Georgia receives additional loans from KfW and ADB
By Natalia Kochiashvili
Friday, October 30
Loan and Grant Agreements were signed between Georgia and the German state-owned bank, Credit Institute for Reconstruction (KfW) in the Social Security Context of the COVID-19 Pandemic.
The agreements were signed by the Minister of Finance of Georgia, Ivane Machavariani, and the Director of the Regional Office of the KfW in the South Caucasus, Klaus Veigel.
In frames of the project, Euro 15 million of the loan agreement is to provide social assistance to those affected by the COVID-19 pandemic.
The grant agreement, amounting to Euro 5.8 million under the Targeted Social Assistance Program, intends to provide social assistance to those affected by extreme poverty.
These agreements are also part of the financial support that the Government of Georgia has received from partner international donor organizations to combat the COVID-19 pandemic and further rehabilitate the country's economy.
Moreover, the Asian Development Bank (ADB) approved a $ 200 million policy-based loan to help rebuild Georgia's economy from the Coronavirus pandemic by addressing challenges in the country's public financial management and social security systems.
The Fiscal Sustainability and Social Security Support Program is part of ADB's comprehensive and integrated assistance package to address the pandemic damage to healthcare, social protection, and the economy in Georgia.
“The steps taken by this program are critical for mitigating the economic impact of Covid-19, maintaining macroeconomic stability over the medium to long term, and protecting the lives of those most affected by the crisis," said Rogerio de Almeida Vieira de Sa, a junior specialist at ADB. The program will also help senior citizens who are particularly vulnerable to the consequences of Covid-19.
While Georgia's public health system was, in the beginning, effective in controlling the spread of Covid-19, the pandemic has had a significant impact on the economy with noticeable slowdowns in tourism and foreign direct investment. The pandemic also sparked a major fiscal breakthrough as government anti-crisis measures increased government spending while tax revenues declined.
The ADB program is aimed at strengthening government fiscal risk management and deepening government domestic securities markets to reduce government-denominated foreign currency debt. This will help reduce the need for refinancing and currency risks, which is an impediment to macroeconomic stability, a precondition for economic recovery.
The program will also help ensure the fiscal sustainability of increased social protection programs in times of crisis; support the reform of the government's national pension scheme for older citizens and other social protection systems for the inclusive recovery of economic growth.
The program is an addition to the $ 100 million loan approved by ADB in May this year to support government anti-crisis measures, including tax deferrals for small and medium-sized businesses, temporary cash assistance for the unemployed during the pandemic, and free diagnosis and treatment of COVID-19.
