Budget Review Georgia Second meeting of Senior Budget

Budget Review Georgia Second meeting of Senior Budget Officials Ljubljana 16 -17 February 2006

General government expenditures and revenues 1996 -2005 (as % of GDP)

General Government Deficits – 2002 -2004, forecast 2005 -2009 (as % of GDP) 2002 2003 2004 2005 2006 2007 2008 2009 EU 15 1. 1 2. 3 1. 4 2. 0 2. 2 n. a Georgia 5. 5 11. 1 6. 2 8. 2 7. 5 7. 0 6. 0 5. 5 2005 -2009 forecast. Source: Eurostat; Basic Data and Directions 2006 -2009 (Georgian Government 2005)

General Government Debt, 1999 -2010 Per cent of GDP

Recent major structural reforms: • • • Budget Systems Law 2004 Treasury reform Energy sector Privatisation and public enterprise management Social security Civil service reform

The Budget Time Table 1 March Ministry of Finance begins budget preparations, begins macro economic framework and Main Directions 15 April Main Directions are sent to Cabinet for agreement, then sent to Parliament 1 June Parliament Financial Committee issues a report on Main Directions 15 June Ministry of Finance issues Budget circular, including budget ceilings per spending agency 15 August Line ministries submit detailed budgets to Ministry of Finance, begin of negotiations 5 September Cabinet finishes discussing spending disagreements 15 September Ministry of Finance submits budget bill to Cabinet 1 October Budget bill sent to Parliament for review, recommendations and approval 1 January Start of the budget year

Medium term expenditure framework • allocating resources to sectors based on: macro-economic forecasts national priorities sectoral priorities resulting in: Basic Data and Directions document • allocating resources within sectors based on: sectoral priorities resulting in: draft budget

Parliamentary approval • Parliament makes recommendations, it does not make amendments. • Accountability to Parliament has been strengthened by introduction of budget chapters by ministers. • Role of Parliament can be strengthened by further improvement of the Basic Data and Directions document and of the reports on execution.

Budget execution • good progress towards Treasury Single Account • extensive preventive cash control • cash management can further be developed • public law entities have important role in service delivery • decentralised service provision still relatively limited

Accounting and auditing • quality of accounting greatly improved • Chamber of Control is influential and plays an important role in the fight against corruption • internal control is a high priority for the coming years