What’s happening in the Georgian economy during the coronavirus crisis?
The economic team of Georgia is working on an economic plan to enable the government to provide as much assistance as possible to citizens who have lost their sources of income due to the state of emergency. Photo: Nino Alavidze/Agenda.ge.
Tweet 
Share
Despite a state of emergency, economic activity continues in Georgia except for Marneuli and Bolnisi municipalities in eastern Georgia where a strict quarantine regime has been imposed after a local, 62-year-old woman tested positive for COVID-19 came into contact with more than 80 locals.
The economic team of Georgia is working on an economic plan to enable the government of Georgia to provide as much assistance as possible to citizens who have lost their sources of income due to the state of emergency as well as to support Georgian businesses in overcoming the crisis created by the coronavirus spread.
The government's economic team is cooperating with major international financial institutions to develop another support package for the economy, including in terms of mobilising additional material resources.
Georgian Economy Minister Natia Turnava stated that there are two types of regimes in Georgia - one is a strict quarantine in Marneuli and Bolnisi and the lighter regime in the rest of Georgia.
Currently, we have two types of regimes in Georgia. One is a strict quarantine, which is enforced in the Marneuli and Bolnisi municipalities and the lighter regime in the rest of Georgia. I would like to reiterate - not in Marneuli and Bolnisi municipalities, but in the rest of Georgia, economic activity continues with no restrictions on businesses, various services, infrastructure projects, construction and many other economic activities. It is just important to follow the rules dictated by epidemiologists", Turnava said.
What economic activities are restricted or allowed in Georgia during the state of emergency?
Prime Minister's spokesperson Irakli Chikovani explained today what economic activities are restricted or allowed in Georgia during a state of emergency.
He said that the implementation of major infrastructure projects will not be hindered in the country. The suspension of activities will not concern the retail sale of food, animal feed, animal and plant products, household chemistry and hygiene, veterinary preparations, pesticides and agrochemicals, seed and planting materials; supply of electrical communication, electricity, natural gas, water, gasoline, diesel; sale of medical goods and pharmaceuticals.
Chikovani said that the restrictions also do not apply to press booths. He also added that restaurants and public food facilities will be able to continue their activities only in case of introducing food delivery service.
Chikovani also named places where gathering of more than 10 people is restricted, such as:
- Medical institutions
- Public institutions
- Defence forces
- Penitentiary institutions
Coronavirus impact on the Georgian National currency, the lari
Economic Minister Turnava spoke about the depreciation of the Georgian national currency, the lari. She said that in the global crisis the Lari followed the dynamic of the depreciation of other countries' currencies.
"There is a global economic crisis and coronavirus is a global challenge. This situation has hit the economy. National currencies of our neighbouring countries and many other countries have been depreciating. It would be wrong and irresponsible to claim that we will be able to counter this world trend. The only thing we can do is to mitigate the impact of the lari depreciation", Turnava said.
The National Bank of Georgia (NBG) announced today that it will sell $40 million at foreign exchange auction tomorrow to control the national currency’s changing value against the US dollar. As a result of the last two interventions the NBG has already sold $60 million in total.
The NBG stated that when the shock is over the Georgian economy will be able to recover quickly.
As of today, 1 USD costs 3.2389 GEL, while 1 EUR costs 3.4578 GEL.
Private companies and individuals are now able to make donations in the national currency to help the poor and disadvantaged get through the coronavirus crisis in Georgia thanks to a StopCov foundation created today.
Enterprise Georgia is starting a new programme today to cofinance family-owned, small and medium-size hotels in Georgia. The programme will seek to alleviate financial problems in the tourism industry due to the spread of the coronavirus.
Georgian Prime Minister Giorgi Gakharia has announced today that all malls will temporarily close in the country to prevent the spread of the coronavirus. Only groceries, pharmacies, gas stations, post offices and banks will remain open.
A price restraint mechanism is ready and has been agreed upon between business and the government. Specifically, prices for nine products will not increase in Georgia, said the Prime Minister’s Spokesperson Irakli Chikovani earlier today.
Streets with metro entrances and bus stops will be sanitised in Tbilisi starting tonight, said Tbilisi Mayor Kakha Kaladze earlier today. "After sanitizing the streets, we will start sanitizing specific bus stops and metro entrances,” said Kaladze.
The Asian Development Bank (ADB) is offering about $6.5 billion to address the immediate needs of developing states, including Georgia, as they respond to the COVID-19 pandemic.
US Ambassador to Georgia Kelly Degnan has praised the Georgian government for its ‘proactive steps’ to contain the spread of COVID-19 virus. “These are challenging times, and we are all trying to keep ourselves and our loved ones safe and healthy. We at the U.S. Embassy are particularly grateful for the pro-active efforts of the government of Georgia, including the NCDC, the PM, the president, almost every ministry, and parliament, doing their best to contain the spread of the COVID-19 virus and minimize its impacts”, she said.
Georgian economic growth may drop to between 0.8 and 3.9 per cent this year, reports the ISET Policy Institute (ISET-PI), one of the first university-based think tanks in the South Caucasus based at the International School of Economics at Tbilisi State University (ISET).
Georgian Agriculture Ministry will spend 16 million GEL ($4.86 mln/€4.42 mln) to make sugar, oil and pasta stocks in the country due to the coronavirus outbreak.The ministry will buy 5,000 tonnes of sugar, 500 tonnes of pasta and 1.5 tonnes of sunflower oil.
The World Bank projects Georgian economic growth to slow sharply this year, coming close to zero percent in 2020 due to the challenging external environment and impacts of the COVID-19 pandemic. It also forecasts Georgian fiscal deficit (a shortfall in a government's income compared with its spending) to be around 5.2 per cent of the gross domestic product (GDP) in 2020.
The National Bank of Georgia (NBG) announced today that it will sell $40 million at foreign exchange auction tomorrow to control the national currency’s changing value against the US dollar. As a result of the last two interventions the NBG has already sold $60 million in total.
3 possible scenarios from PMCG
PMCG Research has developed three possible scenarios for the development of the coronavirus crisis in Georgia, each of which correspond to different periods of time for which containment measures remain in place.
The International Monetary Fund (IMF) and the World Bank forecast Georgian economic growth to be three-four per cent by 2021, said Georgian Finance Minister Ivane Matchavariani.
The European Bank for Reconstruction and Development (EBRD) forecasts Georgian economic growth to fall 5.5 per cent in 2020 mainly as a result of a reduction in the country’s tourism sector due to coronavirus restrictions on travelling.
What difficulties are companies experiencing?
A decrease in demand is the most significant side effect of Covid-19 for Georgian companies among all sectors, shows the new study of PricewaterhouseCoopers Georgia LLC (PwC Georgia) and the Investors Council.
The National Bank of Georgia (NBG) put up $40 million at foreign exchange auction earlier today against the depreciation of the Georgian lari, however only $29.65 million was sold.
The IMF has forecast a sharper decline in world economic growth than was expected just two months earlier, saying that the coronavirus pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and recovery is projected to be more gradual than previously forecast.
TBC Capital, Georgia’s brokerage, advisory and investment bank, predicts the Georgian economy will shrink 4.5 - 5.5 per cent this year in its report about the coronavirus’ impact on Georgia.
The government of Georgia is going to present a 10-year development plan in May, which will convey the government’s vision of how to emerge from the coronavirus crisis, announces Georgian Prime Minister Irakli Garibashvili.