President of the Republic of Abkhazia




On March 6, President of the Republic of Abkhazia Raul Khadzhimba gave a speech at the meeting of the Cabinet of Ministers. On the meeting’s agenda, there was a question on the execution of the republican budget, and also a number of other subjects.

Below is the President’s speech at the meeting.

The presenters remarked that the execution of the budget was based on the principles of balance and efficient use of budgetary funds. The tendency of the past two years is evident to all – own revenues of the budget are growing. This tendency has to continue. For this, the existing tax system has to be changed significantly, it is necessary to intensify the process of reforming the budget. A lot has been said here about the priorities and numbers of the budget for 2016. I would like to comment on those opportunities that have not been fully implemented and on the executive discipline.

Western sanctions against Russia affected our economic and financial opportunities. In the past two years, we have experienced this in matters related to the implementation of the Investment program. A lot of difficulties took place also in matters of timely implementation of socially important obligations. Nobody denies that these difficulties existed, yet we have fulfilled our obligations despite some delays. All this was achieved without an increase in tariffs and tax rates. Despite all difficulties related to the imperfection of our state institutions and endless political arguments, we have endured these difficulties and we continue to strengthen all these positions.

For the next few years, we have to direct all our efforts to the development of small, medium and large businesses, to create conditions for their creation and development, to reduce all kinds of administrative barriers and checks. The Government and its institutions should be more actively engaged in developing tax rules which would be clear to businessmen. Our budget should be increased not by raising taxes, but by collecting them entirely, without allowing corrupt schemes to exist. We also have to increase the efficiency of budgetary spending. Unfortunately, we cannot show a lot of progress in this area. Even though we are far from perfection in this, the existing system of Treasury allows us to control the use of finances. For many types of taxes, significant sums still remain to be collected, they amount to around 243 million rubles. The Government has to undertake work to detect the reasons for the existence of these debts and to eliminate them. In this question, there should be no leniency. I would like to point out once again that the work on tax administration is inefficient. It would be understandable if this was due to objective reasons, but in many cases, the reason is in the shortcomings of fiscal structures. Good work was being done to control the activities of republican unitary enterprises. However, this work was not completed. A lot of enterprises remained free of control from the Government and other supervisory institutions. Most heads of these enterprises have illegally created for themselves comfortable conditions by renting spaces and equipment, but these activities are useless to the state. At this stage, there is almost no work with the debtors, even though at the start, active work was being done to return the debts for the past few years. Today this work is almost non-existent. We spoke about this with the General Prosecutor, and I hope that this work will become stricter. Lists of debtors, both individuals and legal entities, exist. Without waiting for the liquidation of these enterprises, work has to be started once again. Otherwise, the main reasons the money is not returned will be “there is no enterprise”, “this or that debtor passed away”. At the end, almost all of these debts will be written off.  

Apart from the opportunities which have been mentioned, there are those that have to become the sources of additional income for the budget of our state. These sources include unrevealed opportunities in the tourist sphere, agriculture, transport and energy. The work with real estate is not at the proper level. A significant number of facilities have not yet been involved in the economic turnover. Some of them have not brought us a single ruble, even though decisions concerning them have been made in the Government and the Parliament. I demand from the Government and the General Prosecutor’s Office a strict approach to these issues.

The subject of tariffs on various items is also difficult. It is a separate matter which causes agitation in the public.

These questions have to be solved by taking into account the interests of our citizens, their social standing and the situation which unfolds in various spheres. These questions pertain to the spheres of energy, water supply, housing and communal services, and many others. This cannot continue. Even though we speak of our goodwill towards our society, the society also has to understand that the state cannot exist without taxes.

Lastly, I would like to comment on the quality of executive discipline, which is directly connected to the improvement of our budgetary possibilities. A lot of instructions have been given in this period. I will comment only on some of them, which are related to the tax system. Unfortunately, almost nothing has been done yet. Concerning the unified social tax, of which a lot has been said, nothing has been done yet. The instructions amount to 14. Out of 14 instructions, only 4 have been fully carried out, others are being worked on, the rest are almost forgotten. I did not forget about them and I give you my word that I will want to see the results. This is why we have to work more actively on these questions and to use more effectively the opportunities that the state has. Unfortunately, these opportunities are not yet too big. This shows how we treat everything we have.

I do not want to belittle the work of those people who are employed in this sphere, yet the numbers speak for themselves. At the State extrabudgetary fund for the disabled people of the Patriotic War of the People of Abkhazia, the number of disabled people grows exponentially. In 2008, the number of disabled people of the second group was 1076. On January 1, 2014 – 1748 people. In 2017 – 2452 people. The figure rose by 1376 people. Where is the money from, in order to fund them? The fund’s expenses grew by 40 million. The Prosecutor’s Office will receive an instruction to check the documents of these people. With all due respect, I would like to remark that many people in the disabled category have nothing to do with the war.

I believe that we have the resources and the opportunities, yet there is one condition: we have to work side by side, rather than create conditions for confrontations within our institutions and also at the political level. We have to understand that a lot remains to be endured. We can endure only when we have our own opportunities.

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© 2015 Administration of the President of the Republic of Abkhazia, Sukhum, Naberezhnaya Makhadjirov, 32, phone.: +7 840 226 46 31, fax: +7 840 226 46 31