“I want our society to know how we completed the past budget year and what the key macroeconomic and fiscal parameters are of 2021, irrespective of the challenges borne by the global pandemic that the country faced,” stated Irakli Garibashvili, Prime Minister of Georgia, at the Executive Government Meeting on Monday.
As Garibashvili noted, the State Budget for 2021 was planned at the end of 2020 – in the most difficult circumstances in terms of epidemic and economic conditions. Hence, expectation of economic recovery in 2021 was “rather marginal.”
“Economic growth projections were at 4.3% back then. Gross Domestic Product was projected in the volume of 53.4 billion GEL. Government Debt was projected above 60% of the GDP, while the consolidated budget deficit was forecasted to reach 7.6% of GDP,” the PM noted.
“2021 started at a quite difficult note: economic shortfall reached 11.5% in January at a time when we were in a lock-down regime with a very high viral spread and unfortunate losses of human lives.
“Nevertheless, the situation changed radically, when the economic growth indicator turned positive in March and then reached an unprecedentedly high indicator in April at 44.8%. Foreign trade and other economic indicators started to improve quickly from the same period.
“According to the preliminary data for the first 11 months of the year, economic growth reached 10.7% and the overall annual indicator is expected to get to 10.7%, which is 2.5 times higher compared to the original projection,” he said.
“As a result of the high economic growth, nominal indicators of GDP have increased considerably and reached 59.6 billion GEL in updated projections compared to the originally forecasted 53.4 billion.
“According to the overall data for the first 11 months of the year, export has grown by 26.7%, including the local export by 28.7%; proceeds from tourism have increased by 112% compared to the previous year and exceeded the respective indicator of 2019 by 37%. It should be noted that since July, proceeds from tourism exceed 50% of the respective month in 2019 (55% in November) and net remittances in the first 11 months of the year increased by 25.4%. Current account deficit in the first three quarters of the year improved by 2.1 percentage points of GDP, including an improvement of 6.1 percentage points in Q3. We expect the annual current account deficit to be reduced to 10.5% in 2021, returning to 5% over the medium term” Garibashvili stated.
“Quick economic recovery has enabled us to substantially improve the key fiscal parameters. Government Debt has been reduced to 50% instead of the anticipated 60.1% as a share of GDP, while the consolidated budget deficit was originally planned to reach 7.6% and instead narrowed to 6.1% as a share of GDP. Thus, I can wrap-up by saying that we reached a double-digit economic growth in 2021,” he concluded.