The Georgian government’s plan to save the economy

The Georgian government has unveiled a plan to minimize economic losses during the coronavirus pandemic; the main emphasis will be on the tourism industry, as it has received the largest blow.

The following are the most important government initiatives:

1. Banks within 3 months will help all companies in need to restructure their debts. This measure will help the tourism sector save about 100,000 lari (1 lari – $ 0.36).

2. Individuals will be exempt from the obligation to service loans for three months.

3. The government at this stage will postpone for four months (until November 1) the payment of taxes on property and on income to companies related to tourism. The solution will affect 18,000 companies and more than 50,000 employees. Companies through June inclusive will not pay income tax, in July they will have to start paying, and pay off their accumulated debts by November 1.

4.The total value added tax in the tourism industry should be from March to June about 600 million lari [about $215,000,000]. The government, for its part, intends to double this amount.

5. The state for six months will bear the costs of the interest rate on loans for two thousand hotels where the number of rooms is between four to 50.

6. The state will invest 300 million lari [$107,000,000] in capital and infrastructure costs by the end of the year.

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Bank benefits

The banking sector expressed readiness for coordinated work with the government. The largest banks – Bank of Georgia, TBC, Liberty – determined the procedure for privileges on loan payments.

Bank of Georgia is offering its customers a 3-month deferral of payments. A similar offer has been made by TBC. In addition, TBC General Director Vakhtang Butskhrikidze said that the bank is ready to individually solve the problems of clients related to the tourism sector. Liberty Bank is also ready to provide various concessions and benefits.

The Cartu Foundation, related to the leader of the ruling Georgian Dream party Bidzina Ivanishvil, is also ready to provide financial assistance to Georgia. The Foundation says it is ready to eliminate the financial gaps that state structures will suffer during the fight against coronavirus.

Tourism hit harder than other sectors

The main blow of the coronavirus came in tourism and the entire business related to this segment.

The lari has also staggered over the past 10 days falling immediately by 20 points against the US dollar. Today, at the official exchange rate for 1 dollar, you can get 2.9494 GEL.

According to the founder of the Federation of Hotels and Restaurants, Shalva Alaverdashvili, 10 hotels have closed in Tbilisi, and about 100, the owners of which have taken loans, are waiting for their fate to be decided by the government and banks. Some hotels, in search of savings, temporarily closed some of the rooms. 

Tour operators also suffer losses. The head of the association of tour operators Iya Tabagari believes that the problems in this sector will last for six months – almost all reservations canceled since May. Serious losses are incurred by companies operating at least on the domestic market, at least on foreign tours.

Amusement institutions are in a difficult situation, as people are avoiding places of mass gathering. Temporarily, during the spread of the coronavirus, nightclubs have shut down.