1. The Georgian Budget System Presented by: Goga Gugava, Deputy Director of Budget Department Ministry of Finance, Georgia

2. 2 Presentation will cover: History of budget reform Current Georgian Budget System Recent improvements Future improvements

3. 3 History of Budget Reforms 2003 Rose Revolution 2004 Law on Revenues Passage of Organic Law Law on Local Government New State Budget Circular

4. 4 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

5. 5 Ministers Preparation of multi-year strategic plans Preparation of annual budgets Execution of budget

6. 6 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

7. 7 Parliament Approves: – Basic Data and Directions Document – Annual Budget Law – Laws pertaining to the State and Local government budgets and financial management – Budget execution

8. 8 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

9. 9 Budget Process (Continued) Issuance of State Budget Circular (Mid-June) – Spending Ceilings – Instructions – Forms – Schedule

10. 10 Budget Process (Continued) Preparation and Review of budget requests (June – August) Budget Law Submitted to President (September) – Unresolved issues – Cabinet discussion – Amendments

11. 11 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)

12. 12 Budget Execution Quarterly budget distribution Quarterly execution reports Annual report on prior year budget (March) Periodic budget adjustments

13. 13 Territorial Budget Process Municipalities prepare and approve own budget State transfers – Equalization – Conditional – Special

14. 14 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)

15. 15 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

16. 16 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

17. 17 Improvements (Continued) Improved content – BDD – Ministry Strategic Plans – Budget request – Budget law Improved Transparency – Documents posted on web – Citizen’s Guide to the Budget

18. 18 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

19. 19 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

20. 20 Questions? ? ? ?