"Despite the pandemic, economic growth trends are expected to be recovered from 2021," Finance Minister Ivane Matchavariani indicated today during a joint video conference between Vera Martin, the head of the International Monetary Fund mission, and Koba Gvenetadze, the President of the National Bank of Georgia.
The Minister of Finance briefly reviewed the positive dynamics of the past years in the Georgian economy and noted that in 2020 the whole world was hit by an unprecedented humanitarian and economic shock, which also affected the Georgian economy.
"The spread of the COVID 19 pandemic has significantly changed the world economic life. Consequently, this has had a big negative impact on our economy as well. In 2020, the country is expected to experience economic decline in the range of 4.5-5.0 percent, while Georgia, in the previous three years maintained a high rate of economic growth of 5 percent. It is noteworthy that the macroeconomic policy directions pursued by us in the period before the pandemic, were successfully reflected in the credit ratings of Georgia, "- said the Minister. From his point of view, the global pandemic has significantly slowed down these positive trends.
With the support of the International Monetary Fund, we met the pandemic with a fairly successful ongoing program. This has allowed us to quickly gain the support of international financial institutions and go through the first phase of this crucial challenge. During this difficult period, we were able to cover all the affected social groups, the business sector and alleviate the negative consequences of the crisis. This included healthcare packages of GEL 375 million and social packages of GEL 150 million ” he said.
As the Minister Matchavariani noted, the effectiveness of these steps taken by the Government is also underlined by the IMF assessment mission. Business support activities are positively assessed by the mission as well. In total, we have offered up to GEL 1.5 billion of support packages to the private sector. These measures significantly contributed to the revival of the economy and saved many systemic sectors of our economy, for example, the construction sector. "You know that in the first phase of the pandemic, the construction sector shrank by almost 50 percent," - the Minister added.
Regarding the country's economic growth prospects, the Minister of Finance noted that despite the pandemic, it is expected that economic growth trends will recover at a high pace from 2021. By at least 4.3 percent in 2021 and by 5.5 percent in the medium term. According to him, this figure is the highest not only in the region but also in Europe.
"The IMF downgrading its 2021 economic growth forecast to 4.3 percent from 5 percent in October was triggered by regional tensions and intensifying global pandemic events around the world. However, it should be noted that the increase in expectations related to the development of the vaccine and the prospects for resolving the ongoing conflict in the region will have a positive impact on the forecast of economic growth in 2021, "- said Ivane Matchavariani.
Further, he talked about the importance of continuing the reforms, noting that the IMF's mission also believes that structural reforms are still important to alleviate the damage caused by the pandemic.
"Our government has been and remains committed to reforms, not only during adversity but also in the time of difficulties," he said.
To the end, the Minister of Finance thanked the International Monetary Fund mission and its head for the cooperation.
"I would like to thank Ms. Mercedes Vera Martin and her team for the fruitful cooperation and the success that we have achieved together despite the difficulties. I hope this cooperation will continue in the future "-.