Page 29 - GEORptNov20

Georgian sketched 2020 budget envisaging 2.7% of GDP deficit
displaced persons (IDP); and a guarantee extended to developers for the purchase of a certain share (30%) of their project, unless the developer manages to sell the apartments on the market.
The largest part of the budget will go to the purchase of apartments for IDP: GEL150mn plus another GEL200mn under the fourth dimension of the programme, amounting to GEL350mn or more than 80% of the budget total. The maximum price the government will pay under each of the two instruments (firm purchase or a purchase following the guarantee arrangement) is GEL1,700 ($530)per square metre.
GEL70mn will be used to pay a 4% subsidy on the interest paid by debtors under mortgage contracts. It is expected GEL14mn will go on the government paying to guarantee 20% of the value of mortgage loans. The subsidy and guarantees will apply only to those mortgage contracts signed in the second half of this year. They will be extended over a period of five years.
Georgia’s government had sketched its 2020 budget planning based on assumptions of 5% GDP growth next year and the targeting of a deficit of 2.7%-of-GDP in line with this year’s target, Business Media ​reported​, citing finance minister Ivane Machavariani.
The public debt to GDP ratio would under the given scenario reach 45%. Budget expenditures are planned at GEL16bn in 2020. Current expenditure would be GEL11bn , infrastructure expenditure would be GEL3.7bn and debt repayment costs would be GEL1bn, according to the broad distribution of expenditures.
GDP is expected to reach GEL48.5bn, or $16.3bn, on an estimated average exchange rate of GEL2.98 to the USD.
The figures will be adjusted in line with the latest exchange rate projections at the time the government completes its budget planning.
6.1.1​ Budget dynamics - tax issues, privatisation plans
BAT director responds to sales effects of tax hikes and smuggling in Georgia
Tobacco producers sales in Georgia dropped by almost 30% during a single month after tax hikes, British American Tobacco (BAT) corporate business director Zviad Skhvitaridze has said.
The country hiked the value-added tax (VAT) and excise taxes for cigarettes and tobacco, which resulted in end-user prices rising by one US dollar per 20-cigarettes compared to prices found in neighbouring countries. The cost of a pack of Winston cigarettes moved up from Georgian lari (GEL) 4.30 ($1.61/€1.41) to GEL4.80 ($1.80/€1.57), while the price of a packet of Camel cigarettes increased from GEL 4.00 ($1.50/€1.31) to GEL 4.50 ($1.68/€1.47).
Skhvitaridze said that the sales decline was prompted by rising black market sales but he said that he expected the situation to improve during the year as smuggling was tackled.
Akaki Zoidze, head of the parliament’s health committee and a lawmaker of the ruling Georgian Dream party, ​played down​ ​the impact of the smuggling, saying that the illegal market covered less than 1% of total sales.
29​ GEORGIA Country Report ​November 2020 ​ ​www.intellinews.com