Experts estimate preliminary economic forecasts published by the National Statistics Office.
Irakli Lekvinadze says that in light of the tensions in the region, Georgia’s economic growth is being observed, which is positive.
As per the preliminary estimates, compared to the corresponding period of the previous year, the average real growth amounted to 5.9% in 9 months of 2014 while in the third quarter of 2014 it was 5.5%.
As for the data of the last few months, GDP grew by 7.2% in July, by 5.2% – in August and 4.1% in September.
The government estimates that Georgia’s economy will grow by 5%.
In the light of economic growth, for 9 months of 2014 the state budget was executed by 99.49% in the revenues side compared to the 9-month plan and amounted to GEL 6.5 billion while in the tax side the budget was executed by 91.6% and totaled GEL 6.18 billion.
As of 1 October 2014, the balance of the state budget on the state treasury accounts amounted to GEL 625 886.6 thousand; from here: free balance – GEL 625 296.1 thousand; financial resources as grants to finance projects (“Protected Areas Development”) – GEL 590.5 thousand.
During the reporting period, the change in the budget balance (accumulation) amounted to GEL 338 740.3 thousand.
In January-September 2014 revenues to the state budget amounted to GEL 5.36 billion from (101% of the nine –month plan); expenditures amounted to GEL 5.2 billion (93.9% of the nine-month plan).
Irakli Lekvinadze believes that a 6% growth of the economy is an optimum rate at this stage.
“Despite the region’s tensions, Ukraine-Russia and the Middle East conflicts, the international movement of capital and investments delayed, export to Ukraine reduced , growth is still recorded in our economy, which is positive. We do not have a significant change in the growth rate of the economy. This is not a trend, we are dealing with a seasonal factor. The country’s economy is growing, there is no stagnation but a 6-percent growth is registered. I think the growth is going to be within 6% this year. A faster development requires greater economic growth and this background is important, but at this stage we have the optimal rate, “- Lekvinadze adds.
As for the spending figures, the expert estimates, this is a relatively serious problem, and it is desirable to spend funds in accordance to a plan in order to prevent the macro fluctuations and pressure on the national currency.
President of the Association of Young Financiers and Businessmen Nodar Chichinadze states that economic growth has been somewhat reduced from July through September, however, against this backdrop, it is not reasonable to raise the issue of the non-fulfillment of the economic growth forecast of 5% for 2014.
However, the expert says that if economic growth rate had reduced 3-fold in the last quarter compared to 9 month average (5.9%), a 5% growth is still an achievement in the context of the annual rate, while if the annual growth rate is lower than forecast and amounts for example 4%, it will require a 1.8-2% drop in the last quarter of the current year.
There are no prerequisites for such a scenario of events, since in the final months of the year budgetary process is activated, economic activity increases which is a positive impetus to economic growth.
“Thus, in 2014 the economy will grow at least to the estimated level but if economic activity traditionally rises in the final months of the year, the economic growth of 6% would be realistic,” –AYFB President says.
As for the budget project, in his words, the state budget execution for 9 months gives a different interpretation of events and the opportunity to use it for political purposes. However, each medal has two sides and in reality good and bad can be seen in these processes.
In particular, he notes that under the previous government it was a frequent practice when, for example, the winner was known before the tender, a company was registered a few days before a tender and afterwards won it – there were different irregularities, etc.
Thus, inconsistencies in the factual implementation of the budget plan is negative, but positive is that there is no shortage of revenues, which would mean economic crisis. Today we face a shortage in thespending part of the budget which is recorded due to the objective reasons arising from transition from artificial methods of economic management to natural principles,”- Nodar Chichinadze notes.