“Government size” in the economy of Georgia and other countries of the world

One of the main priorities of the new acting Prime Minister Mamuka Bakhtadze is to reduce the size of the government. While being the Minister of Finance, Mamuka Bakhtadze announced that in future, the size of the government would be reduced by 20%. Back then Mamuka Bakhtadze stated that by 2021 current expenditures will reduce from 25% to 21% in relation to GDP.

“Reduction of the size of the government will also continue in following years and from 25.8% of GDP in 2016, by 2021, will reduce below 21%. Actually, the size of the government reduces by 20%, as a result of which reduction the government savings increase and from 2.6% of GDP in 2016, by 2021, will reach 6.5%”, - stated Mamuka Bakhtadze.

In 2017, according to the Ministry of Finance, the Government’s administrative expenditures indeed reduced by 140 mln GEL, of which 100 mln was the reduction of the remuneration expenditures and 40 mln – the expenditures for administrative procurements.

As a result, if in 2016, remuneration expenditures held 5,2% of GDP, in 2017 it reduced to 4.4%. according to the 2018 budget, in 2018, current expenditures should be reduced to 23.5% of GDP.

In different countries of the world, the current expenditures to GDP ratio is calculated by the World Bank. In various countries, this rates (as of 2016) are following:

  • Average rates of OECD member states – 27.7% 
  • Europe and Central Asia Region – 35.3% 
  • Uzbekistan – 18.4% 
  • USA – 22.7% 
  • United Kingdom – 37.3% 
  • Ukraine – 33.5%
  • Turkey – 32.7%
  • Spain – 19.7%
  • Russia – 30.9%
  • Poland – 34.9%
  • Moldova – 31.5%
  • Lithuania – 9.5%
  • Latvia – 42.9%
  • Kirgizstan – 28.1%
  • Kazakhstan – 15.7%
  • Hungary – 43.9%
  • Greece – 48.8%
  • Germany – 27.9%
  • Georgia – 25.8%
  • Czech Republic – 32.9%
  • Cyprus – 36.8%
  • Belarus – 29.8%
  • Armenia – 25.6% 

However, it should be noted that the budget’s current expenditures do not cover only administrative expenditures, but rather includes remuneration, social aid paid by the state, subsidies, grants and other expenses.

The “size of government” of different countries is also assessed by Heritage Foundation’s Economic Freedom Index. In the 2018 ranking, in the above criterion, Georgia’s position has worsened. Namely, in the government expenditures’ sub-criterion, Georgia ranks 73 of 100.

“Over the last 3 years, the government’s expenditures made 29% of GDP, budget deficit is 1,6% of GDP, debt size makes 44.9%”, - states Heritage foundation.

In the government expenditures’ criterion, Georgia’s best position (55 points of 100) was in 2012. Results worse than Georgia has, for instance, Bulgaria (60 points), Azerbaijan (59 points), Turkey (68 points) and Croatia (31 points), however, Armenia shows better results (80 points and “mainly free” status).

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Resignation of the Prime Minister results in resignation of the Government

Resignation of the Prime Minister results in resignation of the Government

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