Georgia's foreign debt increased by 6.1 bln GEL, domestic debt by 1.8 bln GEL
The government of Georgia will take a new loan worth 4.47 billion GEL to handle the crisis caused by the coronavirus pandemic. Photo: Nino Alavidze/Agenda.ge.
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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 emergency funding has been brought in from the following organisations:
- Asian Development Bank - 1.455 billion GEL
- KFW - 805 million GEL
- International Monetary Fund - 603 million GEL
- Asian Infrastructure Investment Bank - 450 million GEL
- French Development Bank - 439 million GEL
- World Bank - 396 million GEL
- EU - 241 million GEL
Overall, in 2020 the government of Georgia will increase foreign debt by 6.1 billion GEL, and domestic debt by 1.8 billion GEL. Also, the budget deficit will increase from 2.5 per cent to 8.5 per cent.
The increase in the deficit is, of course, directly related to the increase in government debt. According to the current forecast, by the end of this year, the volume of debt will approach 55 per cent of the GDP", reads the budget.
According to the budget, it is necessary to gradually reduce the government's debt in the coming years and to return to the pre-crisis parameters as soon as possible.
In order to achieve this goal, the borrowing rate will be significantly reduced from 2021, and therefore the volume of debt in relation to GDP will be partially reduced next year", reads the budget.
Click here to read more about the anti-crisis budget 2020.
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.
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 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.
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 2020 budget will decrease financing of the president’s administration, the gov’t administration and the parliament amid the coronavirus pandemic.
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 currently owes $18.3 billion in external debt, says the National Bank of Georgia (NBG). During the first quarter of 2020, the gross external debt of Georgia decreased by $350.9 million.
Georgia will have a three-year grace period to repay foreign debts taken on amid the coronavirus crisis, said Deputy Finance Minister Giorgi Kakauridze earlier today.
The amount of the external debt of the Georgian government borrowed within the last eight years amounts to 13.3 billion GEL ($4.1 bln/€3.5 bln), thus the total amount of government’s external debt is now three times more than it was eight years ago.
Georgia currently owes $18.8 billion in external debt, says the National Bank of Georgia (NBG). During the second quarter of 2020 the gross external debt of Georgia increased by $435 million. Out of that $202 million increase was due to exchange rate changes, $199.4 million decrease was due to transactions, $33.2 million increase due to price changes and $370,500 - due to other changes.
The Georgian government is going to borrow 5.3 bln GEL from multilateral and bilateral donors and partners in external debt in 2021, says the final version of the state budget for 2021. 3.1 billion GEL will be spent on servicing external state debt, while 570 million GEL will be spent on servicing domestic state debt. Based on the final version of the state budget for 2021, government debt is forecasted at 60.1 per cent of GDP by the end of 2021.