Finance Minister: cost of pandemic to budget has reached 7.2 bln GEL

Georgian Finance Minister Lasha Khutsishvili has summed up the influence of the Covid-19 pandemic on the Georgian economy and the government's effort to help citizens as well as businesses to overcome the crisis within the 'Minister's Hour' format at the Parliament of Georgia today.

He said that the economic downturn during the Covid-19 pandemic has affected budget revenues, while healthcare spending has increased. 

Tax deficit amounted to 1.9 billion GEL; health expenditures reached 0.9 billion GEL; 3 million GEL was spent on business support; social protection measures for our citizens' took 1.3 billion GEL. In total, the pandemic cost totalled 7.2 billion GEL to the budget for 2020-2021", Khutsishvili said.

Khutsishvili said that despite this cost the government met the pandemic 'with fairly high buffers, which made it significantly easier for us to respond to the challenges'. He meant the financial assistance of $2.1 billion which Georgia had attracted from the donor financial organisations.

With the support of international financial institutions, it has become possible to fully fund pandemic response measures and maintain macroeconomic stability", Khutsishvili said.

He added that as a result the government had made a 'significant intervention' to support the business in order to ensure fast recovery of the sector. 

About 60,000 companies have benefited from our business support programmes... In April 2021, small businesses grew by 113%, medium-sized businesses by 59%, and large businesses by about 29%... Activity in the tourism sector increased by 152% compared to April 2020... In April 2021, real growth in the construction sector was 110% and almost fully restored to 2019 levels", Khutsishvili said.

He said that based on the April 2021 data, 'we can say that we have economically moved to the post-pandemic period'. 

Khutsishvili said the economy grew 44.8% in April year-on-year and export grew 70%.

He noted that the pandemic had a significant impact on the budget deficit and government debt, but in an optimistic scenario the government's debt will fall under 55% this year, and by 2025 it will approach 50%.

Khutsishvili announced that the government will finance infrastructure projects worth more than 20 billion GEL in the next four years.