After having studied the proposed 2013 budget, Economic Policy Research Center (EPRC) concluded that rapid fulfillment of most of Prime Minister Bidzina Ivanishvili's election promises is not feasible. (Photo: EPRC.)

TBILISI, DFWatch — The new government’s proposed budget is in some regards unrealistic, according to a new report.

Economic Policy Research Center (EPRC) presented the report Analysis and Recommendations on 2013 year Draft Budget of Georgia on Tuesday.

“After analyzing the budget, we get an impression, that the new government will have to become more realistic already during next budget cycle and to admit, that rapid fulfillment of the major part of the election promises is not feasible,” the report’s introduction says.

The 2013 budget will total USD 5.3 billion; USD 4.4 billion of this is expenditure.

The report’s authors say the new government doesn’t have experience being in government, which is reflected in the budget draft, but there is a desire to overcome inequality.

The budget has been increasing in recent years and in 2013 will be USD 395 million more than in the current year.

«Unfortunately, the 2013 draft budget already reveals certain collision between the need for economic growth and that for social equality,» it says. “We believe that the above collision should be solved in favour of the former, since the task of social equality can never be achieved without economic growth.»

Notably, the new bill is aimed towards social expenditures, which is a reflection of the Georgian Dream coalition’s election promises. The budget bill presented by the National Movement party was also oriented towards social expenses, but there are differences.

One of the possible problems with Georgian Dream’s proposed budget, is according to the report’s authors uncertainties in how effective a proposed fund for state health insurance will be.

Lasha Dolidze from EPRC says that a large part of the population is already insured and there is another part of population, which can provide its own insurance; therefore proposing to insure every citizen may not be effective.

The organization he represents suggests establishing different rules: to provide basic insurance for every citizen, but offer comprehensive insurance for socially vulnerable and unemployed; or direct this financing towards curing chronic illnesses in children.

The financing of the agriculture sector seems to be vague.

“Taking into consideration all conditions and that it is planned to establish 1 billion GEL fund for the purpose of supporting agricultural sector, we believe that at this stage analysis of possible trend of appropriations for agriculture for 2014-2016 is not appropriate, since it is not clear, what will be the form of the above fund, how it will be related to the state budget and whether there will be any fields shared or interchanged between the fund and the state,” the report says.

The authors recommend that the Ministry of Agriculture is not made responsible for handling social aid, and argue that it should be given time and resources to work on developing the sector, focusing on establishing a political and institutional climate conducive to growth in this field.

Tamaz Vashakidze, a guest representing small industry, expressed dissatisfaction during presentation of the report, and said that the new government has in fact forgotten about developing small business in Georgia, as it is never mentioned in the draft budget, even though this was part of Georgian Dream’s election campaign.

The analysts behind the report think the government will put most of its election promises on hold.

“Meeting the majority of promises in the short term is not realistic. We believe that in this regard 2014 will be the most important year, when the new ruling team will obtain adequate governing experience.”

The report was prepared in ten days with the support of Open Society Georgia Foundation. It recommends how to fix possible errors in the draft, since it has not yet been approved by parliament, although it has been presented there twice. Next week MPs will continue to review the bill.

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