On Thursday, June 5, at the hotel “Holiday Inn”, with the support of the USAID funded program G-PAC, PMC Research Center organized a presentation and public discussion of the project “Analysis of the Medium-Term Fiscal Policy Sustainability in Georgia”
The main purpose of the research was to analyze sustainability of the Georgia’s medium-term fiscal policy.
In the framework of the event, PMC Research Center discussed Georgia’s medium and long term fiscal stability. In particular, whether the country’s budget system is ready to handle the present and future challenges and how budget deficit and government debt can affect this process.
“Even though, the state budget deficit and government debt increased in 2014, Georgia will remain solvent in medium as well as in the long-term to serve its obligations unless the scenario of economic crisis of 2009 repeats, or the economic slowdown and national currency depreciation continues on a permanent basis. On the one hand, the budget deficit decrease to 2% of GDP and increase of economic growth to 6% will lead to the stability of the fiscal system. On the other hand, certain risk of depreciation of the national currency and increase in the price level exist. National accounts indicate that in the first quarter of 2014, budget expenditures completion rate was 83%.This fact increases the probability that significant amount of money will be spent by the end of the year”, said Besik Namchavadze, the senior economist at PMC Research Center adding that “therefore, the government’s response to the budget performance in the first quarter of 2014 is crucial.”
Based on the findings of the study, relevant recommendations on the design and implementation of the effective and sustainable fiscal policy were delivered to the policy-makers and ruling authorities.
Economic experts, representatives of the government of Georgia, the parliament of Georgia, private sector, NGOs, international organizations, media, the diplomatic Corps and academics attended the discussion.