TBILISI

The Georgian parliament approved the state budget for 2022 and projected economic growth next year at 6 percent.

The budget sets revenues at 19.36 billion lari ($6.24 billion) and expenditures – at 19.17 billion lari. Tax revenues are expected at 13.42 billion lari, revenues from grants – at 341.8 million lari. The health care and social programmes, education and infrastructure projects are the main priority fields of the budget next year. The budget envisages a rise in salaries for teachers, pensions and payments to military veterans.

The state debt is set at 32 billion lari or around 51 percent of gross domestic product (GDP). The budget deficit is projected at 4.2 percent of GDP.

The government projects annual average inflation at 8.9 percent, well beyond the central bank’s target of 3 percent.

Georgia continued to demonstrate economic growth in the first 10 months of this year as the country eased the majority of the restrictions it had imposed to curb the coronavirus pandemic, businesses reopened and tourists tentatively started to return.

GDP grew by 10.5 percent year-on-year in January-October after contracting 5.1 percent in the same period last year. In October alone, the economy expanded by 6.9 percent, compared with a 3.9 percent contraction a year ago. Growth was recorded in all sectors of the economy except for construction.

Georgia’s highly tourism-reliant economy has been hit especially hard by the COVID crisis and lacks the resource-extraction or manufacturing base that has helped cushion the blow in some other ex-Soviet countries.

The country started its economic recovery in April when it recorded 44.8 percent year-on-year growth. Economic recovery continued to gather pace as the country eased the majority of the restrictions it had imposed to curb the coronavirus pandemic, although the growth had been gradually slowing since April.

The country brought some restrictions back in August amid a hike in the number of infections and fatalities.

In July, Georgia revised its economic growth forecast for this year to 7.7 percent from a previous projection of 4.3 percent in 2021 amid signs of economic recovery and in line with the International Monetary Fund’s (IMF) current projection.

Last month, the central bank projected economic growth at 10 percent this year as the country continued to demonstrate economic recovery and a rise in demand after months of contraction due to the pandemic restrictions.

The IMF said in July that Georgia’s GDP was now projected to grow 7.7 percent in 2021 and 5.8 percent in 2022. In October, the IMF said that significant risks, including slow vaccination, remained as impediments to Georgia’s economic recovery.

According to the World Bank, Georgia’s economy is projected to recover in 2021, growing by 8.0 percent and 5.5 percent in 2022.

In August, Fitch Ratings has revised the outlook on Georgia’s long-term foreign-currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDR at ‘BB’.