Page 29 - GEORptAug20

6.0​ Public Sector 6.1​ Budget
Georgia drafts crisis plan with focus on supporting residential real estate
Prime Minister of Georgia Giorgi Gakharia has unveiled a fourth anti-pandemic impact crisis plan. Worth Georgian lari (GEL) 434mn ($135mn), it is aimed at supporting the construction and development sector of the country, particularly the residential segment.
The plan has been criticised for utilising public money to support already profitable businesses, thus not addressing the needs of low-income population segments. The previous plans referred to the tourism, agriculture and education sectors.
The plan will have four dimensions: subsidies for mortgage loan interest rates; state guarantees for mortgage loans; purchasing of apartments for internally 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.
29​ GEORGIA Country Report ​August 2020 ​ ​www.intellinews.com