In case of another lockdown, the IMF (International Monetary Fund) calls for a reduction in Georgia's capital expenditures, Selim Chakir, the IMF Resident Representative in Georgia, said in an interview with "Analytics" anchored by Elene Kvanchilashvili.
According to him, in case the crisis worsens due to the pandemic situation in the country, the state should reduce the capital expenditures of the budget and provide targeted social assistance with the saved money instead of increasing taxes.
"Another lockdown means that the support of families and businesses will be put on the country's agenda. In this scenario - in this hypothetical scenario - the first task should be to prioritize expenditures - not to increase taxes. Capital expenditure budgets for the last 8 years are about 8% of GDP - it's important, of course, but in the event of such a scenario, it would be necessary to cut capital expenditures and apply it to targeted cash benefits," said Selim Chakir.
Last week, the International Monetary Fund cut Georgia's economic growth forecast from 4.3% to 3.5%. Selim Chakir explains that the fund suggests a slower recovery in Georgia than the original. However, he said that the 3.5% growth forecast does not take into account the "lockdown" scenario, therefore, under the new lockdown, the growth rate will be lower.
The 2021 budget is projected by the government for 4.3% economic growth. If the economic activity in the country will be lower, the fulfillment of the tax part of the budget may be endangered. However, the Minister of Finance Lasha Khutsishvili states that so far there is no threat to the budget execution.