The Georgian Budget System

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The Georgian Budget System

• Presented by
• Goga Gugava, Deputy Director of Budget Department
• Ministry of Finance, Georgia

2
Presentation will cover

• History of budget reform
• Current Georgian Budget System
• Recent improvements
• Future improvements

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History of Budget Reforms

• 2003 Rose Revolution
• 2004 Law on Revenues
• Passage of Organic Law
• Law on Local Government
• New State Budget Circular

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Roles and Responsibilities

• Minister of Finance
• Budget circulars
• State
• Territorial
• Basic Data and Directions Document
• Review and negotiation of budget Requests
• Preparation of proposed and adopted budget laws
• Presentation of budget to Parliament
• Budget execution, monitoring, and adjustment

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Ministers

• Preparation of multi-year strategic plans
• Preparation of annual budgets
• Execution of budget

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Cabinet

• Address unresolved issues between MOF and
  individual ministries.
• Review and amend proposed budget laws
• Approve budget law sent to Parliament
• Respond to Parliament questions
• Review budget execution reports

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Parliament

• Approves
• Basic Data and Directions Document
• Annual Budget Law
• Laws pertaining to the State and Local government
  budgets and financial management
• Budget execution

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Current Georgia State Budget System

• Medium Term Strategic Action Plan (January
  February)
• Each ministry
• All spending agencies
• Basic Data and Directions (March-May)
• Macro-economic directions
• Multi-year forecast
• Government priorities
• Ministry medium term strategic plans
• Initial budget ceilings

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Budget Process (Continued)

• Issuance of State Budget Circular (Mid-June)
• Spending Ceilings
• Instructions
• Forms
• Schedule

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Budget Process (Continued)

• Preparation and Review of budget requests (June
  August)
• Budget Law Submitted to President (September)
• Unresolved issues
• Cabinet discussion
• Amendments

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Budget Process (Continued)

• Submission of Budget Law to Parliament (October
  December)
• Must be submitted by October 1
• Committee review
• Preparation and response to committee comments
• Amendments to draft budget law
• Budget Law Approved (by January 1)

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Budget Execution

• Quarterly budget distribution
• Quarterly execution reports
• Annual report on prior year budget (March)
• Periodic budget adjustments

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Territorial Budget Process

• Municipalities prepare and approve own budget
• State transfers
• Equalization
• Conditional
• Special

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Territorial Process

• Issue guidelines and forms for estimating State
  assistance
• Local governments submit equalization transfer
  data
• MOF Review of financial assistance requests from
  local governments
• MOF issues preliminary transfer amounts
• Distribute approved transfer amounts and budget
  preparation guidelines to local governments
  (Mid-January)

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Territorial Process Continued

• State and local agreements on transfers approved
  (within 30 days of publication of the State
  budget)
• Adoption of Local Government Budget (within two
  months after the adoption of the State budget
• Quarterly execution reports sent to MOF

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Highlights of Improvements

• Improved interconnection between BDD, Ministry
  Budgets, and the annual budge law.
• National priorities
• Ministry priorities
• Expenditure ceilings
• Multi-year approach to forecast and budget
• Clear direction on the use of surpluses and
  limitations on deficits

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Improvements (Continued)

• Improved content
• BDD
• Ministry Strategic Plans
• Budget request
• Budget law
• Improved Transparency
• Documents posted on web
• Citizens Guide to the Budget

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Improvements (Continued)

• Clearer instructions for preparation of the
  budget.
• Increased Parliament involvement, e.g., review
  and approval of BDD.
• Improved working relationship between MOF and
  line-ministries.
• Increased compliance with PEFA indicators

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Future Improvements

• Conversion of budget classification to GFS 2001
  for 2008 budget
• Installation of PFMIS/Budget Automation
• Comprehensive PEFA Assessment
• Improved capital expenditure budget
• Improved territorial budget process
• Equalization formula
• Budget circular
• Re-write and integration of budget laws.
• Program budgeting

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Questions?

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