Page 29 - GEORptOct21

Georgia’s current account gap surges to 12.3% of GDP in 2020
Georgia’s current account deficit amounted to $2.0bn, or 12.3% of GDP in 2020. That's marked down as more than double the $891mn (5.3% of GDP) deficit recorded in 2019 and slightly worse than the latest forecast from Fitch Ratings (prediction: 12% of GDP), according to a statement of the National Bank of Georgia (NBG).
The International and Monetary Fund (IMF) under the latest Article IV Consultations with the South Caucasus country projected the current account deficit improvement to 9.9% of GDP in 2021, compared to its elevated level in 2020, due to early signs of a faster than expected rebound in growth and tourism.
Shrinking tourism revenues amid the coronavirus pandemic were mainly responsible for the deterioration in Georgia’s external position. To offset the loss of forex revenues from tourists and the expected impact on the balance of payments, the government borrowed heavily last year.
Georgia currently owes $20.3bn in external debt, according to NBG data.
The external debt to GDP ratio hit 125% in 2020.
Fitch Ratings in February forecast that Georgia's current account deficit will widen to 12.5% of GDP in 2021, before narrowing to 7.9% in 2022. A domestic-driven recovery and a weak outlook for tourism would mean a higher pace of growth in imports than exports, it said.
5.1.3 Capital flows
Money transfers to Georgia in July up 10.4% y/y
Money transfers to Georgian commercial banks via electronic systems in July increased by 10.4% y/y and amounted to $208.4mn, according to the National Bank of Georgia. Money transfers in June were up by 19.3% y/y.
The largest single source of transfers by value in July was Russia. During this period, $40.1mn was transferred from Russia – 19.3% of the total volume of money transfers to Georgian commercial banks using electronic systems. July remittances from Russia constituted 0.7% less than in the same period last year.
The volume of money transfers to Georgian commercial banks using electronic systems in the first seven months increased by 34.9% y/y and amounted to $1,291.4.
Over the first six months, Russia was the leader in terms of the volume of remittances to Georgia. The total volume from Russia in January-June amounted to $224.8 – 17.4% of the total volume. The remittances from Russia were up 20.7% y/y.
Also in July, $26.7mn was transferred from Georgia to abroad, marking a 19.9% increase y/y.
And finally, in the first seven months, $164.7mn was transferred from Georgia to abroad, translating to a 28.4% increase y/y.
29 GEORGIA Country Report October 2021 www.intellinews.com