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Georgian sketched 2020 budget envisaging 2.7% of GDP deficit
current developments, the Georgian economy was expected to grow by 2% this year.
According to him, the situation will improve in the fourth quarter in terms of the baseline scenario and in 2021 economic growth might reach 6.5%.
“The second quarter will be the most difficult. I think the 2% increase is the benchmark that we see from today's perspective. However, by the end of the year, growth in the fourth quarter will be much higher. I should also add that if everything stabilises, growth in 2021 could be as high as 6.5%," Nadaraia said.
Gakharia explained that under the stimulus package all enterprises linked to the tourism sector would be granted income and property tax breaks until November 1, while a refund of value-added tax (VAT) for companies would be doubled to GEL1.2bn from GEL600mn.
Individuals and tourism-related companies would be permitted to defer interest payments on bank loans for four months, Gakharia said, although this move obviously depended on banks’ acceptance.
“In addition, the government is allocating GEL300mn in capital expenditure and infrastructure projects,” the PM said.
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.
6.1.1Budget 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
27 GEORGIA Country Report April 2020 www.intellinews.com
