Georgian PM vows reduction of foreign debt, budget deficit through “unprecedented, double-digit” economic growth

Georgian Prime Minister Irakli Garibashvili on Monday announced changes in the country’s budget draft. Photo: Government of Georgia press office, 12 Sep 2022 - 15:52, Tbilisi,Georgia

Georgian Prime Minister Irakli Garibashvili on Monday announced amendments to the country’s budget bill to reduce its foreign debt to 40 percent of the gross domestic product, and budget deficit to 3.2 percent of the GDP, crediting the “unprecedented, double-digit” economic growth for enabling the moves.

Speaking during the cabinet meeting, the Government head said the growth would also allow authorities to allocate additional funds for law enforcement agencies, army, infrastructure and agriculture projects, healthcare, sports, social programmes and development of domestic entrepreneurship. 

Praising the Government’s “correct, far-sighted and state-interest-oriented” policy following Russia’s invasion of Ukraine, the PM said Georgia had enjoyed a “double-digit economic growth of 10.4% last year, and the trend has been maintained this year with a 10.3 percent economic growth over the past seven months”. 

The unprecedented economic growth was marked due to the Government's policy, which had refused to pursue the emotional, immature and anti-state calls coming from its opponents”, Garibashvili said in reference to criticism of the domestic opposition of the Government’s stances in the backdrop of the conflict.

He also noted Russia’s war in Ukraine had sparked new challenges worldwide, and credited his Government’s “proper assessments” of the situation for avoiding an “expected backsliding” in the economy, instead of the current growth. 

The Georgian PM thanked the state agencies for their work "round-the-clock" to ensure the country's advancement. Photo: Government of Georgia press office. 

Pointing to figures, the PM said the rate of exports of goods had amounted to $3.1 billion this year, 36 percent more than in the same period of 2021, while incomes from tourism had hit $1.6 billion, three times more than last year’s figures. 

The volume of direct foreign investments in the first quarter of this year has amounted to $922 million, which is twice as much as last year's rate and exceeds the rate of the first half of 2019 by 62 percent. The turnover of VAT-paying enterprises has increased by 21 percent between January and July. This means that this year, in the first seven months, we still have a double-digit, 10.3 percent economic growth”, Garibashvili said. 

Considering the increase, the PM said this year’s budget had been planned with a 8.5 percent economic growth forecast (instead of six percent), with the nominal gross domestic product forecast being set at ₾72.2 billion ($26 billion) instead of ₾64.8 billion ($23 billion). 

He also said the initial budget draft had included the budget deficit at 4.4 percent of GDP, and a reduction of the country’s foreign debt to 51 percent of GDP.

“However, thanks to the increase in state economy, the Government has decided to take ₾710 million ($251 million) less debt than previously planned, which will allow it to decrease the foreign debt to 40 percent of GDP by the end of this year and reduce the budget deficit to 3.2 percent of GDP, instead of previously planned 4.4 percent”, Garibashvili said.