BAKU, Azerbaijan, April 28
By Tamilla Mammadova – Trend:
The larization policy is important to reduce the dependence of the Georgian economy on foreign exchange, but in the current crisis situation, it is inappropriate to take new measures within the framework of larization, said Selim Cakir, the fund’s resident representative in Georgia, Trend reports via Georgian media.
"I believe that the volatility of the lari exchange rate has more to do with external shocks than with larization efforts. I also think that the government sees a priority today in countering the COVID-19 pandemic and its consequences - larization is not a priority today, and I think the government agrees," said Cakir.
Another issue highlighted by the IMF Resident Representative is a possible budget adjustment for 2021, which may be on the agenda in the event of an aggravation of the pandemic situation.
According to Cakir, in this case, it is important that the Georgian government does not save money by providing new social assistance, but reduce capital costs and channels the savings received into social assistance.
"Another limitation means that the agenda will inevitably include the need to support families and businesses. The capital expenditure budget for the last 8 years has been around 8 percent of GDP. This, of course, is important, but in the case of such a scenario, it will be necessary to reduce capital costs and apply them to targeted cash payments," said Cakir.
In early April, the International Monetary Fund lowered its forecast for Georgia's economic growth from 4.3 percent to 3.5 percent. Cakir explained that the fund envisions a slower recovery in Georgia than initially.
In the 2021 budget, the government predicts economic growth of 4.3 percent. If economic activity in the country declines, the implementation of the tax part of the budget may be in jeopardy. However, Finance Minister Khutsishvili says that there is no threat to the budget execution so far. According to the report for the first quarter of the 2021 budget, there is currently no lag in tax mobilization.
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