GEO

Comments by World Bank representative match up with TI Georgia's statement on the budget deficit

24 March, 2015

 

On March 19 we published a study challenging the Ministry of Finance’s (MoF) budget deficit and spending figures, which was followed by the MoF changing its budget deficit as given on its official web page for a third time over the past week. As we noted in our previous announcement, shortly after TI Georgia observed the mistake in the calculation of the budget deficit, the official figure for the 2014 budget deficit on the Ministry of Finance’s website changed from 3.2% to 3%. Today, on March 20, the figure has returned to 3.2%. Unfortunately this change has not been explained, in contrast to when on March 20, the Deputy Finance Minister responded to TI Georgia by saying that the 3.2% deficit indicator had been on the Ministry’s website only for a short period of time and that the correct figure was less than 3%. This was also confirmed in an announcement by the Ministry of Finance on March 19.

The Ministry of Finance’s website, 13 March 2015

The Finance Ministry’s website, 19 March 2015

The Ministry of Finance’s website, 20 March 2015

At a press conference on March 20, the first deputy Minister of Finance, Giorgi Tabuashvili, announced that “the calculation of the deficit did not account for the turnover in the Treasury’s revenue reserve subaccount.”

At the same press conference, the World Bank’s representative noted that the deficit should be calculated by using the approach which TI Georgia had referred to: it should include the balance of the revenue reserve subaccount. The World Bank representative also confirmed that the deficit in 2014 was 2.95% and not 3.2%, while the MoF insists the deficit is 3.2%.

We believe it is important that the Ministry of Finance explains to the public why the 2014 budget deficit figure changed a number of times on its official website over the course of two days. We hope that the Ministry of Finance acknowledges the problems, which we brought to their attention, rather than cast doubt on the professionalism and competence of TI Georgia’s staff.

Notably, the original question posed by our research – why was the unprecedentedly large sum of GEL 82 million kept on the Treasury’s revenue reserve subaccount, when these funds could have been put to better use – has not as yet been answered.