According to Georgia’s State Audit Office report on budget execution for 2025, ongoing international arbitration cases represent a significant fiscal risk for the country. The Ministry of Justice reports that the total potential maximum value of disputes in which the state is a defendant is approximately $1.7 billion. The audit warns that such contingent liabilities could create long-term pressure on public finances and require more comprehensive assessment in fiscal planning.
While the 2025 state budget was implemented in compliance with legislation, the audit highlights several systemic issues. These include persistent gaps between projected and actual economic growth, insufficient transparency in state-owned enterprise financing, and incomplete disclosure of fiscal risks. The report stresses that losses and financial obligations of state enterprises continue to affect the budget deficit and debt levels, yet are not fully reflected in official reporting.
The audit also points to weaknesses in budget planning and execution. These include a sharp increase in spending at the end of the fiscal year, frequent revisions of budget allocations, and inefficiencies in program-based budgeting. A significant share of capital projects and programs showed execution rates below 80%, while budget reallocations across ministries reached substantial volumes, raising concerns about planning quality and spending efficiency.
Finally, the report emphasizes risks related to public debt and external borrowing. By the end of 2025, Georgia’s government debt stood at 35.9 billion GEL (34.4% of GDP), with a large share denominated in foreign currency, increasing vulnerability to exchange rate fluctuations. The audit recommends strengthening debt sustainability analysis, improving fiscal risk management, and establishing clearer rules for financing and monitoring state-owned enterprises.
