Prime Minister Presents Plan for Concrete Economic Stimulus Measures Print Version

2020-03-13

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Georgian Prime Minister Giorgi Gakharia, together with the Cabinet's economic team, presented a plan for concrete economic stimulus measures today.

According to the Head of Government, we all understand that coronavirus is a global challenge that we must counter with our civic responsibility and joint efforts.

It is in nowise time to panic, the Prime Minister emphasized, but time to take concrete, highly effective action.

"Since day one, we the Georgian Government have prioritized the health of our citizens, and steps have been taken firstly to protect the health of our citizens. Another equally critically important issue is our economy and stimulating measures we must take to minimize the inevitable impact on the economy," Giorgi Gakharia said.

According to the Prime Minister, the Government of Georgia, at the very beginning, put together the Coordination Council to work on daily basis and take necessary steps to protect the health of citizens.

"Under the Coordination Council, the Government of Georgia has made well-known decisions: tighter state control on the state borders and on the observance of self-isolation rules, suspension of classes in schools and kindergartens, recommendations on the cancellation of crowded events, and postponement of spring conscription, also suspension of physical probation reporting obligation, and special measures enforced in penitentiaries for two weeks. All that has been done to stop the spread of the imported virus in the country, and the effectiveness of these measures is what matters to us," the Prime Minister said.
According to Giorgi Gakharia, the impact of the virus on global economy will be quite formidable, and the Government must be ready to assist the country's economy and business to mitigate this impact, ensure negative influence's predictability, and plan steps to counter them.

Firstly, tourism is the area to be affected, Giorgi Gakharia explained, a commercial sector that has been the key driver of the country's economic growth over the past few years.
"Consequently, our key goal is to provide this sector with maximal assistance to enable them to have and channel enough financial resources toward building on achievements like jobs and, at the same time, fulfilling their financial obligations. The Government must do everything to let such companies keep as much financial resources as possible," the Prime Minister emphasized.
Giorgi Gakharia also touched on yesterday's meeting with representatives of the banking sector, during which it was decided that the banking sector will, in the next 3-4 months, guarantee loan restricting for all companies, provided that objective needs are substantiated.

"This is the only way to keep about 100 million GEL in financial resources in the tourism sector. In addition, during yesterday's meeting with the banking sector and largest banks, we made a joint decision that our citizens, individuals, if need be, will be exempt from making payments on loans in the course of three months. That is a very important measure in terms of both finances and social distancing," the Head of Government added.
As for tourism-related business entities, on the Government's decision, they will be exempt from property and income taxes for a period of four months until November 1.
According to Giorgi Gakharia, the entities in question include hotels and restaurants, travel agencies, transport companies, and those involved in tour services.

"These companies will be exempt from property and income taxes for a period of four months until November 1. This cut applies to 18,000 companies presently operating in Georgia, and more than 50,000 employees. This way, additional 100,000 million GEL will be kept in this sector in the course of the next four months: March, April, May, and June," the Prime Minister pointed out.
In addition, on the Government's decision, instead of 600 million in VAT returns, this amount will double, and additional 600 million will be channeled back into the economy and companies.
According to the Prime Minister, this initiative will return to the economy 1.2 billion GEL in financial resources through VAT.

"In addition, an already tested mechanisms will be put to use for financing loan interests. In this component, we expanded the size of hotels from 4 to 30 rooms to enjoy loan servicing by the state from public funds in the course of 6 months. That will apply to 2,000 hotels. Besides, we understand that global economy needs assistance through other tools as well, which is why, on the Government's decision, 300 million GEL will be additionally invested into capital expenses and infrastructural projects before the end of the year. In all, about 1 billion GEL will be kept in the economy or channeled toward companies, to support our private sector at this point, though if it proves insufficient-and if see that global challenges and negative economic impact are even more problematic-we are always ready to take necessary measures," the Prime Minister emphasized.
According to Giorgi Gakharia, every step taken by the Government, especially in relation to companies in the tourism sector, including income and property taxes, clearly implies that these companies, for their part, must provide their own staff with support and do their best to keep jobs.

"And that is the Government's ultimate goal," the Prime Minister added and thanked the banking sector for support.
"We will continue our talks with the National Bank on bank regulations to put to work additional stimulus tools, if need be. We are actively cooperating with our international partners because we understand that we must, in the best interests of our country, make fullest possible use of the readiness of international financial institutions to provide support. We hope to achieve such results in the nearest future," Giorgi Gakharia stated.
The Head of Government singled out and thanked Cartu Foundation for its initiative.

"We must stick together, and Cartu Foundation's initiative best illustrates how we can keep our unity in such challenging times, and we must try to rise to such global challenges together," Giorgi Gakharia said.
The Prime Minister once again urged the country's citizens to follow the recommendations of the Government and the Health Ministry.
"I would like to urge all our citizens just to wash our hands frequently, avoid crowded gatherings, steer away from traveling abroad, not to succumb to the panic-fueled sentiments of some irresponsible persons, and observe self-isolation rules should we find ourselves in the risk zone. We all must care for our elderly, our children, and one another, and ultimately we all must care for our country together," Giorgi Gakharia said.

Press Service of the Government Administration