IMF Releases Revised Estimates for Georgia’s General Budget in 2020
The International Monetary Fund, a Washington-based financial institution, released the sixth assessment of Georgia’s economic performance on May 5, revising country’s key fiscal parameters in 2020 in the light of COVID-19 pandemic.
IMF said it reached an agreement with the Georgian government on an augmented deficit of 8.5 % of GDP in 2020, which will amount GEL 4,1 billion (USD 1,3 billion).
Revenues are predicted to fall by 2.8% of GDP. The fiscal relief package to address “the health and socio-economic impact of the shock” will increase Government’s total expenditure by 3.0% of GDP compared to earlier estimates for 2020.
IMF revised upwards total expenditure figures, as the Georgian government will have to commit additional budget resources to mitigate the fallout from the coronavirus pandemic.
Government’s spending is set to jump to GEL 16,2 billion/ USD 5 billion this year from GEL 14,2 billion / USD 4,4 billion in 2019 (initial estimate for 2020 was GEL 14,8 billion / USD 4,6 billion). Authorities will spend GEL 4,6 billion / USD 1,3 billion on social benefits and various kinds of allowances (initial estimate – GEL 4,1 billion / USD 1,3 billion).
The Government’s total revenues are expected to amount GEL 12,1 billion / USD 3,8 billion this year– a decrease by GEL 1,4 billion / USD 430 million compared to the initial 2020 forecast. In particular, general taxes collected on goods and services (VAT) will decline by GEL 600 million / USD 188 million in 2020 in comparison with previous estimates.
Meanwhile, IMF said that Georgia’s public debt – which currently stands at GEL 21 billion / USD 6,6 billion – will swell to GEL 31,5 billion / USD 10 billion in order to finance the augmented budget deficit.
“Public debt is assessed as sustainable despite the sharp increase expected in 2020 due to depreciation and the fiscal relief package to help finance health and socio-economic measures due to the COVID-19 pandemic,” noted the major international financial organization.
It further highlighted that “fiscal consolidation and higher medium-term growth are expected to put public debt as a ratio to GDP on a downward path.” However, IMF said foreign exchange (FX) risks could affect the debt dynamics.
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