FDI up 99% y/y in 3Q14, six-year high
Georgia’s 3Q14 FDI increased 99% y/y (237% q/q) to US$ 508mn according to GeoStat’s preliminary figures. The construction sector was the largest FDI recipient with 36% of total, followed by the transport and communications sector (21%) and real estate (12%). China topped the list of investors with US$ 149mn (29% of total), with the Azerbaijan coming second at US$ 95mn (19%).
Money transfers up 0.2% in 11M14
Money transfers increased 0.2% y/y in 11M14, with Russia accounting for 50% of total, followed by Greece (14.1%), Italy (8.3%), USA (5.5%) and Turkey (4.4%). In 11M14 remittances significantly increased from Turkey (+53.7%), Germany (+36.7%), Italy (+11.2%) and USA (+8.6%). However, money transfers decreased 16.2% y/y in November. Remittances from Russia accounting for 43.9% of total in November experienced the biggest decline 30.3% y/y this year. In November, money transfers strongly grew from Turkey, Israel, Germany and USA.
Elimination of tax-free threshold for personal income tax
Government initiated changes to the tax code for elimination of tax-free threshold of personal income tax for low-income earners from 2015. Existing threshold (introduced at end-2012) of an annual GEL 1800 (around US$1000) enables low-income groups to reclaim paid taxes from the government. This change will save significant amounts in the budget from 2016 as personal income tax refund costs GEL 130-140mn or 0.4% of GDP in 2014.
Georgia enjoys continued support from international community
On 11 December EU and Georgia signed Eur 46mn Macro-Financial Assistance program. The program is intended to strengthen Georgia’s balance of payments and to support reforms. On 10 December US congress agreed to allocate US$ 30mn under Foreign Military Financing for Georgia in 2015 fiscal budget
