GEO

The Georgian defense budget: seven years without supervision

27 May, 2013

Georgian Defense spending is the third largest after education and healthcare.  It is important that we know that defense spending is both efficient and lawful. 

2005 to 2006 was the last date on which the State Audit Office (the Georgian Chamber of Control) conducted an old-style comprehensive review (revizia) of the Ministry of Defense’s spending, and even this review did not cover all departments within the ministry.

In 2008, Georgia and Russia were at war and defense spending accounted for approximately 22 per cent of the state budget. Serious questions remain as to why the country’s supreme auditing body did not consider it necessary to conduct a financial audit of the ministry following the end of the war. TI Georgia believes it is important to investigate how efficiently the ministry has managed state assets and public spending.

Following the 2006 old style comprehensive revizia (review), the Chamber of Control conducted an audit of the execution of state budgets of the Ministry of Defense in 2008 and 2009, which is an incomplete account of spending. Audit reports of the state budget execution show that this kind of audit cannot replace a financial or compliance audit.

Moreover in 2009, the law on Chamber of Control was amended and the older system of revizia was replaced with an audit. However, the Chamber of Control instead chose to perform a budget execution audit. As a result of this legislative change, most government ministries have been audited under the new system - but not the Ministry of Defense.

It is noteworthy that the results of the 2009 budget execution audit were kept entirely confidential. This may have been warranted by the findings, but this leaves the public with even less information regarding the Ministry of Defense’s spending, which remains opaque. Over the course of the last seven years the state did not believe it necessary for it or the public to determine:

  • Whether defense expenditures were lawful and appropriate
  • How efficiently the defense budget is managed
  • Whether inventories of military equipment were updated
  • To what degree the ministry’s activities and financial system correspond with the law

The country’s supreme auditor does not and cannot have an obligation to audit every public institution on an annual basis. Nor can the whole of the defense department’s spending be made public, for reasons of national security. However this secrecy makes public supervision a less effective mechanism. For this reason and considering the sheer scale of defense spending and the length of time that has passed without a thorough and public audit, it is important for the government and the new management of the ministry to be interested in how the ministry has spent its funds over the past seven years, and in particular wartime spending.

Author: Mikheil Kukava