PM: Economic Recovery Will Start with Tourism

"The United Nations World Tourism Organization (UNWTO), together with the World Health Organization (WHO), will develop specific rules in the near future for the safe re-opening of the tourism industry. Everyone should understand that this process will take at least until year-end, however, we should not stop our routine economic performance," stated Giorgi Gakharia, Prime Minister of Georgia at a meeting held with representatives of hotels and travel agencies in Batumi today.

He added that the country is actively cooperating with the UNWTO.

"Our country and its current account were mainly advancing by tourism, foreign direct investments (FDI) and remittances. Unfortunately, we experience problems in all these areas. Therefore, tourism is the sector which should slowly get into motion and we should be among the first towards this end. We are actively working with the UNWTO. The latter will soon develop specific rules together with the WHO for the re-opening of the tourism industry. There are several critical points within this realm - border crossings and passport control, transportation and hotel accommodation. All these are basic essential stages, where anti-COVID measures and rules should be adhered to for safety," he said.

The Minister pointed out that it is essential that people learn how to adapt to the virus, as the economy should not stop and the country should develop.

"Our main task is to cope with the virus together. We are fighting on two fronts. On the one hand, we are concerned with the health of out citizens, and it looks like we will have to co-exist with this virus. We should adapt. We should learn how to cope with the virus. On the other hand, life should not stop. The economy should open-up. We should all learn how to adhere to the basic rules of safety to let the country develop. First of all, we will need to care about economic development to maintain jobs, welcome visitors, advance tourism by feeling obliged to care for our country and our citizens. Of course, it will not be easy to practice social distancing, face masks, remote work. Nevertheless, we will have to do it. It is the only possibility in the given context to make Georgia stand among the first-runners to start a gradual and very cautious re-opening of tourism. We are already discussing this with our neighbors and European partners in the bilateral format and beyond. We wish to create safe corridors. We are coping with the virus, however, it is a process and nobody can claim that we have won a victory over it."

The PM noted the hotel industry of the country has served over 25,000 people and has learned in due course how to manage the spread and transmission risk,
which is a considerable number.

"Of course, most important of all is the hotel segment. In terms of doing business, hotels are important as we took a decision at some point to use them as quarantine zones by engaging those who were willing. There were a lot of questions, concerns and uncertainties in the beginning, but it ended up into a concrete, competitive advantage."

He stressed that many hotels have learned in the country how to manage the risk of spread and transmission.

"It is of tremendous importance. Those who represent the hotel industry understand that a lot of business lines are involved, requiring compliance with respective standards. Whether willing or not, they had to understand how to turn hotels quarantine zones. All of that is of tremendous importance. None of the countries in the world have a similar experience in doing so in a systemic manner from the very first day. Afterward, in the most recent days, some started to apply this knowledge. UNWTO is also keenly interested in it. We are now exchanging information on our performance."

The PM also spoke about measures implemented or intended in support of the tourism sector at the meeting with representatives of hotels and travel agencies operating in Adjara.

"As soon as the crisis hit, we made cautious steps, as nobody was ready to make a precise forecast on how long the crisis might last. Nobody is ready for it even today, irrespective of the fact that we have more or less promising data and numbers. First of all, we tried to extinguish the fire and help medium size hotels - the most needy - in co-financing the interest expenses on bank loans. We deterred Personal Income Tax (PIT) for many of them, however, we now see that it is a ridiculous and insufficient measure. We all understood that the crisis has advanced, and thus further steps have been made. The industry will be exempt from Property Tax throughout 2020. The number of hotels eligible for the co-financing of interest on bank loans has been increased, and will not only cover those that have 50 rooms but will apply to a greater number - whose annual turnover is up to 20 million GEL. Other hotels are structured differently and no possibility or necessity of such support is plausible. Of course, PIT was also a significant systemic component for travel agencies that already had batch bookings. We are primarily talking about carriers. We will be helping them in financing their interest on borrowings. Tour guides are a separate matter. It is a big community and an important one. They will require certain support measures, apart from financial assistance. In terms of more basic structures, they will need to be more effective, orderly and productive for all of us."

He explained that economic recovery will start with tourism and agriculture in the country, followed by construction and development, industry and education.

The Government of Georgia is considering declaring COVID-19-free tourist zones.

"It may be Sairme, Tskaltubo or Gudauri. Even Bakuriani is large for this initiative, leaving aside Adjara. It will be quite difficult to declare Adjara as COVID-free, though some parts of it may work. Hotels that have a relevant infrastructure are of great importance for this. We may think of Batumi as a separate destination and set some rules to declare its individual locations as COVID-free. We all understand it well that economic recovery, re-opening and resumption will start with tourism and agriculture, followed by construction and development. Of course, industry will be the next sector with education, healthcare and others. It does not mean, however, that the range is defined by the significance of sectors for the national economy. It only means that sequence depends on the average weighted indicator of two components - who suffered most and who contributed most. Some are upset by us starting with tourism, rather than industry or agriculture. However, we take the average weighted indicator and contribution of the tourism sector to the national economy and damage caused by the pandemic were largest in this particular sector. Then comes the agriculture and other segments of the economy," added the Prime Minister.

In his words, the country now has all the preconditions to turn the crisis into an opportunity, primarily for the benefit of the economy.

"The crisis will lead to such technical adjustments to the transmission chain and structure of supply and demand that it will undoubtedly serve as an opportunity for our country. We may turn the strongest aspects of our economy into a competitive advantage that will enable us to make a breakthrough. It does not mean that we should be disillusioned."

Gakharia emphasized that full support has been solicited from international donors and primarily from the International Monetary Fund (IMF).

"Georgia was the first country to conclude an agreement on a new program with the IMF. It means that in the context of full and absolute turbulence, IMF trusted the macroeconomic stability of our country and stated that the economy of Georgia may be resilient towards such blow under such criteria and conditions. All our steps that have been made in support of the economy and business enabling, maintenance of jobs, social allowances to citizens and financial aid are discussed in detail and every unit counts. Georgia was the first country to complete negotiations with international donors and secured 1.6 BLN USD for the government of the country as a budget support facility. In the conditions of such uncertainties and turbulences, consent to such request of assistance is an achievement of us all. It is a sign of macroeconomic stability and fundamental health of the country. We were talking with every donor on behalf of our government, including the IMF and secured 1.5 BLN USD for the private sector of the country. It means that funds will be accessible for the private sector of the economy - any sector of it. These may be medium-size enterprises and local manufacturing, already benefitting of some programs funded by the donor community."

Gakharia underlined the need to enhance efforts for the positioning of Georgia as a safe destination for tourism.

"Most important of all is to agree today that in the fight against this virus, following sectors of the national economy - agriculture, trade, construction, but primarily tourism - should be effectively re-opened to serve as a precondition for promoting Georgia globally as a branded destination of tourism not only in terms of beaches, skiing resorts, wine, rich history, culture, cuisine, but as a COVID-free destination. It is of tremendous importance within all those marketing campaigns that will be promoting Georgia as one of the rapidly-growing countries and safe destination for tourism - two dimensions alongside."

He also underlined the need to be cautious when re-opening the economy.

"When re-opening the economy we should be particularly cautious and avoid haste, as a possibility of rewinding back is the most important component of our re-opening strategy. We should always be able to rewind back as soon as we experience problems. This crisis should turn into an opportunity for our economy to let the Georgian economy exit the crisis even stronger. We may find such dimensions and points of growth and breakthrough or sectors here that have never crossed our minds before or could never imagine them possible. Also, strategy for the recovery of tourism and its effectiveness should add another very important sign to the international positioning of Georgia very soon - somewhere in August - as a Safe Destination for Tourism, Proven Effective in the Fight with COVID-19, which is primarily within your best interest, as more tourists will come to the country and you will have more customers, leaving you with greater revenues. This crisis should turn into an opportunity for our country and response of tourism to the crisis should be an additional advantage in positioning Georgia at international markets as an attractive destination for tourism" concluded the Prime Minister.