defense budget to the tune of GEL 400 million, bringing down the Defense Ministry’s budget to GEL 1.1 billion. The Energy Ministry will also see its funds cut, from GEL 226 million to GEL 61 million.

The Healthcare Ministry will get GEL 270 million next year, and the Education Ministry GEL 458 million.

“For the first time in Georgia’s history,” Gurgenidze triumphantly added, the government will be expecting a small budget surplus.

Annual inflation, the prime minister predicted, should not exceed eight percent next year.

“The national bank has implemented successful monetary policies, and as a result annual inflation has decreased from 11.5 percent to 11 percent in December,” Gurgenidze said.

The only MP who voted against the 2008 budget was Lado Papava. A former economy minister who recently left the majority faction in parliament, Papava warned that the jump in social spending could push inflation levels dangerously high.

“All the social programs put in place from the end of 2007 will aggravate inflation processes,” he told journalists after casting his vote against the budget.

Papava also questioned the government’s methodology in planning and presenting the budget, suggesting that expenditures in 2008 will be considerably higher than the government admits.

The government submitted a first draft of the 2008 budget to parliament in October, but withdrew it after then-president Mikheil Saakashvili appointed Gurgenidze to the prime minister’s post in November and promised to refocus state spending on social programs.