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Tax Reform will Decrease the Income and Increase the Deficit

International Monetary Fund is expecting 3,4 % economic growth during the current year, however next year, they predict  5,2%.  Monetary Fund in Georgia will have 2,6% inflation this year and 3,6 % inflation next year. GDP is expected to have 12,1 % deficit in 2016 and 12% next year.

As for the countries in the region, the Fund predicts that Azerbaijan Economy will decrease with 2,4%, Russian Economy with 0,8%, Armenian economy will increase with 3,2% and Turkish economy will have a rise of 3,3%.

The Fund Regional Survey has mentioned the influences that Brexit might cause. According to the survey, British decision of leaving EU did not have a major influence on Caucasus region. It caused the instability of currency with 5% in Georgia.  The Currency Fund is expecting 3,7% of growth in oil-importer countries like it was in 2015.

“The increased state expenses in Georgia, stimulates internal demand. The stability of currency will have an influence on the inflation in Georgia, Armenia and Kazakhstan, and low customer and oil prices will increase the inflation to 2,4%. Next year, it will increase to 4,9% due to the strengthen of internal activities.

Survey also says that every country will improve their fiscal positions except Georgia from 2017.

“Because of Tax reform in Georgia, tax income will decrease and the deficit will have a rise, if some big actions are not made.”