Economic Opposition or a Political One?

Budget reduction by 164,6 million might victimize several ministers

Giorgi Kalandadze. Civil Georgia.

President Shevardnadze favors Parliament’s intention to fire certain ministers. “It even might be good” said President at the Government Meeting on October 17th. However he did not clarify replacement of exactly which minister would be desirable for him. Parliament’s “offensive” on the Government has been triggered by need of reduction of the expenses in the state budget for year 2001. The Government has to reduce expenses by 164,6 million Georgian Laris ($79,5 million).

“We should sequester the budget. But we should also demand responsibility of concerned authorities for failure to match their obligations. We evaluate activity of the Government negatively due to failed budget,” states Zaza Sioridze, Chairman of the Fiscal and Budget Committee. The Committee is one of the main political opponents of Finance Minister. The Committee concludes that “suggested changes to the budget are too optimistic. Reduction by 164,6 millions would not be enough to r each balance between incomes and expenses because 75 million deficit during 9 months in tax, special funds and non tax incomes are not considered [in the project]”.

Deputy Chairman of the Committee Solomon Pavliashvili says that “Finance Minister has a right to proportionally reduce expenses every month within 10% range. Such steps should have been done when it has become known that during first 6 months deficit of ‘own’ incomes reached 31 million Laris.”

While discussing results of first 6 months, certain Government members, including ‘head’ of the ‘economic’ tea, State Minister Gia Arsenishvili and Finance Minister Zurab Nogaideli talked about successful overcoming of the budget crisis. But 3 months later they request permission to reduce expenses.

On October 26th Directorate of the International Monetary Fund will discuss in Washington D.C an issue of resuming fiscal aid program to Georgia. The program has been suspended due to budget problems in spring. but as Finance Minister says the program might be resumed and this would provide country with additional external income sources. Here Minister considers  several credit by the World Bank of total 65 million Laris. Nogaideli says that decision upon providing these credits to the country is directly connected with restoration of IMF program in Georgia.

Finance Minister states that request for Parliament’s permission for budget reduction is made not for adjustment of expenditures policy but for the meeting of IMF directorate board on October 26th. Minister also pledges that there would be no more sequestering again.

the Parliament does not share minister’s optimism. Solomon Pavliashvili, Vice Chairman of Fiscal and Budget Committee thinks that the issue of reduction of the expenses would be provoked once again at the end of the year.

Chairman of the Chamber of Control Sulkhan Molashvili shares this opinion. “We approach this matter critically. After consultations with economists and other experts, I am sure that another reduction would be definitely requested,” says Molashvili. He also said that the Finance Ministry and other governmental agencies are ignoring opinions of the Chamber of Control.

After reading report of the Chamber of Control regarding budget results for the first 6 months of year 2001,  one might assume that the Government should be arrested. The report says that 16 paragraphs of the Law of Georgia on the State Budget for Year 2001 have been violated. The report also says that all governmental institutions are violating acting laws to certain extent.

“In the conclusion it might be said that such process has transformed to certain kind of system and wayward tradition. The country still does not have decent system for regulating and functioning of the budget. Therefore the budget is not becoming a firm guarantee for economic stability and country’s development,” concludes the Chamber. Tension between the Chairman of the Chamber and Finance Minister reached its peak few days prior to discussion of the issue of sequestering in the parliament.

Actually existence of criticism in relations between Nogaideli and Molashvili is rather normal thing, because under Georgian legislation the Chamber must control expenses of governmental institutions. However, in this particular case criticism is backed with political processes within the government as well.


Due to opposition between the members of the government Minister of Tax Incomes Mikheil Machavariani resigned from his post in August. Justice Minister Mikheil Saakashvili shared same fate one month later. First one was opposed by Vano Chkhartishvili, Minister of Economy, Industry and Trade. And the second one – by Internal Affairs Minister and State Security Minister. Both Machavariani and Saakashvili belonged to so called “Reformers” team of Zurab Zhvania, Parliaments’ Speaker. First member of this team to come to the government was Mikheil Tchkuaseli, finance minister in 1997. But in the year 2001 number of “reformers” in the government started to decrease. Present Finance Minister would be the next to follow to ex-ministers and resign from the post. Parliamentarians from both the Majority and the Opposition are demanding responsibility of the Economy Minister Vano Chkhartishvili as well. After Machavariani’s and Saakashvili’s resignation, Nogaideli is the last “Reformer” in the Government.