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National Bank Evaluates 2018 State Bidget Bill

High deficit in the 2018 state budget does not create inflation risks, the report by NBG on Georgian State Budget Law reads.

“The 2018 state budget deficit grows by 60 million GEL to 1.374 million GEL. The consolidated budget bill is planned at 3.7% in relation to the 2018 forecast GDP volume. For macroeconomic stability it is necessary to maintain the budget deficit in midterm period under 3%. The submitted budget bill calls for gradual reduction of budget deficit to 2.7% by 2021. Therefore, provided in midterm period the budget deficit returns to stable level, in 2018 the high budget deficit will not create inflation risks”, the report reads. 

The NBG report makes emphasis on growth in liabilities. 

“The key source for financing the budget deficit consists in a growth in liabilities. The bill calls for issuing 400 million GEL T-bills, like the previous year. The NBG welcomes an expansion of T-bill issuance, because financing of budget deficit through T-bills reduces currency risks in the country and develops the securities market”, the report reads. 

The document was signed by the NBG President. 

“In midterm period the budget parameters of the country should comply with fiscal indicators agreed under the IMF-supported expanded financing mechanism program”, the document reads.