Page 13 - GEORptSep20

Georgia announces $1.1bn anti-crisis package
Funded under the AIIB’s COVID-19 Crisis Recovery Facility (CRF) and co-financed by the World Bank, the loan will fill the unanticipated financing gap that has arisen due to the effects of the COVID-19 outbreak. The gap could jeopardise Georgia’s ongoing reforms under the Economic Management and Competitiveness Program (EMCP).
Prior to the pandemic, Georgia adopted reforms under the EMCP designed to sustain rapid growth and ensure inclusion, job creation and resilience through measures to strengthen economic management and enhance competitiveness. COVID-19 has caused government financing constraints, “creating huge funding needs for the ongoing implementation of reforms under the EMCP", a press release from the AIIB stated.
Georgian Prime Minister Giorgi Gakharia on April 24 unveiled a Georgian lari (GEL) 3.5bn ($1.1bn, equivalent to 7% of GDP) anti-crisis plan to mitigate the economic and social effects of the coronavirus (COVID-19) outbreak.
"For now, the country will spend GEL3.5bn on managing the crisis, of which GEL1.035bn will be directed at social support of citizens, GEL2.11bn will be directed at the economy and entrepreneurs, while GEL350mn will be spent on the health care of all citizens," Gakharia said.
Almost all the opposition parties have sharply criticized the government’s anti-crisis plan, claiming that it is insufficient.
In his public speech, Gakharia stressed the social dimension of the plan, but the details related to the GEL2.11bn earmarked for the economy and business remained rather scarce. Furthermore, a significant part of this budget, namely GEL1.1bn, is made up of loans extended by the government to banks for boosting lending and therefore cannot be counted as “public spending”.
The country’s GDP will contract by 4% this year, the government has assumed. Gakharia said that budget revenues will likely drop by GEL1.8bn ($563mn) and the government’s expenditures will decrease by GEL300mn ($94mn) due to events and business trips that cannot be held.
The 7%-of-GDP plan entails a social assistance package for individuals, as well as a fiscal stimulus in the form of tax relief and exemptions for businesses over the course of the following six months.
According to the PM, 350,000 citizens will be entitled to receive targeted financial assistance, “the bare minimum of what the Georgian Government could offer today to each of its citizens.”
The employees who have lost their jobs during the pandemic will receive a monthly allowance amounting to GEL200 for six months ($375 in total). Employees who have not been laid off during the pandemic and receive less than a GEL750 ($234) salary, will be exempted from income tax for the next six months. For those who earn less than GEL1,500 ($469), income tax will only apply to a GEL750 ($234) tax base.
Self-employed people or jobless persons able to prove they have lost income due to the pandemic will receive GEL300 ($94) as one-off assistance.
Socially deprived groups (320,000 people), as well as adults and children with
13​ GEORGIA Country Report ​September 2020 ​ ​www.intellinews.com