Georgian 2021 budget projects revenues to remain sustained - IMF
BAKU, Azerbaijan, Jan. 8
By Tamilla Mammadova – Trend:
Fiscal projections of Georgian for 2021 contain temporary targeted measures amounting to 2 percent of GDP in response to COVID-19, Trend reports via the International Monetary Fund's (IMF's) report.
Social assistance will include temporary transfers to workers in the formal and informal sectors and self-employed who lost income, additional direct transfers to vulnerable families with children, and utility subsidies to low energy consumers in January and February 2021; this last measure is expected to reach the informal sector.
The 2021 budget projects revenues to remain sustained and include temporary support measures totaling 2.1 percent of GDP and sustains capital expenditure at 7.9 percent of GDP.
Given heightened uncertainty, staff cautioned against a significant drawdown in government deposits and supported the authorities’ plan to refinance the 2021 Eurobond.
Public debt (net of government deposits) is projected at 59.1 percent of GDP in 2021 due to higher borrowing and lari depreciation.
A gradual fiscal consolidation will balance providing support to the economy to limit scarring while adhering to the fiscal rule. By 2023, the fiscal deficit will reach 3 percent of GDP, and gross public debt is expected to remain below 60 percent of GDP.
The more gradual path for fiscal adjustment will put public debt on a higher trajectory and postpone the resumption of its declining trend to 2022, with public debt (net of government deposits) now projected above 45 percent of GDP (program anchor) in the medium term.
As the adverse effects due to the pandemic wane, tax revenues would recover and support measures would elapse, while the wage bill and spending on goods and services are projected to remain contained. Improving tax administration and mobilizing additional revenues, including by reducing tax expenditures, would generate space for higher infrastructure and education spending.
If fiscal risks materialize, the authorities are committed to reassess and implement, if needed, additional fiscal consolidation efforts to comply with the fiscal rule.
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