Prime Minister Gakharia Unveils Anti-Crisis Plan to Mitigate Coronavirus Fallout
On April 24, Georgian Prime Minister Giorgi Gakharia unveiled an anti-crisis plan to tackle economic and social challenges amid the coronavirus fallout. The plan entails a social assistance package for individuals, as well as fiscal stimulus in the form of tax relief and exemptions for businesses over the course of following six months.
In his speech, the Prime Minister highlighted the economic toll wrought by the pandemic. He said Georgian economy would contract by 4 % this year, while state budget revenues might suffer a GEL 1,8 billion (USD 562,5 million) loss, and current expenses would decrease by GEL 300 million (USD 94 million).
A total of GEL 3,9 billion (USD 1,2 billion) will be allocated for implementing the anti-crisis plan, Gakharia stated. According to the Prime Minister, 350,000 citizens will be entitled to receive “targeted” financial assistance – “a bare minimum, what the Georgian Government could offer today to each of its citizens.”
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The anti-crisis plan includes following measures:
- employees who have lost jobs during the pandemic will receive a monthly allowance amounting GEL 200 for six months (GEL 1,200 or USD 375 in total);
- employees who have not been laid off during the pandemic and receive less than GEL 750 (USD 234) salary, will be exempted from income tax for the next six months. Those who earn less than GEL 1500 (USD 469), income tax will only apply to a GEL 750 (USD 234) tax base;
- Self-employed people or jobless persons able to prove they have lost income due to the pandemic will receive GEL 300 (USD 94) as a one-off assistance;
- Socially deprived groups (320,000 people), as well as adults and children with disabilities (40,000 people) will be entitled to GEL 600 (USD 188) financial assistance for the next six months.
According to the relief plan, starting from 2021, pensions will rise annually at a rate no less than the inflation rate, so that “price rise will not affect real value of the allowance.” In particular:
- As for retired people aged seventy and older, inflation-rate increased pension increase in accordance with the inflation rate plus 80% of the value of economy’s real growth;
- Pension increase will amount no less than GEL 20/ USD 6 (for those aged 70 and older no less than GEL 30/ USD 9);
- In addition to the said measures, an already announced one-off rise in pension by GEL 30 for senior citizens aged seventy and older will remain in force (a total of 410,000 will benefit from this increase).
The Government allowed automated VAT refund for businesses. Commercial banks will receive USD 600 million (USD 187,5 million) for long term lending.
Another GEL 500 million (USD 157 million) was allocated for businesses, including GEL 300 million (USD 94 million) for financing lines of credit aimed at small and medium businesses. The Government will assume the role of a loan guarantee for 90% of the new credits. Additional funds will be allocated to support farm crediting.
According to the Prime Minister, the state will write off overdue fines of individuals and businesses using state irrigation system.
The Government plans to register 1,2 million hectares of land over the course of next three years.
Prime Minister Giorgi Gakharia also spoke about the gradual lifting of coronavirus-related restrictions and outlined a timeline for allowing resuming of business and other activities.
The reopening plan will be rolled out in six different phases, each stage taking place in every two weeks, while taking into consideration the epidemiological situation in the country. For the whole period, citizens will be obliged to observe physical distancing guidelines and wear face masks in closed public spaces.
- first stage (starting from April 27): driving private vehicles/taxi cabs will be allowed; online shopping and delivery services to resume operations; open air agricultural markets will reopen;
- second stage (starting from appr. May 11): restrictions on construction business, car maintenance services, computer maintenance services, and recreational zones will be eased;
- third stage: (starting from appr. May 25) restrictions on retail and wholesale shops (excluding shopping malls) having separate access from streets will be lifted; all types of open-air markets will reopen; publishing companies will resume operations;
- fourth stage (starting from appr. June 8): shopping malls, open-air restaurants, beauty salons will reopen; all kinds of financial services will resume functioning;
- fifth stage (appr. June 22): enclosed markets/all types of restaurants will reopen;
- sixth stage (appr. July 6): gambling businesses, entertainment services, hotels, educational institutions, all other types of businesses will resume operations.
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