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IMF Does Not Approve Launch of Estonian Model in Georgia

IMF Does Not Approve Launch of Estonian Model in Georgia

IMF does not approve government’s decision to launch Estonian Model in order to attract investments.

Francois Painchaud, resident representative of IMF in Georgia noted, while submitting regional report that the income tax reform would increase the budget deficit and as of their prediction, it should be 6% by the next year. They do not known how the government is going to fill the gaps.

Envisaging the fact, that it will cost expensive to the government, Painchaud notes that alternative versions might be chosen for attracting investments. IMF regards, that arrangements should be made in order to develop business environment, establish clear regulations for bankruptcy law and judicial reforms.

“In our outlook, we have envisaged income tax reform, which is scheduled in Georgia by the next year. It will grow budget deficit. The government must make steps to assimilate this deficit, but we do not known yet, how the government is going to fill the gaps”, – Painchaud declared. He regards, that the government must reduce administrative expenditures or effectively increase investments in the economy.

It should be noted, that Ministry of Finance predicts lack of 0, 5 bln in the revenues and budget deficit of 4% by the next year due to the income tax reform. It worth to mention, that according to the IMF’s forecast, Georgian economy will grow by 3, 4% this year, while by 5, 2% by the next year.