Deposit guarantee schemes (DGS) provides the compensation of the individuals’ deposits up to 5000 GEL or its equivalent in any other currency, when the event of covered loss occurs. In addition, scheme will cover all depositors first 5 000 GEL equivalent, despite the volume and currencies of the deposits.
According to the draft law presented to the Parliament, the insurance fund target level will be 6% of the total eligible, covered deposits. The main source for financing of the insurance fund, among another sources, will be monthly regular payments, which should amount less than 0.067% of the insured GEL and 0.1% of the insured USD deposits.
This research publication analyses dynamics of tax revenues as well as assesses tax burden and tax response with respect to GDP.
Tax burden is estimated as a ratio of taxes to GDP. During 1996-2003 the size of tax burden was 8.4%-12%, while during 2004-2009 it reached at 25%. After 2009, the size of tax burden is stabilized by the adoption of “Organic Law of Georgia on Economic Freedom”.
In order to estimate response of taxes to policy changes, one should check the time series on stationarity. The results show that personal income tax, value added tax, and excises are nonstationary variables at the level. In contrast, profit tax, property tax and import duties are stationary variables.
The fact that fiscal policy has taken one of the central roles in combating the global financial crisis (2008-2009) and dealing with its aftermath, has once again highlighted the importance of the design, measurement and implementation of fiscal policy. Well-designed fiscal policy can support medium term macroeconomic stability, an essential prerequisite for economic growth. However, while implementing the fiscal policy, the choice of fiscal instruments can have considerable impact on economic and budgetary effects. For example, international practices of successful fiscal consolidation are usually ones that based fiscal tightening on the reduction of government spendings rather than on the reduction of public investment or increase in taxes. Therefore, the role of fiscal multiplier as a tool of ensuring the accuracy of macroeconomic forecasting has increased.
Intervention by a Central Bank, in a broad sense, is defined as an official purchases and sales of foreign exchange in order to achieve one or more of the following objectives. For example, moderating exchange rate fluctuations and correcting misalignment; addressing sharp fluctuations in the exchange rate, high exchange rate volatility, wide bid-offer spreads relative to tranquil periods, sudden changes in foreign exchange market turnover, accumulating foreign exchange reserves and supplying foreign exchange to the market. Intervention in a narrow sense implies central bank foreign exchange operations when targeting exchange rate movements.
The main aim of the following research is to explain the meaning and content of the output gap and on the basis of widely accepted methods to measure output gap for Georgia.
The output gap is an indicator of the economic cycle. The output gap measures deviation of the actual output from its potential level. Potential output can be described as the maximum level of output that could be achieved by maximum utilization of resources while maintaining stable inflation. Thus, the output gap is often applied for assessment of economic activity with respect to its potential level.
The recent macroeconomic developments, such as the foreign and domestic factors causing the exchange rate depreciation along with the rising inflationary risks, has once again highlighted the importance of timely implementing active changes in fiscal policy in line with the monetary policy tightening. As there is a lively debate about the possible directions that fiscal policy could take: fiscal tightening, that would result reduced government spending and/or increased taxes or fiscal stimulus, that would result increased government spendings and/or reduced taxes. The aim of this research publication is to thoroughly analyze the possible effects of fiscal policy on the overall economy by presenting the international practices and main risks associated with their implication in short and long-run periods. Therefore, the publication only serves as an information pipeline for those interested in the issue.