Central Bank: “2017 high budget deficits do not create inflation risks”

State budget revenues are planned to increase by 25 million GEL. Photo by N. Alavidze/Agenda.ge

Agenda.ge, 18 Oct 2016 - 11:33, Tbilisi,Georgia

The country's central bank says high budget deficits forecast for 2017 do not create inflation risks although it was preferable to keep the budget deficit as low as possible.

This was mentioned in a report of the 2017 draft budget created by the National Bank of Georgia (NBG) and presented to Parliament of Georgia.

NBG stressed high budget deficits in 2017 would not create inflation risks but it was desirable to keep the budget deficit below three percent to maintain debt sustainability and fiscal stability.

A budget deficit is an indicator of financial health in which expenditures exceed revenue.

In the report the central bank welcomed the Government’s decision to issue more treasury bills as this would reduce the currency risks and develop the securities market.

Earlier in October Georgia’s Ministry of Finance announced next year Georgia will have a budget of 10 billion GEL – a 410 million GEL more than the 2016 budget.

The initial version of the draft state budget was 10.55 billion GEL, of which 9.52 billion GEL will be composed of budgetary funds, 135 million GEL will be grants and 900 million GEL will be credits.

State budget revenues will be about 8.71 billion GEL while budget expenditures will reach 8.17 billion GEL, which was 22.3 percent of GDP.

Looking ahead the Budget and Finance Committee of Parliament of Georgia will hold a closing session regarding the 2017 state budget after completing the first stage of discussions about next year's budget.

The 2017 draft budget will be given to the Government by October 22, which will include remarks from Parliament's Budget and Finance Committee.

The Government must present the final budget to Parliament no later than November 5.

Georgia was currently enjoying a stable economy and was expected to end the year 2016 on a financial high. Between January and September 2016 Georgia’s consolidated budget incomes reached 6.47 billion GEL – a 140 million GEL surplus, said the Finance Ministry.