Georgian government has not fulfilled the structural obligations the International Monetary Fund and the World Bank has given to it that is why the World Bank has refused to give transfer to Georgia. As a result, 225 million GEL (112,5 million USD) will be cut from the expenditure part of this year’s budget. The Finance Minister does not identify the obligations Georgia has not performed but states that they were accomplishable.
The budget modification cannot be called sequester; it has gone through corrective, Zurab Noghaideli, the Finance Minster, states. In the beginning of the year Zurab Noghaideli was declaring that sequester would not pose threat to the budget of 2001. May and June (and probably July) budgets have been completed and everything was supposed to be all right but definite modifications occurred in the year budget anyway.
Note: proportional cut in income and expenditure part of the budget is called sequester; cut in expenditure only is called corrective.
“The IMF and the Georgian Government agreed that Georgia would not be concerned about fulfilling the obligations any more but it would not receive the promised transfer in response”, the Dilis Gazeti says. Only 12-14 million GEL will be transferred to the budget from the privatization of “Telecom” and “Electrokavshiri” (power communication), the amount of which is supposed to form 80 million GEL in total.
The budget corrective will not show on the country’s interior expenditure part, the Minister states. “The budget will be cut but the population will not sense it – maybe neither this statement stands far from the truth for it has been a long time since the population has not sensed the budget at all”, the Dilis Gazeti assumes.
Debt to the Georgian National Bank is thought to be left without paying off. The Ministry will not be able to pay the credit of 65 million GEL off soon because of the budget corrective. It will not be paid off by next year either. So the concern of experts and media regarding devaluation of national currency is quite realistic.