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Georgian gov’t reveals plan to gradually open economy, announces 3.5 bln GEL in support programs

Georgian Prime Minister presented the government’s plan to see the country through the corona-virus crisis earlier today on April 24.

Gakharia noted the main three priorities of the government right now are overcoming the epi-demic, restoring the economy and ensuring the health and well-being of the population. Up until now, Gakharia said, the government has implemented various measures to assist the population and businesses through the initial stage of the pandemic, including: paying the utility bills of 1.3 million households, subsidizing nine main food products, implementing loan deferral, restructur-ing and interest payment programs and waving propery and income taxes for certain business categories.

Now, the Georgian government will take measures to lead the country through the rest of the storm.

The anti-crisis economic recovery plan consists of two parts –financially supporting and assisting individuals and businesses and detailing a plan to gradually re-open the economy over the next three months.

Assisting households, individuals and business owners

Per the plan, individuals who have lost their jobs due to the pandemic or who are on paid leave will receive 200 lari per month over the course of the next six months. About 350,000 citizens will be eligible for these payouts, for which 460 million GEL has been allocated.

Employers will receive subsidies for every retained workplace: for six months, up to 750 GEL of salaries will be exempt from income taxes, which is projected to save businesses 250 million GEL in the near term.

The self-employed or people in the informal sector who can substantiate their claims of job loss will be given a one-time payout of 300 lari, for which 75 million GEL has been allocated.

Particularly socially vulnerable families, and families on the socially vulnerable index with three or more children under the age of 16 will receive a one-time payout of 600 GEL in six months, in addition to people with disabilities. Approximately 260,000 people will benefit from these pay-ments.

Starting January 2021, pensions will be increased by an additional amount as indexed against inflation and economic growth. The increase in pensions will not be less than 20 lari, regardless of inflation, and for those over 70, it will be no less than 25. This comes on top of promised pension growth on July 1, adding 30 lari to those over 70.

Support for the private sector and business owners

The VAT automatic refund mechanism will double returns to businesses this year, who will re-ceive an additional 600 million GEL in returns.

Commercial banks will be provided with long-term financing of GEL 600 million.

An additional GEL 500 million will be allocated for business support, including a credit-guarantee scheme with a budget of 300 million GEL for small and medium businesses looking to take out loans or restructuring old loans.

Enterprise Georgia will also offer a number of tools for private businesses, including:
• increasing the loan / leasing co-financing period from 24 to 36 months
• changing the interest rate financing mechanism
• lowering the minimum loan / leasing limit
• increasing funds for working capital

Meanwhile, farmers will be able to receive grants of up to 30,000 GEL to fund annual crop pro-duction, while 50 million GEL will go towards paying the interest rate of agri-credit loans.

Budget

The Georgian government will thus commit around 3.5 billion GEL to batting back the negative effects of the coronavirus, with more than a 1 billion GEL going to the welfare of citizens and social support. Measures to protect businesses and the economy will receive 2.1 billion GEL in funds, while 350 million GEL will go towards strengthening the healthcare system and fighting the pandemic.

Reopening the economy

As for the question of reopening the economy, PM Gakharia announced that this will be a gradu-al process as the government slowly rolls back restrictions. However, hygienic requirements will remain in place for quite a while, such as social distancing, wearing face masks in closed spaces and other measures. Gakharia also called on businesses and the public sector to continue working remotely as much as possible in this period.

Businesses will be allowed to open at two-week intervals and by category over a period of three months.

Subsequent steps forward will be only take place after an analysis of the epidemiological situa-tion. If the situation worsens, then changes to the plan will be made.

The first stage of softening the state of emergency regulations will begin on April 27, when light vehicles will again be able to drive. Taxis will be allowed to resume operations as will e-commerce and delivery businesses. Open air markets will be allowed to resume opera-tions.

Two weeks later, the second stage will allow for the operation of businesses involved in: con-struction, car wash and auto-services, computer repair and recreational zones.

At the third stage, retail and wholesale stores – except malls – will be able to resume business. All types of open markets will be able to re-open, as will manufacturing and publishing enterprises.

The fourth stage will entail the opening of shopping malls, open-air restaurants, all types of fi-nancial services, beauty salons and aesthetic medicine centers.

Closed markets, all restaurants and cafes will be able to open at the fifth stage.

At the sixth stage, all sports, entertainment, education and recreation facilities will be able to open, and non-profit activities will be able to resume.