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Is Georgia economically successful country?

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Vazha Beridze

After the report of the President of the National Bank of Georgia Koba Gvenetadze to the extraordinary parliamentary meeting, Archil Talakvadze – the majority leader  made a speech and,  on the background of a sharp criticism by side of the opponents, declared proudly for attention of all Georgia that despite the difficulties and challenges the country is facing today, its economic growth and development is stable.

According to him, Georgia takes the leading position in the region to this direction, that as he says is a direct outcome of the correct economic policy pursued by the government and of various external factors. According to Talakvadze’s own assessment, as a result of correct reforms implemented rover the last years by the economic team, a social background in the country is improved, supports to the small and medium-size businesses are increased and, what is more important, the poverty rate is decreased, in comparison with the previous year.

However, the majority leader said nothing about the fact that regardless of this “correct and successful measures” which as if caused  a real economic boom in the country, the currency exchange rate is falling down day-by-day  while the inflation index is increased, that means the decreased incomes for already poor citizens, permanent rise of prices on the goods. i.e. life becomes more expensive; He said nothing also that the level of unemployment is critically high, owing to which a mass drain of the country’s population to foreign countries to find there some cheap job, is continuing. Indeed, according to the social studies conducted recently, just in the social aspects is the situation part the most critical. Especially danger is observed in the tendency of increase of the prices on food products, that, we can say, obtained an irreversible nature. For example, according to the official data published by the  National Service of Statistics of Georgia, the prices on bread and the bakery products increased by 10,2% in February of the current year (wheat bread and flour included. In total, all this caused much damage to the socially unprotected layers). But, bread is not a sole product on which the prices have increased almost immediately. According to the same study, prices on the fish and other sea products increased by 12,5%, on the meat and meat products – by 4,3%, vegetables – by 7,6%, mineral waters, soft beverages and juices – by 2.5%. As to  the sphere of services: healthcare is increased by 3,4%, that in its turn  made considerably expensive both out-patient and hospital services, as well as the medical equipment, apparatuses and devices (by 4,8%), that in total, caused increase of the Consumer Price Index.

To say in short, in contrary to the statements of some officials from the government and the parliament, which are noted to obtain  more and more political PR nature due to partial crisis and approaching the elections, rather than a motivation of doing real job, the statistics that is always really `true”, say that the economy of the country is at the edge of death, while a factual state of the population and its  attitude towards the situation, are the second-row issues of importance and still remain an item of political trade and speculations for the government. . .

Is Georgia a really economically successful country today and whether there are true by this view the statements made by the majority leader  Archil Talakvaze on the extraordinary parliamentary meeting?  these are the issues ”Georgia and the World”  asked the economic experts to comment:

“The country cannot be developed by investments of only one billionaire”

Vazha Beridze, an economist: 

-, A factual side of the statements made by Talakvadze, may be closes to  the reality, because a certain economic growth in the country is true. But figures are one thing, but  how this growth is reflected on the living conditions of the population, is another thin and, this has its own reasons. As to approaches to the issue, I think the government has right attitude to the sphere of economy, however, the economic policy cannot reflect such the approaches. To say simply, the government   does not have a conceptual vision of the economic development, which is the main and necessary thin for the long-term prospects. By the way, in his last TV-interview broadcasted several days ago,  Ivanishvili indicated  that they did all they could and, cannot offer anything more till 2020. Yes,  this is quite direct and frank statement, but, if they cannot offer anything more, what then is the way out? I think that in this case you must resign and appoint extraordinary elections, in order to give opportunity to other forces to continue the country’s development. In term where the leading party leader openly declares that nothing practically new and  important changes can be implemented until 2020, I cant imagine, for what another development we may expect!  Can a brave noise of unexperienced girls and boys  be the outcome for the too poor social state of the society? – No. of course. This is the reality and not the one that says that the economic growth is reflected in some figures. It is good of course, but not enough such a reflection in figures. it can be enough if it is reflected really on the life of the population too.

– Do you have any expectation that such the reflection will take place in future?

– No, unfortunately, and, there are several reasons  to think so. First of all, it is the elite corruption and the low-level competition that proceeds from it and that has moved to quite another stage recently, I mean there are total branches in the business and economy where almost all is in captured ion the  hands of cartels. Naturally, this hinders   seriously the economic progress and development. But, this is not the sole factor. Another seriously hindering factor is the territorial problem, that ,unfortunately, cannot be resolved in a visible future. In general, it is really difficult to attract investors in such the region and arise their  interest in investing long-term projects.  As to way out, it is clear for all theoretically – more investments and not hoping for just one investor – Bidzina Ivanishvili, who truly does good things, but this is not enough, since the country cannot be developed by investments of only one billionaire. However, I repeat: It is very difficult to arise attract serious investors ion the conflict region. All act with caution and analyze possible complications which may create a threat to their projects.

– Is the economic policy of the government effective for minimizing the inflation?

– I think the government fails to compensate the negative effects of inflation and, this is the direct result of the fact  that the main regulator of the problem, I mean the National Bank, does not have the clear and adequately formulated economic policy. Considering all the above, it is too difficult  to say that our future will be better. No, it will not be better. Anyway, I do not  expect important positive changes, because, I repeat: I cannot see the economic and political preconditions  for improvement, which preconditions, natrurally, are important and play a significant  role in the current developments

Gia Khukhashvili
Gia Khukhashvili

“The time ended when  it was possible to preserve power through a virtual picture of well-being”

Gia Khukhashvili, expert in the economics:

-, If say nothing about  figures and statistics, everything is measured  finally  by a refrigerator. By this I want to say that  even if the economic growth is achieved, that is accounted via the certain figures in  a study of a particular organizations it has no sense unless a well-being of our citizens is improved. A to the statements on such economic growth, in the past Saakashvili also was making too many such  declarations and, now the same is done by this government. However, in contrary to the “National Movement” which was attempting to assure the population so cynically that as if everything is OK but we cannot see it, the current officials create a certain virtual picture but too ineptly. Meanwhile, a reality is that refrigerators are emptying, the  inflation processes are on, products are becoming more  and more expensive, but no indexation of incomes is done. So, a question arises: What a sense in the  economic growth if population is hungry?

– According to the data for February of this year published   by the  National Service of Statistics of Georgia, the prices on bread and the bakery products increased by 10,2% ,  prices on the fish and other sea products increased by 12,5%, on the meat and meat products – by 4,3%, vegetables – by 7,6%. How all this can be reflected on the social state of the ;population?

– There is a consumer basket and, when the manipulated statistical data   are introduced on the basis of an unspecified methodology to assure us that as if the inflation is low, nobody feels hot or cold by these figures, since the citizens are interested in the price of bread, not in some figures calculated by undetermined methods. In this time, the government is busy not by a job-oriented affairs  but a cynic statements and think that they do by this a political PR. But, they are mistaken  since this trick is not politically profitable any more, citizens  see and understand everything  and become concerned. The time ended when  it was possible to preserve power through a virtual picture of well-being. We have already passed this stage and know that this is just a propaganda, nothing else, and it becomes more and more cynic, a rating of the government is permanently falling down . That is why it becomes difficult to it to preserve power.

Interviewed by Jaba Zhvania 

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