Transparency International recommends Georgian gov't to reduce budget deficit, take less loans for 2023

Transparency International Georgia has recommended the government of the country to further reduce its budget deficit and consider less foreign debts in next year’s state budget, as the parliament is preparing for the final approval of the financial document.

The organisation said on Wednesday the budget deficit was estimated to be ₾2.3 billion ($0.82bln), or 2.9 percent of the gross domestic product, in 2023. It noted the figure had stood at 3.1 percent of the GDP in last year’s budget.

• Georgia’s 2023 budget planned with 5% economic growth forecast - PM

It also noted that while the trend of the decreasing deficit was "welcome", and the 2023 figure was returning to within the limits allowed by law, "it is still at a high level”.

The organisation said reducing the deficit would contribute to stability of prices and the exchange rate of the national currency, adding it would also “help the national bank to ease the tightening monetary policy, further reduce the government's debt burden and improve the country's credit rating".

In addition, Transparency International has also recommended that the government reduce the taking of high-interest domestic debt, "which significantly increases budget costs".

• Georgia’s external debt at $22.3 billion

The organisation also said in order for the government to "significantly increase" the recently reduced amount of foreign grants it must fulfil the recommendations necessary for receiving the EU candidate country status by the end of the year. 

Based on the experience of EU candidate countries for 2014-2021, in case of obtaining this status, Georgia will have the opportunity to receive an additional grant of up to ₾400 million ($143.39mln) annually from the EU", the report said.

The parliament approved the initial draft budget for 2023 on Monday.