Key Findings

• In 2025, GEL 118.3 million in grants was received from abroad through the state budget, representing a 60% decrease compared with the previous year.
  
  
• The decline in the total amount of grants in 2025 was largely caused by the suspension of budget-support grants, which had been provided entirely by the European Union.
  
  
• In 2025, both targeted and investment grants also decreased compared with the previous year. Investment grants fell from GEL 44.2 million to GEL 38.9 million, while targeted grants declined from GEL 83.4 million to GEL 79.4 million.
  
  
• In 2025, the decline in grants received from abroad was partly offset by payments made by state Legal Entities under Public Law (LEPLs) into the state budget as grants.
  
  
• In 2025, a record GEL 161.3 million was transferred from LEPLs to the state budget as grants. The 2026 plan provides for GEL 260 million, a 61% increase (+GEL 99 million) compared with 2025.
  
  
• Between 2022 and 2025, grants received from abroad decreased by 55% (-GEL 142 million), while grants transferred from LEPLs to the state budget increased by 64% (+GEL 63 million).
  
  
• The financial resources held by LEPLs as free balances are generated by surplus revenues, which are mainly accumulated through fees charged for their services. These resources are directed to the state budget by decision of the Government.
  
  
• For example, the Ministry of Internal Affairs Service Agency generated GEL 289.3 million in revenue in 2025 (+20% year-on-year), and GEL 164.7 million during the first six months of 2026 (+29% year-on-year). GEL 200 million is held as a balance in the Service Agency's account; increased service tariffs may be considered one of the possible reasons for the growth.

How Is the Shortfall in Grants Balanced in the State Budget?

Since gaining independence, Georgia has received significant financial assistance from Western partners and international institutions, which has contributed to the country's development. In recent years, steps taken by the country's ruling political force that IDFI characterizes as undemocratic, the adoption of repressive legislation, violence against civil society, and anti-Western rhetoric have repeatedly triggered strong reactions from Western partner states. Among other consequences, financial assistance programmes that directly benefited the Government of Georgia have been suspended.

Unfortunately, comprehensive classified information on the grants allocated to Georgia is not publicly available. However, state-budget data cover grants received directly through the budget, which also provides some opportunity to analyse the impact of the Georgian Dream government's policies on external assistance.

According to the data reflected in the state budget, over the past ten years Georgia received the smallest amount of grant assistance from abroad in 2025. A total of GEL 118.3 million in grants entered the budget, a 60% decrease compared with the previous year. There is no expectation of an improvement in this respect in 2026 either. According to the budget plan, only GEL 86.3 million in grants from abroad is expected in 2026.

Grants received from abroad and reflected in the state budget are classified as budget-support grants, targeted grants, and investment grants. The decline in the total amount of grants in 2025 was largely caused by the suspension of budget-support grants, which had been provided entirely by the European Union. The largest budget-support grant provided by the EU to Georgia was delivered during the pandemic and was intended to support implementation of the government's anti-crisis plan.

In subsequent years, the European Union continued to allocate budget-support grants to the state budget under various programmes. For example, in 2024, the GEL 61 million in budget-support grants transferred from the EU to the state budget was distributed among the following programmes:

European Union for Integrated Territorial Development — GEL 23.5 million.

European Neighbourhood Programme for Agriculture and Rural Development — GEL 14.8 million.

Economic Governance and Fiscal Accountability — GEL 12.3 million.

Skills Development and Alignment with Labour-Market Demand — GEL 10.8 million.

In 2025, both targeted and investment grants decreased compared with the previous year. Specifically, investment grants declined from GEL 44.2 million to GEL 38.9 million, while targeted grants fell from GEL 83.4 million to GEL 79.4 million.

Investment grants are capital-purpose grants directed toward financing specific infrastructure projects. In 2025, the largest donor organisations in this category were KfW (the German Reconstruction Credit Bank), with GEL 21.7 million, and the EU, with GEL 11.5 million.

Targeted grants are registry grants credited to the Treasury account and received by budgetary organisations for specific purposes. Detailed data concerning targeted funding to be received by ministries and agencies — including the donor organisation, purpose, and amount — have not been updated on the Ministry of Finance website since 2023.

Revenues recorded under the grants item of the state budget, in addition to grants received from abroad, also include amounts contributed to the budget as grants by state LEPLs and non-profit (non-commercial) legal entities. In 2025, a record GEL 161.3 million was transferred from LEPLs to the state budget. This partly compensated for the decline in grants received from abroad.

For example, since 2022, grants received from abroad have decreased by 55% (-GEL 142 million), while grants transferred from LEPLs to the budget have increased by 64% (+GEL 63 million). In 2025 specifically, grants transferred from LEPLs to the state budget increased by 10% (+GEL 14.5 million) compared with the previous year. According to the 2026 plan, GEL 260 million is expected to be received from LEPLs and non-profit legal entities as grants, representing a 61% increase (+GEL 99 million) compared with 2025.

Under the Law on the State Budget, LEPLs whose turnover exceeds GEL 1 million are required to direct at least 10% of their own revenues to the state budget. However, the final amount transferred by LEPLs to the state budget as grants depends on a decision of the Government of Georgia.

Specifically, under the Law on Legal Entities under Public Law, if an LEPL's annual taxable profit exceeds GEL 1 million, part of the free balance held in its account is transferred to the state budget on the basis of an appropriate government decision. Accordingly, in 2026 the Government of Georgia plans to mobilise the largest amount to date from the free resources of LEPLs into the budget, thereby compensating for the shortfall in grants expected from abroad.

The financial resources held by LEPLs as free balances are generated by surplus revenues, which are mainly accumulated through fees established for their services. Budget data for the LEPLs with the largest financial resources show that their revenues have increased significantly in recent years, creating additional financial resources for the state budget.

For example, the Ministry of Internal Affairs Service Agency generated GEL 289.3 million in revenue in 2025, which was 20% higher than the previous year's figure of GEL 239.4 million. At the end of 2025, GEL 188.6 million was held as a balance in the Service Agency's account. The growth in the agency's revenues continued in 2026. During the first six months of 2026, the Service Agency generated GEL 164.7 million in revenue, compared with GEL 127.7 million during the same period of the previous year, representing a 29% increase. The growth in the agency's revenues may be attributed both to an increase in the number of applications and to various newly introduced and increased tariffs.

For example, following an amendment to the Customs Code that entered into force in 2026, the fee for issuing transit licence plates increased significantly, from GEL 50 to GEL 370. An inspection conducted at the agency's premises became GEL 180, instead of GEL 100, among other changes.

In recent years, almost all high-revenue state institutions (LEPLs) that provide a range of services to citizens have also shown revenue growth. For example, in 2025 the revenue of the State Services Development Agency amounted to GEL 145.3 million (a 14% increase); the Revenue Service generated GEL 280.8 million (an 8% increase); and the Patrol Police Department generated GEL 239.7 million (a 12% increase).

An analysis of revenues received as grants in the state budget shows that, according to IDFI, democratic backsliding and the adoption of repressive legislation significantly reduced the volume of funding received from abroad and reduced budget revenues. Of particular note is the complete restriction of budget-support grants from partner states and international organisations, which had exceeded GEL 100 million per year on average before 2025, while in 2025 they fell to zero.

Against the backdrop of reduced foreign financing of the state budget, the overall amount of revenues received as grants was partly balanced by funds mobilised from the revenues of local LEPLs. At the same time, the surplus revenues of the LEPLs that are the main contributors to the state budget are largely determined by their tariff policies for public services.

Accordingly, IDFI concludes that in recent years Georgia's ruling force has been compensating for the decline in foreign grants — that is, financial assistance — received by the state budget through surplus revenues generated by more expensive public services paid for by Georgian citizens.