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 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).