We Should Either Assist Business and Exempt it From Taxes or Collect Taxes and Replenish the Budget
According to “the International Financial Institutions against COVID-19” published by the Economic Policy Research Center (EPRC), preliminary preventive measures carried out by international financial institutions inspire that the developing countries, including Georgia, will not have to pass the rehabilitation phase absolutely independently and they will be able to receive financial and technical assistance packages from the international community.
However, how efficiently the Georgian economy will overcome the virus challenges depends on how well the country will work with international financial institutions and how efficiently the Authorities will use the attracted financial resources.
“At this stage, there are several sources for attracting financial resources, for example, from the World Bank – 45 million EUR; the USA assistance will be directed to assisting the healthcare sector. The EU has allocated funds for Eastern Partnership countries. As for other financial institutions, they announce consolidated amount of financial support and I suppose negotiations will be underway how to distribute these sums among the developing countries. It is important to use our diplomatic contacts to receive as many assistance packages as possible, because international organizations do not offer specified stimulus packages to countries. In most cases, they allocate funds that should be used by domestic Authorities to transform them into economic stimulus packages, for example, certain types of tax preferences for small and medium businesses. However, this dos not suffice to naturalize the current shocks.
I suppose we will have to take loans too, because the stimulus packages cover subsidies and tax preferences in various countries. In this situation, the consumption has declined, unemployment has increased and the state budget supposedly will have problems in terms of tax incomes. Therefore, we will not able to mobilize funds in other ways. We should either assist business and exempt it from taxes or collect taxes and replenish the budget. We cannot do both businesses if we do not receive international assistance and I supposed foreign loans will be also necessary”, Irina Guruli, deputy executive director of the Economic Policy Research Center noted.