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Analysis of 2012 State Budget and Elections

08.02.2012

Coalition “Freedom of Choice”

General Evaluation: 2012 State Budget of Georgia is significantly different from 2011 state budget due to election year. The expenditure part of the budget is particularly interesting, which regulates expenditure policy of the government through various activities. There are several expenditures in the relevant part of the state budget, which directly or indirectly aims to increase voters’ content which will finally assist the authority to gain more votes during the elections.

All abovementioned circumstances can be estimated and analyzed when budget expenditures are clarified in details and transparently. It means description of planned activities and directions that should be funded. 2012 State Budget of Georgia is significantly insufficient in this direction and unlike 2011 budget details about expenditures are expressed only formally. While the 2011 state budget contained about 3 000 various details, there are only 1 500 clarifications in the new budget. The draft-budget worked out by program budget format provides information about general events and the amount of concrete program funding is not clarified. Several programs, which were launched in 2011, will be widened in 2012 and their budget is exposed only in one figure.

The authority, skilled on certain budget issues and election technologies, tries to hide expenditures in the budgets, which will be considered usage of administrative resources [during elections]. 2012 State Budget does not contain information about expenditures of the previous year, in order not to compare the election year of 2012 with the non-election year of 2011. Despite similar difficulties, the “tricks” of the government to gain more votes during the elections is clearly detected when comparing 2011 and 2012 budgets.

Interesting Expenses in Relation with Elections

One example of increased expenditures in relation with the elections is funding of regional infrastructure, whose most part is funded by foreign credits (153 million GEL out of 193 Million GEL). It includes funding of regional and municipal infrastructure, which is six times bigger than it was in 2011 and 4/5 of it is funded by credits. Infrastructural projects are good trump for the government. Traditionally, candidates of the ruling party attend opening ceremonies of infrastructural projects, which are actively broadcasted by national TV-Channels and are visible stocks for the ruling team.

By 2012, the budget of the Village Promotion Program was increased at 10 million GEL and amounted to 50 million GEL. Local (village) needs are funded from this program mostly. The funds for projects to be implemented in the regions of Georgia was increased three times and made up 297 million GEL. On the one hand, those funds will be spent on infrastructure rehabilitation, and on the other hand it will be a good instrument for the ruling party to gain political dividends by attending opening ceremonies of infrastructure and various projects (we have already witnessed similar precedent, the President opened hospitals throughout Georgia in the framework of election campaign).

In 2012, the funds for various social programs will also be increased, including the pension funds and various healthcare programs. Particularly, from September, 2012, the amount of pensions for retired people of different ages will increase and it will amount to 140 GEL in comparison to current 125 GEL. Thus, the amount of annual pension budget will increase from 907.8 million GEL up to 1072. 5 million GEL. From September 1, 2012 the allowances in the framework of Social Packet will be also funded in accordance to the government’s resolution. Concrete details are not known yet and apparently, it will be pre-election surprise.

In 2012, expenditure funds for agricultural programs will also increase that will amount to 25 million GEL in total. Among them is intensification of agricultural production, which aims promotion of development of nursery and storehouse farms. The viticulture and winery funds will also increase, which will be mostly spent in the fall of 2012, just before the scheduled elections.

By 2012, funds of the president and government of Georgia –will again receive 50 million GEL each. Although the funds are not increased, faulty mechanisms of expenditure were not changed in fact. It means, due to previous practice, the activities oriented on direct bribery of voters will be funded from the president’s and government’s funds.

Throughout 2012, financial institutions funded from the budgets of Georgian state, Abkhazian Autonomous Republic, Adjara Autonomous Republic and local self-governmental entities will be authorized to increase allocation of salary funds no more than 1/12 of the approved allocations envisaged under the same article. Similar principle of increase continues like previous years, though we have some changes too. Due to past experience, we can suppose that more personnel will be recruited during the pre-election campaign as it happened in the past.

Other Interesting Expenses and Facts

There is unclear expenditure in the 2012 budget – promotion efficient functioning of state governmental agencies funded with 10 million GEL. Similar expenses were not envisaged in the last year budget. Besides that, 500 000 GEL is allocated for state awards. Neither this program was funded last year.

One more initiative, which was not reflected in the budget and is unclear how the government will fund it, is: funding TV-advertisements of political parties from the state budget, which was initiated by the Chairman of the Legal Committee of the Parliament on January 27, 2012.

The Ministry of Finances did not approve program preparation principle of local budgets that is also significant and related with the elections. Thus, the Minister of Finances breached the requirements of the Georgian Budget Code and resolution # 284 of the government of Georgia, issued on March 10, 2010, which obliged him to approve this type of budget. We petitioned to the Ministry of Finances to clarify the situation, though they have not replied to us for more than six months. It proves the transparency of local budgets was sacrificed to the political decision. Otherwise, the Minister of Finances should have been strictly punished for similar violation.

CEC Funding

Increase of CEC funding is fair decision. 12.4 million GEL from 2011 was increased up to 39. 6 million GEL in 2012. The funds for election operations were particularly increased (total 26.9 million GEL), that shall be wasted on the monitoring of election lists, financial and technical maintenance of elections, advertising campaign and media monitoring. Elections cannot be organized without those procedures. However, effective public control (monitoring) is more important than expenditure efficiency.

Short Conclusion

Finally, when the government funds long-term activities and implements the public order, the budgets of election and non-election years must differ only with election administration expenses. 2012 state budget was not drawn up based on this principle and aims to assist the ruling party to gain political dividends.

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