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Georgia
Economic Impact and Responses
June, 16, 2009Kiev, Ukraine
E&E Competitiveness Conference
Economic Growth
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GDP
Nominal GDP (US$bn) Real GDP growth, y-o-y (%)
Source: Department of Statistics of Georgia
Nominal 2008 GDP is US$12,797 mln Source: Department of Statistics of Georgia, Ministry of Finance of Georgia
Georgian Economy Overview
Source: International Monetary Fund
Georgian Economy Overview3
Investment Inflows
Source: National Bank of Georgia, International Monetary Fund
Source: Department of Statistics of Georgia
Net FDI
May 2009www.georgia.gov.ge
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Banking Sector Expansion
4
Dhabi Group
Georgian Economy Overview May 2009www.georgia.gov.ge
Exchange Rate
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Exchange rate evolution
Source: National Bank of Georgia
Georgian Economy Overview May 2009
Georgian Economy Overview 6
Monetary PerformanceNBG’s Gross FX Reserves
Source: National Bank of Georgia Source: National Bank of Georgia
• As of 1 May 2009, Georgia has already entered into agreements for or received 38.2% (US$1,731.2 million, 13.4% of 2009 forecast GDP) of the total donors pledge to private and public sectors
• Additional projects have already been indentified and agreements have been reached on the amount of US$1,879.4 million (41.4% of total pledge, 14.6% of 2009 forecast GDP) to be formally committed in 2009
• Government of Georgia has been working and negotiating the terms and conditions on the remaining amount of US$924.4 million, 20.4% of total pledged amount
Donor US$ million
World Bank 530
EBRD 927
Asian Development Bank 300
IFC 350
European Investment Bank 330
USA 1,000
EC 638
EU members 174
Japan 200
Other states 88
Total 4,535
The Donors’ Pledges of US$4.5 billionAid by donors Aid by sectors
Georgian Economy Overview 7
Sector US$ million
IDPs support; e.g. IDPs housing 350
Transport infrastructure 682
Energy infrastructure 381
Urban and municipal infrastructure 210
Finance and banking 1,105
Non- sectoral support 586
Unallocated 1,221
Total 4,535Source: World Bank, European Commission Source: World Bank, European Commission
May 2009www.georgia.gov.ge
Current Account Deficit
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Current account deficit
Exports and imports**
CAGR (‘04-‘09F): 16% CAGR (‘04-‘09F): 10%
Note: Updated as of 10 April 2009*Donor inflows include both public and private sectors. Donor inflows in 2009 is adjusted according to the banking sector foreign debt outflowsSource: National Bank of Georgia , Minister of Finance of Georgia
**Export & import of goods and services Source: National Bank of Georgia
Georgian Economy Overview May 2009www.georgia.gov.ge
Fiscal Revenue
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Tax revenue performance(GEL mln)
Source: National Bank of Georgia
Georgian Economy Overview May 2009
Recent Reforms - Taxation
Georgian Economy Overview 10
‘04A ‘05A ‘06A ‘07A ‘08F ‘09F ‘10F ‘11F ‘12F ‘13F
Number of Taxes 21 7 7 7 6 6 6 6 6 6
VAT 20% 20% 18% 18% 18% 18% 18% 18% 18% 18%
Income Tax 12-20%
12% flat
12% flat
12% flat
Social Tax + Income Tax 32% 25%
Social Tax + Income Tax
20% 20% 18% 15% 15%
Social Tax 33% 20% 20% 20% - - - - - -
Corporate Profit Tax 20% 20% 20% 20% 15% 15% 15% 15% 15% 15%
Dividend income tax 10% 10% 10% 10% 10% 5% 5% 3% 0% 0%
Out of 21 taxes under the former tax code, only 6 exist today
Tax rates reduction timetable has been further accelerated in key tax rates in 2008
This will provide a significant stimulus for the economy in 2009 and beyond
Georgia, over the last five years, has evolved into one of the most attractive low-tax jurisdictions in Europe
Banking Sector
Georgian Economy Overview 11
NPL to total loans
Source: National Bank of Georgia, FSA
Foreign debt outflow
May 2009www.georgia.gov.ge
US$468.5 mln of US$548.5 mln banking sector debt, due in Q1 and Q2 0f ‘09, has already been repaid
Source: National Bank of Georgia, FSA
Georgian Economy Overview 12
Needs• Short term assistance to most vulnerable • Increased Competitiveness (gov & bus)• Reducing/rationalizing perceptions of risk
Activities• Trade and Investment – Access to information• Business Development – Competitiveness,
Human Capital• Continued Economic Reform
Georgia – USAID EG Activities