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How international finance is helping Georgia weather the storm of COVID-19



International financial institutions, development agencies and foreign governments have pledged a stag-gering $3 billion to Georgia over the course of 2020 to help the country mitigate the affects of the coronavirus and implement an economic recovery plan.

Approximately half this assistance will go to the public sector to top up the budget, carry out social assistance programs, provide liquidity to the National Bank of Georgia and shore up the country’s healthcare system. Another $1.5 billion will be injected into the country’s private sector, much of which will be distributed through local banks.

The number of partners that have stepped up to help out and the range of offerings that have been made bare individual attention.

For starters, the US Government is supporting numerous aspects of Georgia's response to COVID-19, from the immediate public health response and continuity of public services to planning and supporting Georgia's economic recovery. The US CDC is supporting infection prevention and control in COVID-19 designated laboratories and hospitals throughout the country. With U.S. funding, the IAEA is providing 4,000 gold-standard test-kits to the Ministry of Health. USAID recently allocated $1.7 million to the Geor-gian Red Cross (IFRC) and other public health organizations to support a wide range of activities to help the country in the current emergency. Also, USAID is pivoting existing programming to rapidly respond to the crisis, redirecting millions of dollars of support to address the current situation and prepare for the future economic recovery.

The European Commission adopted a proposal earlier on April 22 that will provide 150 million euros in macro-financial assistance (MFA) to Georgia in the scope of its larger assistance package to support 10 neighboring countries experiencing severe balance-of-payment problems.

The MFA funds will be made available for 12 months in the form of loans on high favorable terms

The European Union’s External Action Service has announced two support packages for Georgia. The first, announced in the end of March, entailed 70 million euros from a larger pool of redirected funds allo-cated to the six countries of the Eastern Partnership, and an additional 20 million euros in localized grant funding aimed at supporting local business, and encouraging farmers and individuals to gain skills and develop their businesses or recover from the crisis.

EU Ambassador to Georgia Carl Hartzell said the funds would be used to “help Georgian businesses get easier and more affordable access to lari-based credits and grants to boost and rebuild their companies after the crisis.”

Georgia will also have access to a 30 million euro pool of assistance to be managed by the World Health Organization (WHO) for the purchase of medical devices and personal equipment, such as ventilators, laboratory kits, masks, goggles and gowns. Exact country allocations will be decided on after an assessment conducted by WHO based on needs. More than 11 million euros has been made available to civil society organizations across the Eastern Partnership region as well.

A second announcement of aid was made on April 9, and included 183 million for Georgia in redirected funds.

EU Ambassador to Georgia Carl Hartzell said that the funds “will support economic and social recovery, and will provided at a local level and also strengthen state finances to help Georgia successfully get through this difficult economic period. All this funding comes as non-reimbursable grants, not as loans, and comes on top of the support package the EU announces last week, bringing total EU support to Georgia to over 250 million euros.”

The International Monetary Fund announced in mid-April that around $200 million would be made available to the Georgian budget to help the country cope with the coronavirus crisis. It will be used to meet urgent medical and social-economic needs.

IMF Mission Head Vera Martin said more funds may be made available, as the “[IMF] team will recom-mend an increase in support to Georgia by 130 percent of the quota (about $375 million) to help finance health and macroeconomic stabilization measures, meet urgent balance of payments needs arising from the COVID-19 pandemic and catalyze support from the international community.”

The first assistance package is to be made available to the budget immediately, while the second round will be given in two tranches of $100 million. The first will be given to the NBG in 2020 2H, and the sec-ond in 2021.

The European Investment Bank has also come up with a substantial 200 million euro contribution for healthcare infrastructure and fiscal needs.

The Asian Development Bank was working on a support package for Georgia’s fight against the coro-navirus as of April 9.

It will focus on ‘counter cyclical budget financing, a fast-tracked policy-based loan for social protection measures, programs to strengthen energy, urban water, vocational skills sectors.’ It will also increase support for private sector operations in Georgia by providing loans and trade finance to banks in the country.

Meanwhile the World Bank offered 45 million euros in support back in late March to Georgia to imple-ment reforms critical for inclusive economic growth and assist in the country’s efforts to mitigate the economic impact of the coronavirus pandemic.

The EBRD has made 1 billion euros for its clients across 38 economies available to replenish emergency liquidity, working capital and trade finance funds.

As Georgia faces new economic challenges, the EBRD’s current offer includes measures such as emer-gency liquidity, working capital, trade finance and financing the private sector, especially for small and medium-sized enterprises (SMEs). The bank plans to announce a number of new programs by the end of the month.

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Grant Thornton Tax and Legal Alert - Overview of changes in Georgian legislation, April 2020, in Georgian and English

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In what circumstances will criminal law liability be imposed for violating the rules of the state of emergency? by Business Legal Bureau (BLB) in Georgian and English

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Grant Thornton: Legal Response to Covid-19 Challenges

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Deloitte: COVID-19 Anti-crisis Economic Plan Introduced by the Government of Georgia (in Georgian and English)

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BLB Newsletter, April 13, 2020 (in Georgian and English)

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BGI Law Brief, (Georgia Responds to Covid-19 Pandemic) - March 2020

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BGI Law Brief, February 2020

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