Irakli Kobakhidze: “The budget grew by GEL 10 billion in the last four years.”
Verdict: FactCheck concludes that Irakli Kobakhidze’s statement is HALF TRUE.
Revenues (all types of income) amounted to GEL 14.5 billion whereas expenditures (all spending) constituted GEL 14.4 billion in 2020 state budget, approved in December 2019. The budget was revised multiple times during the pandemic with the final report indicating GEL 18 billion in revenues and GEL 16.2 billion in expenditures.
State budget revenues are projected at GEL 24.6 billion with expenditures totalling GEL 25 billion for 2024. The government has announced a projected budget increase of GEL 519 million after implementing the six-month budget which has not yet been approved as of 13 September.
Nominal revenues increased by GEL 6.6 billion over the last four years, not the GEL 10 billion as cited, whilst expenditures grew by GEL 8.8 billion. Furthermore, consumer prices increased by 27.2%, meaning that real revenue growth is GEL 1.7 billion and real expenditure growth amounts to GEL 4.4 billion when adjusted for inflation.
The Prime Minister’s cited figures are exaggerated and inaccurate, even in nominal terms. Moreover, the real growth under inflation is significantly lower than the claimed GEL 10 billion. Therefore, FactCheck concludes that Irakli Kobakhidze’s statement is HALF TRUE.
Analysis
When presenting the first 20 MP candidates for the 2024 parliamentary elections, Prime Minister Irakli Kobakhidze claimed (from 7:35): “We expanded the state budget by GEL 10 billion over the last four years.”
Irakli Kobakhidze was referring to the 10th term of the Parliament of Georgia which began its work in December 2020. Thus, the ‘past four years’ refers to the period from 2021 to 2024.
Revenues amounted to GEL 14.5 billion, whereas expenditures constituted GEL 14.4 billion in 2020 state budget, approved in December 2019. The pandemic, which began shortly after approving the budget, necessitated revisions to the main financial document of the country. On one hand, tax revenues declined whilst on the other, expenditures needed to manage the pandemic increased.
Subsequently, the revised projections for revenues increased to GEL 18.4 billion and expenditures were expected to reach GEL 15.9 billion. In reality, the final implementation amounted to GEL 18 billion and GEL 16.2 billion, respectively.
State budget revenues are projected at GEL 24.6 billion with expenditures totalling GEL 25 billion for 2024. Whilst the year is not yet complete, the six-month budget plan has been implemented.
Graph 1: State Budget (GEL Billion)
Source: Ministry of Finance of Georgia
Although the Prime Minister did not specify whether he was referring to revenues or expenditures in his statement, the claimed GEL 10 billion increase only holds when compared to the original 2020 budget plan, approved in 2019, in either case. The nominal increase as compared to actual performance is GEL 6.6 billion for revenues and GEL 8.8 billion for expenditures after revisions.
The government announced a projected budget increase of GEL 519 million after implementing the six-month budget in July which has not yet been approved. If the budget is approved and implemented, payments would show an increase of GEL 9.3 billion when compared to the 2020 performance, bringing it close to the mentioned GEL 10 billion increase. However, another factor to be considered in the discussion is inflation.
Consumer prices typically rise each year which is a normal occurrence in market economies. Furthermore, inflation compounds over the medium and long term and the higher the inflation, the greater the discrepancy between nominal and real indicators. Consumer prices increased by 9.6% in 2021 followed by a rise of 11.9% in 2022. The average annual inflation rate had dropped to 2.5% by 2023 and continued to further decrease to 1.2% for January-August 2024. Consumer prices grew by 27.2% from 2021 to 2024 (assuming that the 1.2% inflation rate persists till the end of 2024).
Graph 2: State Budget (GEL Billion)
Source: Ministry of Finance of Georgia
The real increase in revenues amounts to GEL 1.7 billion and in expenditures – GEL 4.4 billion when adjusted for inflation. If the budget truly increases by GEL 517 million, the real growth will rise to GEL 2.2 billion for revenues and GEL 4.9 billion for expenditures. Both aforementioned figures are far from the claimed GEL 10 billion increase. The difference of GEL 10 billion is only reached in nominal terms when comparing to the 2020 data and without considering inflation.
Whilst the budget has indeed increased as compared to 2020, the difference does not amount to GEL 10 billion. This increase is reduced even further when accounting for inflation. Considering that the Prime Minister’s cited figures are exaggerated and inaccurate, even in nominal terms, FactCheck concludes that Irakli Kobakhidze’s statement is HALF TRUE.
