Page 37 - GEORptAug21

EU extends €100mn to Georgia under two MFAs
The general government budget target has been revised to 7.1% of GDP from 7.5% previously.
The public debt to GDP ratio is, meanwhile, projected to remain below the 60% threshold at 57.3% at the end of this year, compared to the 60.1% calculated under the initial budget planning. This downward revision stems from the combined effect of the higher-than-expected GDP growth and slightly lower public financing needs.
Revenues were revised upward by 2.5% to Georgian lari (GEL) 12.345bn ($3.91bn).
The revised budget planning will be submitted to parliament for approval.
According to the 2021 budget planning, budgetary revenues this year are set at GEL16.76bn ($5.1bn), up by GEL2.2bn compared to 2020. The state budget estimates tax revenues at GEL10.34bn. The document calculates revenues from foreign grants at GEL287mn; other revenues are expected at GEL550mn. GEL5.28bn is set to be allocated through external debt. Revenues from privatisation are set at GEL150mn.
The government drew up the budget planning with the assumption of 4.3% economic growth in 2021. It projects 5.5% in average economic growth in 2022-2024.
Budgetary expenditures are set at GEL18.38bn, up by GEL4.06bn compared to 2020. Under the 2020-2021 anti-crisis plan, GEL2.8bn ($850mn) will be allocated to support businesses and GEL200mn ($61mn) to assist citizens.
The European Union has transferred €100mn to support Georgia's balance of payments and help meet its budgetary financial needs under macro-financial assistance (MFA) operations.
One operation aims to restore Georgia’s stable external financial position and is co-financed by the International Monetary Fund (IMF). Since 2008, the EU has conducted four MFA operations in Georgia.
The components of this assistance include €75mn from a new MFA operation announced in April aimed at mitigating the socio-economic consequences of the coronavirus (COVID-19) pandemic and €25mn as the last tranche from a previous MFA operation approved in April 2018.
Of the €100mn disbursed, €95mn is in the form of soft loans and the remaining €5mn is a grant.
The €75bn tranche will form parts of an MFA dealing with the pandemic and a reform agreement with the Georgian government.
Reforms are to be implemented in the areas of public finance management, governance (especially to improve the independence, accountability and quality of the judiciary), the energy sector and labour market policies. If the government implements these agreed reforms, an additional €75mn will be disbursed as MFA in early 2021.
The second tranche of the MFA operation approved in April 2018 (€25mn ) consists of loans (€20mn) and grants (€5mn). The implementation of the specific agreed policy conditions for this second tranche make it possible to carry out reforms in the areas of public financial management, the financial
37 GEORGIA Country Report August 2021 www.intellinews.com