PMCG: If the economy will grow less than estimated, tax revenues will be less
Government should take appropriate steps to reduce budget costs and control budget deficit, namely: costs should be reduced in accordance with the reduced tax revenues. If the economy will grow only by 2% and inflation forecast will be justified (4%), then the costs should be reduced by 236.7 million Gels. First of all, costs should be reduced by cutting administrative costs.
The country’s monetary and fiscal policy makers should coordinate
According to PMCG, Georgia’s economy may grow only by 2%. The organization explains that if inflation rate won’t exceed the forecasted one (4%), nominal GDP will grow only by 6%, that is lower (1 750 mill Gel) the 9.5% - envisaged while planning 2015 budget. As a result, 2015 tax revenues will be less than forecasted by 236 mill gel that can raise new fiscal challenges for the country.
What’s wrong with the economy: 5 questions to 8 experts
Tamar Jugheli, Research Director at PMC RC discusses about exchange rate. Three advices to people how to act in this situation: 1. Don’t panic, as speculations may aggravate citizens more; 2. In future, take loans or other obligations in the currency in which they have income; 3. Do not take obligations without 100% guarantee of repayment.
Falling Exchange Rate Discourages Bank Borrowing, Survey Shows
The ongoing dramatic devaluation of the Georgian Lari towards the USD is discouraging citizens from borrowing from banks for fear of not being able to repay the loans, a recent survey by The FINANCIAL has shown. More than half of the respondents had planned to borrow from banks till the national currency started to devaluate so significantly. In cases where there is a real need for extra finances then Georgians are prepared to borrow in the national currency only.
Experts explain reduction in economic growth by several factors
Part of the experts agree with the arguments of the Government and claim that reduction in economic growth forecast is linked with the external factors. Others believe that the wrong economic policy of the Government have greater impact than the external factors.
Aleksi Aleksishvili: it was impossible to artificially appreciate Georgian Lari
Georgia economy is weak, small. Therefore Lari could not resist the global situation. The main question that arises – whether the National Bank of the Government could artificially intervene to continue the course of the work as it was before. The answer is obvious – no.
The number of visitors to Georgia raised by 101 200, in 2014
The number of visitors to Georgia raised by 101.2 in 2014 comparing with 2013 year. According to PMCG, the highest share (86.2%) came over land from the neighboring countries (Turkey, Armenia, Azerbaijan and Russia).
The number of tourists to Georgia is important for foreign currency flow, also for the tourism’s further development in the country
According to PMCG, the number of visitors to Georgia is 5.5 million, that exceeds the corresponding figure in 2013 by 1.9%. The number of tourists increased in I (7.6%) and in III (2.2%) quarters. While in II and IV quarters the number was reduced by -0.4% and -0.5% respectively.
Based on the 2014 three quarters GDP is increased by 5.9%
Based on the 2014 three quarter the real GDP is increased by 5.9%, comparing to the same period in 2013. According to PMC RC, the largest share of GDP comes to construction (1.2 percentage points), industry (1.1 percentage points) and trade (1.1 percentage point).
State budget revenue will be fully accomplished in 2014
According to PMCG analysis, the revenue part of the State budget will be fully accomplished, while expenditure nearly by 98%. In addition, tax revenue is expected to exceed. The analysis is based on the indicators of eleven months of 2014, the information of the State treasury and analysis of the previous years’ budget implementation.
Eka Ghvinjilia about the exchange rate changes at Radio Tavisupleba
Eka Ghvinjilia, Project Manager at PMC RC discussed about the recent changes in exchange rate. According to the organization, sharp deterioration in the exchange rate was caused by speculative behavior of market players and panic conversions by businesses.
PMCG listed reasons of sharp deterioration of the exchange rate
Georgia has floating exchange rate policy that includes a free regime to other currencies and is formed according to world demand and supply market. In this case, the National Bank does not affect the determination of the exchange rate.
GEL’s depreciation was caused by market’s speculative behavior and panic conversions
During the peak period 1 US dollar was sold for about 2.05 Georgian Lari, that despite of the fundamental reasons affecting exchange rate (deterioration of the trade balance, reduction off the money transfers and tourists’ flow) is abnormally high rate.
PMCG: Panic conversions by population and businesses caused GEL’s sharp depreciation
PMCG issued special publication, coming out the recent devaluation of Georgian Lari: official exchange rate of 1 US dollar is 1.93 GEL on December 10, 2014. During the last three weeks dollar has depreciated against GEL by 0.18 units.