The state budget for 2013 will face a revenue shortfall caused by the economic slowdown that makes local economic analysts consider that the budget deficit surplus will be 500 million GEL this year.
Giorgi Kvirikashvili, Georgias Economy Minister confirms the expected revenue shortfall but believes that all social obligations will be fulfilled.
A Tbilisi-based economic analyst, Paata Sheshelidze says that the budget deficit will force the government to take foreign and local debts to finance it.
"Once a government incurs a budget deficit; it has to borrow money to pay for the extra spending, which increases the national debt which can be very dangerous, Sheshelidze noted.
The fiscal deficit was projected to decline from 3.5% to 2.8% of the GDP in 2013. This year budget sets revenues at 7.42 billion GEL and expenditures at 7.25 billion GEL. The deficit was mainly caused by the decrease of value added tax (VAT), the three major sources of tax revenue locally.
According to the government forecast, the Georgian economy grew by 2.5% in 2013, while initially they estimated a 6% growth.