Treasury liability and budgetary deficit

The Georgian Government is increasing the amount of treasury liabilities it has issued, from GEL 160 million to GEL 260 million. The Government explains this fact by demand from the banks determined by the low interest rates at which they are buying these liabilities at the auctions. Economic analysts however explain it by applying a simple economic calculation – the Government wants to cover its budget deficit by issuing these liabilities. Banks are happy to buy treasury liabilities because they prefer to issue loans to the State rather than invest in the economy as the present situation is risky.

Issuing treasury liabilities is included in the economic stimulus package elaborated by the Government to rescue the country from crisis. Economic analyst Shota Gvenetadze thinks that the Government is issuing treasury liabilities because it is short of the cash needed to activate administrative resources in order to preserve their positions. Therefore it is being done to maintaining the leadership rather than support the economy. Other analysts think that taking on extra loans, either external or internal, is an extra burden for the State.