How much did the coronavirus pandemic cost to the Georgian budget?

The state debt this year according to the baseline scenario will decrease below 60% and amount to 57%, and according to the optimistic scenario – 55%, the minister said.

TBILISI, 11 Jun – Sputnik. The coronavirus pandemic in 2020-2021 cost Georgia’s state budget 7.2 billion lari ($ 2.25 billion), Georgian Finance Minister Lasha Khutsishvili said in a speech in parliament.

The first case of coronavirus in Georgia was recorded on February 26, 2020. A month after that, a state of emergency was declared in the country, which was lifted on May 22, 2020. However, Georgia’s borders remained closed until February 1, 2021, when Georgia decided to open airspace.

“The budget has been hit quite hard by the pandemic. The economic contraction has affected budget revenues, health spending has increased significantly, and we have made significant interventions to support business, the goal of which was to keep companies alive and, albeit with reduced turnover, to post-pandemic period, “Khutsishvili said.

According to him, taxes during this period were reduced by 1.9 billion lari, health care costs increased by 0.9 billion, aid to companies cost 3 billion, and aid to the population – 1.3 billion.

“As a result, the pandemic cost the budget 7.2 billion lari in 2020-2021,” Khutsishvili said.

At the same time, the head of the Ministry of Finance named the amount that Georgia received from international partners to fight the pandemic.

“In the form of international assistance, we raised a total of $ 2.1 billion. We met the pandemic with fairly high buffers, which made it easier to respond. We had a successful program with the IMF, the country had a high level of trust from international financial institutions and was a large package of reforms. All this has become the main factor that has conditioned our success with donors, “Khutsishvili said.

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At the same time, the head of the Ministry of Finance of Georgia commented on the budget deficit, noting that it will disappear along with the coronavirus pandemic.

“More than half of the budget deficit is the so-called coronavirus deficit, which will disappear with the end of the pandemic,” Khutsishvili explained.

As for the national debt, here too the Ministry of Finance has a positive forecast for 2021.

“If we look at other countries, the public debt on this scale has grown almost everywhere, based on the fact that all countries have taken appropriate measures, but it should be noted that, according to the scenario we presented, the public debt this year, according to the baseline scenario, will decrease below the level 60% and will amount to 57%, and according to the optimistic scenario – 55%, “Khutsishvili said.

According to the National Statistics Service, GDP growth in April was 44.8% compared to the same period last year, and the average real growth rate for the four months since the beginning of the year was 8.1%.

Now the Ministry of Finance is considering three scenarios for the growth of the Georgian economy in the current year – a base one with 6.5%, an optimistic one with 10.2% and a pessimistic one with 4.3%. According to forecasts, GDP growth will be high in 2022 and will amount to 6.9%.

The optimistic scenario provides for a faster growth in tourism – more specifically, at the level of 40-45% from 2019. It also assumes strong economic growth in other sectors of the economy.

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According to the updated forecast, the current account deficit is improving and the dynamics of government debt reduction will be faster. Based on these forecasts, the preparation of the draft amendments to the budget will begin.

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