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Sunday, 19 August 2018


Saakashvili loses last percent

2011-08-01 20:47

Saakashvili loses last percent. 20291.jpegGeorgia's international creditors have to acknowledge that the economic situation in the country is getting only worse. Experts of the European Bank of Reconstruction and Development have lowered the GDP growth forecast for Sakartvelo in 2011 to 5%. Next year's outlook is still worse: 4%. What can the Georgian government do to take the country out of the crisis - except for making optimistic statements?


The Georgian economy has been falling deeper and deeper since 2008. After the war in August the country's GDP went down by 4% despite the growth in the pre-war period. On the contrary, the external debt started to grow quickly. In 2009 it went up by 1/3. Sakartvelo authorities see no other way out of the crisis except for privatization of state-owned enterprises. "Our problems are caused by systemic errors made by the authorities, as well as the war in 2008 that increased political risks in the country's economy", - the Georgian expert for economic issues Giya Huhashvili once said. - The recession has been on ever since". According to him, having received a lot of international donor aid, the problems were postponed but not solved. And Georgia's worst times are well

ahead since the republic has not overcome the peak of the financial crisis yet, unlike the rest of the world.

The expert was 100% right. Recently the European Bank of Reconstruction and Development (to whom Tbilisi owes USD 56 mln) lowered the GDP growth forecast index in Georgia by 0,5% this year. In 2012 the specialists offer a more miserable forecast. "The vast package of financial aid Georgia received after 2008, is coming to an end", - the EBRD report states.

Indeed, Georgia was repeatedly warned that in a couple of years' time the government and the National Bank of the republic will have to service large external obligations. Presently the country's debt is USD 4,2 bn. But what do we hear in reply?

Firstly, prime minister Nica Gilauri cheerfully reports on Eurobonds issued by Georgia for the amount of USD 500,000 and solution of external debt problems, as he expects. "The Eurobonds are wonderfully sold on international stock exchanges. Even better than national securities - including Italy", - he says. Then Gilauri proudly states that the imports to the republic has grown by 36% , and the exports - by 44% over the last six months. Finally, another index of success, according to Georgia's PM minister, is the number of tourists that visit the country.

Ok, fine: but if the Georgian economy is so successful as Mr. Gilauri claims, why are Sakartvelo's donors so critical? Why does the republic receive a new USD 40 mln loan from the World Bank in "support of the reforms aimed at pursuit of economic revival and preparation for a post-crisis growth?"

The most demonstrative explanation of it is the ridiculous auction organized by the Georgian parliament selling four junk foreign cars and almost 17 tons of metal scrap. This is the way Georgian government tries to pull the national economy out of the crisis and settle debts.

According to the experts, Georgia will fail to do that not only because of a low growth rate of the Georgian economy. The point is that Western donations could have been spent on various projects - but they remain inside pockets of Saakashvili and his team. They all love repeating that corruption was eradicated in the republic. It's impossible to solve all problems selling state-owned enterprises: hardly do Sakartvelo factories and plants cost USD 4 bn. Mishiko has no mineral wealth either.

In a situation like this Georgia would benefit from the return on the Russian market. But this is unreal with Saakashvili as president. The head of Sakartvelo is taken hostage by his own ambitions that drag his country down.

Well, now reap the fruits of your "labor", Mikheil!

Ruslan Chigoev

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