Parliament adopts amendments to the 2015 state budget
Parliament adopted amendments to the 2015 state budget on July 17, 2015. The amended budget envisages cutting the economic growth forecast from 5.0% to 2.0%, while maintaining the fiscal deficit at 3.0% of GDP. Initially estimated public debt-to-GDP ratio is revised up to 43.7% (out of which 33.9% is external public debt) from 37.2%, driven by lari depreciation. Deputy Finance Minister told lawmakers on July 17 that the deficit might be even less than 3.0%, as GDP growth might actually reach 3.0% in 2015.
In the approved state budget, tax revenues are reduced by GEL 200mn (initially targeted GEL 7.6bn), while additional funding is planned to be raised from other sources: GEL 185mn from foreign loans, GEL 41mn from EU-funded budget support grants, GEL 20mn from transfer of savings to state budget from legal entities of public law, and GEL 150mn from mobile operators in license fees for providing 4G services. Domestic public borrowing is reduced by GEL 100mn.
Despite the increased revenue plan, overall state budget expenditures for this year remain unchanged at GEL 9.6bn. A funding cut in the amount of GEL 160mn (out of which GEL 70mn on donor funded infrastructure projects) affected most of the ministries. Out of this amount, GEL 105mn is redirected to various infrastructure projects and to partially cover the damage caused by the flood in Tbilisi on June 12-14. External public debt service payments are increased by GEL 53mn. Overall, based on the higher revenue plan, government deposits are set to increase by GEL 25mn to GEL 325mn.
Trade deficit down 11.4% y/y in June 2015
According to GeoStat’s preliminary figures, the trade deficit in June 2015 decreased 11.4% y/y to US$ 402mn as exports fell 18.9% y/y to US$ 198mn, while imports were down 14.0% y/y to US$ 600mn. Detailed statistics will be available on July 21.
Property registration up 7.3% y/y and company registration up 7.7% y/y in June 2015
Property registration (commercial and residential real estate) increased 7.3% y/y (+17.4% m/m), reaching 49,138 units in June 2015, according to the National Agency of Public Registry (NAPR). Registration increased for both primary (+15.8% y/y, 20.4% of total) and secondary (+5.3% y/y, 79.6% of total) properties.
Company registration increased 7.7% y/y (+7.4% m/m) to 4,019 units in June 2015. Out of newly registered companies, 97.3% were business legal entities while 2.7% comprised non-entrepreneurial (non-commercial) legal entities.
Producer price index up 1.3% m/m and 10.2% y/y in June 2015
PPI for industrial goods increased 1.3% m/m in June 2015, according to GeoStat. A 1.9% increase in manufacturing prices contributed 1.53ppts to the overall index change. The prices were significantly higher for chemical products (+14.1% m/m). Prices also increased for manufacture of basic metals and fabricated metals (+3.4% m/m).
Annual PPI increased 10.2% y/y in June 2015, with manufacturing prices increasing 12.9% y/y (mostly for manufacture of foods, beverages and tobacco, chemical products and basic metals and fabricated metals), contributing 10.53ppts to the overall index change. Prices were 2.8% lower y/y in the electricity, gas and water supply category, contributing -0.35ppts to the overall index change.
Money transfers down 20.8% y/y in June 2015
Money transfers decreased 20.8% y/y to US$ 100.4mn in June 2015, according to NBG. The 35.5% y/y drop in transfers from Russia, accounting for 41.5% of total transfers, was the major contributor to the decline. As in previous months, remittances continue robust growth from USA +27.4% y/y (8.5% of total), Turkey +15.4% y/y (6.7%), and Israel +37.6% y/y (2.7%).
