The Government of Georgia will make changes in the 2021 budget. According to the Minister of Finance Lasha Khutsishvili, the reason for the budget adjustment is the faster recovery rate of the economy, which was 8.1% in January-April, while in April the economy grew by 44.8%.
Adjustments due to this factor will be included in the macroeconomic forecasts of the budget and instead of 4.3% the target for 2021 growth is set at 6.5%. According to the Minister of Finance, due to the relatively high growth of the economy, the budget deficit will be adjusted, which will be reduced to 7.1%.
It is unknown at this time whether the Georgian government will increase its budget and tax expenditures.
"The forecast for 2021 is 6.5%, which is much higher than the previous forecast of 4.3%. And the economic growth forecast for 2022 will also be high - 6.9%. Against the background of high growth, we will reduce the budget deficit to 7.1%; the deficit was 7.6% according to the previous forecast. Deficit reduction is important for macroeconomic stability.
Our forecast also includes an optimistic scenario, according to which growth in 2021 will be double-digit. It is quite possible that the activity will develop in an optimistic scenario, it is estimated at 10.2%. This scenario envisaged a 40-45% recovery of the tourism level in 2019. In April, we have already seen these signs of a 44.8% increase in April, where there is improvement in all directions. Due to this factor, the current account deficit will be reduced and the government debt will be even smaller. It is with these factors in mind that changes will be made to the budget," the finance minister said.
The volume of the state budget for 2021 is 18.38 billion GEL, which is an unprecedented scale in the history of Georgia. The volume of the consolidated budget is also a record large and it amounts to 20.72 billion GEL. The budget is projected at 4.3% economic growth.
According to this year's budget, the Ministry of Health receives the largest funding - 5.56 billion GEL. In second place is the funding of the Ministry of Infrastructure and it amounts to 2.42 billion GEL. In third place were the United Ministries of Education and Culture & Sports, with a budget of 1.8 billion GEL. However, in March, the ministry split into two. 1.5 billion GEL is left in the budget of the Ministry of Education and Science, while 300 million GEL is left in the field of culture and sports.