Georgia/ 6. Financing of culture  

6.1 Short overview

The Georgian national economy had developed at a quite quick rate until the first half of 2008. In 2006, economic growth increased by 9.4% and in 2007 by 12.3%. In the first half of 2008, economic growth increased by 9%, however, beginning from the second half of 2008, the Georgian economy began to move backwards because of the Russia-Georgia military conflict and the world economic crisis. The amount of direct foreign investments decreased as the pessimism of consumers and investors worldwide increased. Since October 2008, the turnover of enterprises in Georgia dropped and the tax revenues in the state budget reduced accordingly. This resulted in the economic recession in the country. The growth of the gross domestic product in 2008 was only 2.1%.

During the drafting of the budget for 2009, economic growth was forecasted at 2%, though within that year the affect of the world economic crisis on Georgia still continued and according to the forecast updated in the first half of the year, the growth of GDP was determined at -1.5% and, according to the final forecast in 2009, the Georgian economy actually dropped by -4%. This factor affected on the state budget and the tax revenues decreased by 600 million GEL. The consolidated budget deficit increased from 3% to 6%.

However, the total funds allocated in Georgia in the cultural sphere have been growing consistently.

On one side, this is related to the economy, the growth of GDP, and on the other side, this is the result of the domestic and foreign cultural policy. The shift which took place in the policy after the Russian-Georgian military conflict helped to focus on the promotion of culture in Georgia which in turn has lead to increased budgets in this field.

However, the budgetary data for any particular year is not comparable due to the method of collection and it is hard, therefore, to calculate the percentage of expenses allocated to culture in the total state expenditure http://www.mof.gov.ge/budget/by_year.

Culture in Georgia is financed by both the state and local budgets

In 2004, the Ministry of Culture was merged with the Departments for Sports and Youth Affairs. Along with a sharp growth in the state budget, the budget of the Ministry of Culture, Monument Protection and Sport of Georgia and regional expenditures for these spheres also increased.

Budgets and Expenditures: Ministry of Culture, Monument Protection and Sport

The total budget of the Ministry for 2004 was 28 906 700 GEL, or 3.02% of the overall state budget (151 321 720 GEL).

In 2005, the total budget of the Ministry of Culture, Monument Protection and Sport was 32 554 400 GEL, which amounted to 1.74% of the state budget (282 407 300 GEL). This represents a decrease of 1.28% from 2004 in the share of culture in the overall state budget. Furthermore, the 2005 draft budget of the Ministry was 32 554 400 GEL and the actual expenditure was 34 433 200 GEL.

In 2006, the draft budget for the Ministry was 53 984 400 GEL, or 1.4% of the state budget. Actual expenses totalled 53 757 300 GEL. In an operational context, the estimated expenses from the state budget for culture, sport and religion in 2006 was 72 779 900 GEL (actual expenditure: 71 935 500 GEL).

In 2007, the draft budget of the Ministry was 65 380 000 GEL, while the actual expenditure was 77 113 691 GEL. In the first six months of 2007, the adjusted amount was 43 485 300 GEL, or 2% of the state budget, and the expenses – 39 224 400 GEL. In the first six months of 2007, estimated expenses from the state budget for culture, sport and religion were 52 428 800 GEL (actual expenditures: 48 060 600 GEL).

At the beginning of 2008, the State Budget allocated 77 843 900 GEL to the Ministry of Culture, Monument Protection and Sport.

From the full budget (86 216 400 GEL / 34 486 560 EUR), the Ministry of Culture, Monument Protection and Sport (2009) was allocated 64 028 800 GEL / 25 611 520 EUR for culture, and the amount allocated to sports and youth affairs was 22 187 600 GEL / 8 875 040 EUR (1 EUR equivalent 2.5 GEL).

In 2010, the budget (fact) of the newly reformed Ministry of Culture and Monument Protection amounted to - 77 025 000 GEL(fact). Unlike previous years, the total budget of the new Ministry was allocated to culture - 30 810 000 EUR accordingly (1 EUR = 2.5 GEL).

In 2011, the budget (plan) of the Ministry of Culture and Monument Protection amounted to 25 078 000 GEL. The total budget of the new Ministry was allocated to culture - 10 903 478 EUR accordingly (1 EUR = 2.3 GEL).

Service culture in 2009 - 53 949.6 GEL (fact), 2010 - 56 104.7 GEL (fact), 2011 - 50 135.1 GEL (plan).

Local budgets

The information about allocation of funds for culture and cultural spheres at the local, regional and municipal levels has been difficult to collate, mainly due to the small funds and poor infrastructure. An exception was the large cities with big budgets, where municipalities had separate departments for culture. However, in 2005 the independent departments for culture were liquidated even in Tbilisi and integrated in the department of social affairs, sports and youth.

However, Tbilisi municipality often finances various cultural events, not just in Tbilisi, but in other cities and towns as well, though the exact budget data (or the transparent access to those data) are not available. Such funding transfers are often dependent on the interests of the ruling establishment and are often the subject to public debates (the lack of transparency of transfers and political assessments thereof are discussed by strong NGOs such as the Georgian Young Lawyers Association.)

The local budget data have not been available since 2008.

The estimated expenses to be spent on culture from the local budget in 2006 was 69 940 200 GEL (actual expenditure: 67 421 900 GEL). In the first six months of 2007, estimated expenses amounted to 35 388 800 GEL (actual expenditure: 28 824 500 GEL).

GDP and per capita expenditure

In 2009, due to the world economic crisis, the economic growth in Georgia was determined at -4%. However, in 2010 the economic growth was at 6,4 %.

In 2010, the nominal indicator of the gross domestic product amounted to 20 743.4 billion, that is 2 794.8 billion GEL more than the indicator for 2009.

For the first two quarters of 2011, GDP made up 11 118 700 000 GEL.

Table 7:    Dynamics of GDP, in million GEL, 2005-2011

*              For the first two quarters of 2011, GDP made up 11 118 700 000 GEL.

According to the Ministry of Finance data, from January-June 2007, as compared with the same period of the previous year, the actual gross domestic product increased by 12.5% and exceeded 7.5 billion GEL in nominal terms. The significant share in the growth of GDP is due to industry, trade and transport. These three branches provided the growth of GDP by 5.5%, or 44% of the total rise in GDP.

In 2006-2007, the state cultural expenditure per inhabitant amounted to 15.6 GEL and 20.5 GEL respectively that is 0.5% of GDP per inhabitant. (Source: Ministry of Finance, Ministry of Culture, Monument Protection and Sports). In June 2007, as compared with December 2006, the general rate of customer prices increased by 4.1%. During the twelve-month period (from June 2006 to June 2007) the inflation rate was 7.3%.

The expenditure of households on cultural events and commodities is available in chapter 8.2.1) however, from 2003, such studies have not been held and new data are not available.

According to data for 2003 from the State Department for Statistics, recreation and culture represented 1.8% of the total personal consumption in households, which is half of the 2002 figure of 3.9%.

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