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Georgia - Military Spending

Georgia does not have the financial resources needed to develop and sustain a force sufficient to meet all threats, particularly in the nearand mid- term periods. Pragmatic analysis and planning was needed to identify the most critical capability deficiencies in order to properly prioritize the allocation of limited defense resources to address those shortfalls.

The appropriations of Ministry of Defence of Georgia for 2012 was 675,700,000 laries, or about $407,000,000. Future defense budgets provide the capability to build on the foundation established by historical and current budgets. In this regard, the MODs budget had grown substantially since 2003. Budget increases, international assistance, as well as significant US training assistance (Georgian Train and Equip and Sustainment and Stability Operations Programs), have provided the needed stimuli to rapidly improve the capabilities and readiness of the GAF.

The 1997 defence budget of Georgia totalled 79 mln GEL (about $52.7 mln), in 1998 it reduced to 74 mln GEL (about $50.0 mln), while in 1999, according to the draft state budget, it may shrink to 65 mln GEL (about $43.0 mln). As 10 mln GEL (about $6.7 mln) of them are for pensions and social security programs, direct defence spending in 1999 will total only 55 mln GEL (about $36.7 mln). It meant that officer salaries will not rise, the army would be unable to purchase new armaments and weapons, fuel supply will be meagre, the number of military exercises and training will reduce. Generally speaking, there would be little possibility to improve combat efficiency of the army.

Although the total 1999 draft state budget had increased by 200 mln GEL (about $133 mln) in comparison with the previous year, the MOD budget reduced by 19 mln GEL (about $12.5 mln). All the other power structures enjoyed substantial increase of their budgets: the (State Department of Frontier Defence of Georgia), by 83.8 percent (its personnel will enlarge by 12 percent), the MIA by 8.1 percent, the MSS by 11 percent or by 15.2 mln GEL (about $10 mln), the State Safeguard Service by 37 percent or by 8.8 mln GEL (about $5.8 mln), the State Intelligence Department by 38.5 percent. With its 25 mln GEL (about $16.5 mln) budget the SDFD holds the record among the power structures (save the MOD).

In addition to initial budget funding, the MOD received substantial budget supplementals in 2004, 2005, 2006, and 2007 that accelerated its ability to more rapidly modernize outdated equipment and build/renovate infrastructure. These supplementals resulted principally from unanticipated increases in government revenue collections and the sale of state owned properties. Future projections have taken into account that additional supplemental funding is unlikely to continue as the Ministry of Finance (MoF) Medium Term Expenditure Framework (MTEF) process improves.

Development of future MOD budgets has been coordinated with the both the Ministry of Finance and collaboration with other international financial institutions, particularly with regard to projections concerning mid- and long-term economic data. Future budget projections have not only provided the basis for SDR development, but also contributed to enhanced Planning, Programming Budgeting System (PPBS) multi-year planning. Future budget calculations include the additional funding required, beginning in 2008, to significantly raise MOD salaries and fund a comprehensive health and life insurance plan for all personnel. It should also be noted that sufficient annual pay raises are programmed to offset inflation and still provide a modest salary increase for all personnel.

One of the important outcomes of the 2007 SDR process has been the development of a near-, mid- and long-term modernization priorities to address capability deficiencies. Acknowledged shortcomings in the GAF acquisition management system will be addressed to improve the procedures necessary to prioritize new equipment programs and provide consistency and focus for identifying the types of new equipment needed by the GAF to replace obsolete Soviet systems. Based on these requirements, potential options can be assessed for subsequent purchase. Actual expenditures will be guided by access to the appropriate equipment that is both available for Georgian procurement and offered with a complete sustainment package of necessary spare parts, training, and other logistic related features (tools, diagnostic equipment, etc.).

2007 Estimation of Future Defence Budgets
(in thousands of GEL)

Year Projected
DB as
% of GDP
2008 20 440 400 1 100 000 5,4%
2009 23 039 200 1 151 960 5,0%
2010 25 933 700 1 167 016,5 4,5%
2011 29 171 400 1 166 856 4,0%
2012 32 817 825 1 148 623,9 3,5%
2013 36 920 053 1 107 601,6 3,0%
2014 41 535 059 1 038 376,5 2,5%
2015 46 726 942 1 074 719,7 2,3%
2016 52 567 810 1 209 059,6 2,3%

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Page last modified: 30-09-2012 18:06:50 ZULU