Georgian PM presents anti-crisis budget for 2020
Georgian Prime Minister Giorgi Gakharia has presented the anti-crisis budget for 2020 at the Inter-Agency Coordination Council today. Photo: PM's press office.
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Georgian Prime Minister Giorgi Gakharia has presented the anti-crisis budget for 2020 at the Inter-Agency Coordination Council today in response to the before sending it to the Parliament of Georgia later today.
The reason and purpose of our meeting today is the anti-crisis budget for 2020. We all understand very well that the epidemic has pushed the country back economically. Today the budget will be presented to parliament and you are all here to discuss it and change our opinions", Gakharia said.
The coronavirus pandemic has had a negative effect on major macro and fiscal parameters, reads the budget proposal, which says that the economy, which was on good track at the beginning of 2020 and exceeded over five per cent growth in January, has worsened significantly following the economic restrictions due to the pandemic and dropped by more than 16 per cent in April.
According to the annual forecast it is expected that:
- The economy will shrink by 4 per cent
- Exports will decrease by more than 6 per cent
- The current account deficit will shrink to 10.3 per cent of GDP
- Tourism and remittances will be reduced significantly
- Consolidated budget tax revenues will be reduced by more than 1.5 billion GEL
- 3.4 billion GEL will be mobilised for the anti-crisis plan
- The budget deficit will increase from 2.5 per cent to 8.5 per cent
What is the loss caused by the pandemic in consolidated budget revenues?
In 2020, consolidated budget revenues (excluding debt and donor grants) were planned at 13.70 billion GEL. Because of the pandemic, the loss of revenue amounts to just 1.81 billion GEL, reads the budget.
The resources needed for the implementation of the measures defined by the anti-crisis plan in 2020 amount to 3.4 billion GEL.
Additional resources mobilised in the budget to prevent the pandemic
Additional resources mobilised in the budget to prevent the pandemic and its consequences amount to 5.63 billion GEL, which includes credits allocated by the international partners (4.47 billion GEL):
- EU grant - 330 million GEL
- StopCoV foundation - 133.5 million GEL
- Interest receivable as a result of placing additional mobilised resources on deposits - 53.5 million GEL
- Increase in domestic debt - 650 million GEL
Consolidated budget reduced
At the beginning of the pandemic it became clear that a reduction of the consolidated budget would become necessary, reads the budget proposal.
Since the beginning of March, budget expenditure has been significantly limited and work has begun on the release of resources, both in the state budget and in local budgets.
As a result, it was possible to release up to 600 million GEL in the consolidated budget, which is reflected in the draft budget amendments.
According to the budget, primary current expenditures have reduced by 199.6 million GEL, while capital expenditures were reduced by 347.5 million GEL.
On the other hand, primary current expenditures for the pandemic increases by 1.87 billion GEL; capital expenditures - by 123.8 million GEL; Debt service and repayment increases by 42 million GEL.
As a result state budget allocations increase by a total of 1.49 billion GEL and amount to 15.92 billion GEL.
Gakharia said that the government is working with international partners and predicts Georgia will be one of the first countries that will be able to recover.
He stated that the budget parameters presented today were agreed upon with the International Monetary Fund (IMF).
What support can business expect?
The government of Georgia has presented an anti-crisis plan for Georgian businesses in order to ease the burden caused by the coronavirus crisis. The government responded to the demand of the hotels, restaurants, tourist agencies and tour operators in Georgia and decided to postpone payment of property and income tax by four months.
The Georgian government is working with experts from the University of Cambridge and the University of London as well as Deloitte analysts and local experts to create a post-crisis economic plan and decide what steps they should take in order to improve the Georgian economy after the coronavirus lockdown.
How does the gov’t plan to support the construction sector?
The Prime Minister of Georgia Giorgi Gakharia has presented a fourth anti-crisis plan today worth 434 million GEL aimed at supporting the construction and development sector of Georgia. He said that the construction and development sector was one of the fastest growing sectors which employed 120,000 people in 2019.
Georgia will spend 3.5 billion (about $1.10b/€1.02b) on its coronavirus anti-crisis plan, Georgian Prime Minister Giorgi Gakharia announced earlier today. "For now, the country will spend GEL 3.5 billion on managing the crisis, of which 1.035 billion GEL will be directed at social support of citizens, 2.11 billion GEL will be directed at the economy and entrepreneurs, while 350 million GEL will be spent on the health care of each citizen", Gakharia said.
The government of Georgia will take a new loan worth 4.47 billion GEL to handle the crisis caused by the coronavirus pandemic, according to the anti-crisis budget for 2020 presented today.
The 2020 budget will decrease financing of the president’s administration, the gov’t administration and the parliament amid the coronavirus pandemic.
Georgia has reported four new cases of the coronavirus earlier today, bringing the total number of cases to 822. 690 of the 822 patients have recovered, while 13 others have died. As of today 119 people remain infected with COVID-19 in Georgia. Two of the four new cases are imported, one is a medical personnel and the remaining one is connected with the Saburtalo cluster.
People above 70 years will receive an increased pension starting July 1, 2020, with monthly pensions increasing by 30 GEL ($9.84/€8.63) to 250 GEL ($81.97/€71.95).
Experts from Deloitte have analysed Georgian fiscal, monetary and sectoral economic policies and given recommendations to the Georgian government at an online meeting with Georgian Prime Minister Giorgi Gakharia earlier today.
Georgia has chosen more than 400 companies including Finnish multinational communication company Nokia and has started talks to the companies’ managements to attract FDIs to the country.
The Georgian parliament has approved the anti-crisis budget, which reflects additional necessary expenditures of 3.4 billion GEL needed to combat the coronavirus and treat patients, the Georgian Ministry of Finance announces.
'Alternative scenarios needed for economic growth, budgeting'
Transparency International Georgia has presented an analysis and recommendations of the draft anti-crisis budget for 2020 just a few days ahead of a vote in the parliament of Georgia, which recommends that the government of Georgia needs to come up with alternative scenarios for economic growth and budgeting.
The International Trade Centre (ITC) has selected 18 national trade promotion organisations including Enterprise Georgia which will take part in the 2020 World Trade Promotion Organization (WTPO) Awards.
As the shock of the pandemic is expected to last until the end of the year the government of Georgia is taking actions to further support individuals affected by the crisis. "Despite all the positive tendencies, the shock of the pandemic will last until the end of the year. Therefore, we should reexamine every social group and allocate resources for citizens who are in special need. I also want to emphasise that as of today, 721,000 citizens have already received social assistance packages which had been created by the government", said Gakharia.