The Government of Georgia has submitted the draft law “On the 2025 State Budget [1]” to the Parliament. We offer a brief analysis of the draft budget by Transparency International – Georgia. It is noteworthy that the draft under consideration is an initial version of the budget, which will be returned to the government twice for amendments before it is finally adopted. It is possible that in December, the Parliament will adopt a budget that differs significantly from the current one.
Key findings
State budget receipts[1]
In 2025, the Georgian state budget receipts will amount to GEL 26.9 billion, exceeding 2024 by GEL 2.3 billion (9%).
The most significant contribution to the increase in the budget receipts will come from tax revenues, which will increase by GEL 2.1 billion to GEL 21.2 billion in 2025. Among others, income tax revenues will increase by GEL 830 million; VAT revenues by GEL 671 million, and profit tax revenues by GEL 210 million.
Grants from international organizations and governments will decrease by GEL 91 million. The largest decrease will be in grants from the European Union. In 2025, the Government of Georgia will receive a grant of GEL 15 million from the European Union, which is GEL 92 million less than in 2024. The EU grant of GEL 15 million will be spent on the water supply project for the villages of Adjara and the rehabilitation of the Vardnili and Enguri hydroelectric power plants. A number of programs such as territorial development, labor market development, agricultural development, etc. will no longer be financed by the European Union.
Budget expenditures[1]
Budget expenditures for 2025 will amount to GEL 27 billion, which is GEL 2 billion (8%) more than in 2024.
The largest increase (GEL 893 million) will be in social spending, which will reach GEL 8.4 billion, of which GEL 4.4 billion will be spent on pensions. From 2025, the pension for individuals under 70 will increase by GEL 20 to GEL 335, while the pension for individuals aged 70 and above will increase by GEL 35 to GEL 450. The amount allocated for social assistance will increase by GEL 113 million. The allowance for severely disabled persons and persons under 18 with disabilities will increase by GEL 35, and the allowance for other categories of persons with disabilities will increase by GEL 20.
Administrative expenses, which include public sector wages and the purchase of goods and services, will increase by GEL 548 million. GEL 2.9 billion (an increase of GEL 336 million) will be spent on salaries, and GEL 2.4 billion (an increase of GEL 212 million) will be spent on the purchase of goods and services. The salaries of civil servants will increase by 10% to a minimum of GEL 1,460 per month.
The number of civil servants will increase by 1,160, which will also lead to an increase in the amount allocated for wages. The number of employees in the system of the Ministry of Internal Affairs will increase the most (by 1,204). The number of employees of the Anti-Corruption Bureau will increase by 35 to 121.
After social expenses, the largest amount – GEL 6.1 billion will be allocated to capital projects, which is GEL 56 less than in 2024.
Agencies and programs experiencing significant changes in funding
According to the draft state budget for 2025, the Ministry of Internally Displaced Persons from the Occupied Territories, Labor, Health and Social Affairs will receive the largest increase in funding compared to 2024 - by GEL 871 million to GEL 8.7 billion. In particular, spending on pensions will increase by GEL 490 million to GEL 4.4 billion. The amount allocated for social assistance to target groups of the population will increase by GEL 113 million. Funding for universal health care will increase by GEL 234 million to GEL 1.9 billion.
The budget of the Ministry of Education and Science will increase by GEL 377 million to GEL 2.9 billion. Since July 2024, most teachers have had their salaries increased. In 2025, they will receive the increased salaries throughout the year, leading to a significant increase in school funding.
The budget of the Ministry of Defense will increase by GEL 220 million to GEL 1.6 billion. The increase in the Ministry’s budget is due to the 20% increase in salaries.
The budget of the Ministry of Economy and Sustainable Development will increase by GEL 199 million to GEL 1 billion. The increase is mainly due to the financing of two programs: GEL 103 million increase in state property management and GEL 60 million increase in infrastructure development. GEL 150 million has been allocated to the National Agency of State Property to start the construction of the Anaklia deep sea port.
The budget of the Ministry of Internal Affairs is set to undergo an increase of GEL 90 million. The primary factor driving this change is the 10% increase in wages for police officers.
The Ministry of Regional Development and Infrastructure will experience a significant reduction in its budget, amounting to GEL 255 million. The reduction in funding for the construction of high-speed highways is the primary factor contributing to this decline.
Budget deficit and government debt
In 2025, the state budget deficit is projected to reach GEL 2.3 billion, representing a decrease of GEL 107 million compared to the previous year. The projected ratio of the state budget to GDP for 2025 is 2.3%. In 2024, this indicator was 2.6%.
In 2025, the total negative balance of the unified state budget, which also includes the budgets of local self-governing units, is projected to reach GEL 2.4 billion, representing a 2.5% share of GDP.
Despite the budget deficit remaining within the legal limits and not exceeding 3% of GDP, the government should still pursue further reductions. Reducing the deficit will contribute to the stability of prices and the Lari exchange rate, thereby facilitating the National Bank’s ability to implement a more accommodative monetary policy. In addition, the government will take on less new debt, which will reduce the debt burden and improve the country’s credit rating.
In 2025, the government will assume a debt obligation amounting to GEL 3.6 billion. Concurrently, the government will repay GEL 1.4 billion of existing debt. As a result, the amount of public debt will increase by GEL 2.2 billion. Of the newly borrowed GEL 3.6 billion, GEL 1.6 billion is comprised of domestic loans, while GEL 2 billion represents foreign debt.
By the end of 2025, the government debt will amount to GEL 35.8 billion, representing a debt-to-GDP ratio of 36.8%.
[1] Expenditures include all funds that leave the budget, while expenses include only funds that are spent for specific purposes, such as social, educational, etc.
[1] Receipts includes all types of funds that come into the budget, while revenues include only tax revenues, grants and income received from other specific sources.
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[1] https://mof.ge/5757
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[11] https://www.transparency.ge/sites/default/files/grantevbi_eng.png
