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Fiscal deficit to narrow but remain high in Georgia

Business Materials 28 April 2021 22:02 (UTC +04:00)

BAKU, Azerbaijan, April 28

By Tamilla Mammadova – Trend:

The fiscal deficit will narrow but remain high, forecast equal to 7.5 percent in 2021 with the continuation of temporary support measures and 5 percent in 2022 as stimulus winds down, Trend reports via the Asian Development Bank (ADB) Outlook 2021.

Targeted temporary assistance includes monthly transfers to the unemployed, tax breaks for firms that retain employees, and help to households for utilities.

Current expenditure is projected to decline to 25.1 percent of GDP in 2021 and 23.2 percent in 2022 with prudent management of the public sector wage bill and with spending on goods and services curbed. Capital expenditure will narrow to 7.5 percent of GDP in 2021 and 7 percent in 2022 while maintaining large outlays required for road infrastructure projects.

"Revenue is expected to remain broadly stable at about 25 percent of GDP in both years. The International Monetary Fund has called for stronger public investment management and improved governance in state-owned enterprises. This would include streamlining the methodology that directs project appraisal, selection, and implementation, and improving the management of fiscal costs and risks from investment projects," the report said.

With the resumption of growth and a smaller deficit, public debt is projected to ease to the equivalent of 59.1 percent of GDP at the end of 2021, with external public debt equaling 48 percent of GDP, and ease further to 56.9 percent a year later, with the external portion equaling 45.1 percent of GDP. The government plans to redeem $500 million in sovereign Eurobonds that mature in April 2021 by issuing new Eurobonds.

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