Reforms-driven success Georgia maintains a reputation as a top reformer globally Georgia is pro-Western oriented, keeps close ties with for its performance in governance and pro-business reforms. the International Financial Institutions (IFIs) and open These measures enabled the economy to do well despite trade policies. In June 2014, Georgia signed an Association numerous shocks, including the global financial crisis of Agreement and related Deep and Comprehensive Free 2008-2009, or the commodity price slump of 2014, which Trade Agreement (DCFTA) with the EU. Visa-free travel impacted Georgia’s main trading partners. Georgia, with to the EU, granted to Georgian passport holders in March a ranking of 6 globally, is currently the highest rankedth 2017, is another major success for Georgian foreign policy. economy in Europe and Central Asia region according to the While remaining committed to EU integration, Georgia 2019 Ease of Doing Business index by the World Bank. By has also managed to stabilise its relations with Russia, as allowing voluntary value added tax registration at the time the latter lifted its embargo on Georgian products in 2013. of business incorporation, Georgia reduced its relative gap to Moreover, Georgia-China economic ties are increasing and a the best regulatory performance on starting a business the free trade agreement signed in 2017 is expected to further most in 2017-2018. Furthermore, Georgia is ranked 16 outth expand the Chinese market for Georgia’s exports. Georgia of 180 countries on the Economic Freedom Index measured is participating in China’s huge Belt and Road Initiative, that by the Heritage Foundation in 2019 and 27 out of 200th will also have positive spillovers on the Georgian economy countries in Trace International’s 2018 Matrix of Business and the region overall. The country’s ongoing programme Bribery Risk. Georgia is a positive exception to the trend of with the IMF is seen to support the country in reducing high bribery rates in the regional economies and is on par economic vulnerabilities and promoting economic growth. with European Union (EU) member states, with only 7% of The largest credit rating agencies (Moody’s, Fitch and S&P) people admitting to having paid a bribe, according to the acknowledge the country’s economic and institutional 2017 Global Corruption Barometer study by Transparency strength and resilience to global shocks. This is reflected in International. Georgia improved its ranking by five positions Georgia’s latest one-notch rating upgrade to BB from BB- since 2017 and ranks 41 out of 180 countries in the 2018st from Fitch in February 2019. The Government’s emphasis is Transparency International’s Corruption Perceptions Index. on increasing capital expenditures to enhance the potential With this ranking, Georgia is ahead of Italy (53), Slovakiard growth while being committed to containing current (57) and Croatia (60) and leads the Eastern Europe andth th spending to reduce fiscal deficit. National Bank of Georgia Central Asia region followed by Montenegro (67), Belarusth (NBG) aims at reducing external vulnerabilities by reducing (70) and Turkey (78). The Economic Liberty Act, effectiveth th dollarisation in the economy and supporting capital market since January 2014, ensures the continuation of a credible development. fiscal and monetary framework for Georgia, by capping fiscal deficit at 3% of GDP and public debt at 60% of GDP. Gross Government Debt The Economic Liberty Act also requires the approval of the electorates through a nationwide referendum for imposing (as a % of GDP), 2018E new taxes and raising existing tax rates, subject to certain exceptions. Georgia has one of the world’s friendliest tax regimes having removed a number of taxes, from 21 in 2004 to just six currently. The tax burden has been reduced and further tax incentives of recent years include the application of corporate income tax only on distributed profits since 2017, and fivefold tax rate cut for small businesses starting from 2018. 44.8% Source: IMF 16 Annual Report 2018Bank of Georgia Group PLC aissuRnatshkazaKnatsikebzUyekruTavodloM.peR hcezCaivtaLainauhtiLainamoRaigroeGaikavolSdnaloPainemrAsuraleBainevolSeniarkUyragnuHaitaorCorgenetnoMadanaCniapSeropagniSylatI