According to the Draft Budget for 2022, the deficit will be 4.2%. However, due to the pandemic crisis, the deficit has been rather high in both 2021 and 2020. In 2020, the deficit hit a record 9.4%, while in 2021, it was down to 6.7%. Draft budget with high deficit has its negative side and it is reflected in the inflation.
As Eva Bochorishvili, head of the Research Department at Galt & Taggart, points out, the NBG considers the deficit as a risk factor for inflation.
However, on the other hand, the funds raised by the government in the form of debt took the form of a fiscal stimulus this year and it also made some contribution to the economic recovery.
"Many factors contributed to the recovery this year, including fiscal incentives, such as high rate of foreign inflows, remittances, exports, as well as the dynamics of tourism recovery was quite good. There were many other factors, including accumulated demand and bank lending," said Eva Bochorishvili.
