The 2024 state budget projects receiving GEL 105 million from the European Union. The state budget received a total of GEL 1.4 billion in EU grants between 2013 and 2023, averaging GEL 127 million annually. However, the estimated EU grant amount has been reduced to GEL 7 million in the draft budget for 2025.
Contrary to the MP’s claim, the reduction in funding was not due to opaque spending – the main reason for the decrease was political disagreements and the Russian-style law. Furthermore, whilst a reduction of GEL 100 million in a GEL 27 billion budget will not threaten the functioning of the country, it will result in a loss of trust and potentially investments, in addition to the aforementioned GEL 100 million. Given the factual inaccuracies, lack of context, or possible intentional distortion of the actual picture, FactCheck concludes that Irakli Kadagishvili’s statement is FALSE.
Analysis
Whilst commenting on the potential reduction of the funding from the European Union, a member of the tenth convocation Parliament from the Georgian Dream political party claimed: “It is regrettable that the actual investment from the European Union to Georgia over the past 34 years has not exceeded GEL 100 million. This is on the backdrop of the Georgian budget, amounting to GEL 28 billion. The Georgian government has been spending both the GEL 28 billion and this GEL 100 million absolutely transparently. It is interesting whether Mr Borrell thinks that NGOs should spend this GEL 100 million as transparently as the Georgian government does or should it turn into ‘black money?’”
Prior to Irakli Kadagishvili’s aforementioned statement, the High Representative of the EU for Foreign Affairs and Security Policy Josep Borrell suggested that civil society, rather than state agencies, might receive EU financial assistance. The EU grant has been reduced from GEL 105 million to GEL 7 million as compared to 2024 in the draft state budget for 2025. The Ministry of Finance presented the first version of the budget on 30 September whilst Deputy Minister Giorgi Kakauridze asserted that the grant volume would likely increase in the final version. Whilst the third revised version of the budget must be approved by the third Friday of December (20 December), the second revised version still reflects the same GEL 7 million from the EU as of 22 November. Despite Irakli Kadagishvili using the word “investment,” it is clear from the context that the MP was referring to grants rather than foreign direct investment.
The MP likely referred to the 2024 consolidated budget (the state budget as well as the budgets of municipalities and autonomous republics) whilst mentioning the GEL 28 billion figure. Total revenues for 2025 are projected at GEL 26.9 billion, with the consolidated budget set at GEL 31 billion, according to the draft.
Irakli Kadagishvili simultaneously refers to “34 years” and cites figures for the budget and grant received in a single year. It is difficult to determine whether he meant that the EU grant averages GEL 100 million annually or if the total grant over the 34 years constituted GEL 100 million. However, in either case, the statement is inaccurate.
Leaving aside the entire period of independence, the state budget received GEL 1.4 billion in grants from the EU during the 11 years of the Georgian Dream’s governance from 2013 to 2023. This corresponds to an annual average of GEL 127 million.
How are these funds utilised? A total of GEL 2 million was spent on the development of Ajara’s water supply, GEL 16 million on the development of the economy and business and GEL 9 million in agriculture in 2023. Furthermore, GEL 116 million was allocated to the agricultural development programme.
The MP claims that GEL 100 million is not a significant amount considering a GEL 28 million budget. Whilst GEL 100 million is not a small figure, it constitutes less than 0.5% of the total budget, suggesting that its absence will not threaten the functioning of the country. Financing for the army and the police, issuing social benefits and implementing infrastructure projects will continue without disruption. However, the real issue is more political, as this situation underlines that it is Brussels as a whole that is critical regarding the current policy of the Georgian government rather than just a few members of the European Parliament.
Graph 1: Grants from the European Union in the State Budget
Source: Ministry of Finance
Moreover, Irakli Kadagishvili claims that Georgia has been spending the funds received from the EU transparently which could create the impression that opaque spending or corruption was the reason for the reduction in funding. However, this is inaccurate. Josep Borrell pointed to a deviation from the European path as the reason rather than the opaque spending of past grants: “The process of [EU accession] is being put on hold, it is stopped, until the Georgian government goes back to the [European] track. To go back on track, a lot of things have to change. In the meantime, we will use the money that was allocated to the government for the people who are fighting for their freedom [and European values].”
Additionally, the EU and its financial institutions also provide Georgia with low-interest loans. Georgia owes the EU EUR 133 million directly, the European Bank for Reconstruction and Development (EBRD) EUR 204 million and the European Investment Bank (EIB) EUR 1 billion as of 31 October 2024, totalling a debt of over EUR 1.3 billion. Georgia’s debt to France amounts to EUR 730 million and to Germany EUR 555 million amongst bilateral creditors. Georgia’s debt to the European Union, EU financial institutions and specific EU member countries exceeds EUR 2.5 billion.
Another part of the aforementioned statement addressed the funding of NGOs where the MP questioned whether they would spend the received grants transparently like the government budget. However, donor organisations have not raised concerns about the transparency of NGO expenses. The main reason for the confrontation between the Georgian government and the West is the Russian-style law. Whilst the Georgian Dream political party has argued and continues to assert that the only objective of the law is to enhance transparency, many people in both Georgia and the EU view the law differently. Thousands of people in Tbilisi held almost continuous rallies for 1.5 months from the introduction of the law at the first hearing until the veto was overcome.
Budget grants from the EU reached GEL 1.4 billion from 2013 to 2023, constituting an annual average of GEL 127 million just during the Georgian Dream’s governance and excluding the entire period of independence from the analysis. The reduction in funding was not due to opaque spending, rather the primary reason for it was political disagreements and the Russian-style law. Furthermore, whilst the absence of GEL 100 million in a GEL 27 budget will not threaten the functioning of the country, it will result in a loss of trust and potentially investments, in addition to the aforementioned GEL 100 million. Given the factual inaccuracies, lack of context, or possible intentional distortion of the actual picture, FactCheck concludes that Irakli Kadagishvili’s statement is FALSE.
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