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Budget provides continued support to Georgian economy - IMF mission

Business Materials 20 April 2021 16:42 (UTC +04:00)
Budget provides continued support to Georgian economy - IMF mission

BAKU, Azerbaijan, April 20

By Tamilla Mammadova – Trend:

Georgia's 2021 budget and fiscal stance remains appropriate at the current juncture, said Subir Lall, the acting Chief of IMF Mission for Georgia, Trend reports via Georgian media.

According to him, the budget provides continued support to Georgia's economy, through temporary and targeted fiscal support measures and elevated capital spending, while also beginning the necessary convergence towards the fiscal rule.

"Fiscal support should not be withdrawn too quickly, which could weaken the economic recovery. If more fiscal support is needed due to a new wave of COVID-19 pandemic, reprioritizing spending should be the first line of defense in our view," he said.

"In the aftermath of the shock reducing the fiscal deficit and debt will be a priority. We welcome the authorities’ commitment towards medium-term fiscal consolidation in compliance with the fiscal rule. Georgia has built up an impressive track record of policy credibility and sound macroeconomic management and this will help maintain this credibility and strengthen it further," Lall noted.

As he noted, under the previous program, the government has made fiscal risks more transparent, notably by publishing a comprehensive annual Fiscal Risk Statement accompanying the budget. The next step is to reduce these risks, in particular by implementing the state-owned enterprise reform.

"We see the need to develop a comprehensive new governance framework covering establishing commercial objectives, performance management, and principles for competitive neutrality among other things. SOE reform will also ensure that the footprint of the state is limited to areas where there is a need for the provision of public goods and not in a way that crowds out the private sector," he noted.

In his words, broader structural reforms will be essential to sustain a durable, inclusive and job-rich recovery that is led by the private sector.

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