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Thursday, 19 July 2018


Mr. Gilauri’s naked optimism

21.07.2011  |  00:38

Mr. Gilauri’s naked optimism. 19859.jpegUnder conditions when the Georgian economy is suffering distress, Prime Minister Nika Gilauri keeps calm like a real captain. He believes that Sakarvelo won't have any problems with the payment of the multibillion foreign debt. According to Gilauri, Eurobonds issued to postpone the first payment to the International Monetary Fund are a great success. However, our interlocutor, an expert of the Institute of Strategic Assessment and Analysis Sergey Demidenko, has got a different opinion on Tbilisi's economic prospect and the success of reforms


conducted by Saakashvili's team.

"After Eurobonds have been issued, Georgia has got no more problems with the foreign debt payment in 2012-2013", - Gilauri says, referring to the example of the seeming "positive" changes in the country's economy. Firstly, in his opinion, Eurobonds perfectly sell at the world exchanges; they sell even better than the securities of many countries, including those of Italy. Secondly, at the beginning of the year, the budget deficit amounted to 4,5 percent and now this figure is said to be equal to 3,7 percent.

One feels like saying: wake up, Mr. Gilauri! Or, do you still reckon to get one billion dollars in the form of investments? Oh yes, the National Bank comforts the citizens of the country by the eight-percent inflation and price reduction that has become possible after harvesting but the republic cannot last from harvest to harvest.

One can accuse the "vicious" Russia of one's failures as Head of the Security Council Giga Bokeria does while contemplating over the problems with investments. Or, call it an "aggressor" and a "destabilizing" factor, because of which western moneybags allegedly do not want to invest in Georgia. However, one cannot solve all the economic problems this way, unfortunately.

Four and a half billion dollars of the foreign debt is no joke. Sooner or later, it must be paid back despite Washington's favourable attitude, while the issue of Eurobonds only postpones the payment date. As was correctly noticed by economic expert Gia Khukhashvili, when we are speaking about the privatization of enterprises, for instance, about selling a railway, these are no investments at all. "This is just a sale that does not give anything real in terms of economic development", - he is sure.

It is notable that the International Monetary Fund has already warned the Georgian government that the republic is going to face uneasy times. Even more than that: the analysts recommend Saakashvili not to put much hope on the restoration of the pre-crisis foreign capital flow into the republic. Well, that is quite logic, considering the problematic banking sector and the unemployment factor.

The prospect of the Georgian economy and Gilauri's statement have been discussed by GeorgiaTimes correspondent with an expert of the Institute of Strategic Assessments and Analysis, Sergey Demidenko.

- Don't you think the Georgian prime minister is too optimistic?

- I believe such statements must be viewed mostly in the propagandistic context. The aggravation of the domestic situation in Georgia, I mean another wave of the opposition's activation and what we have seen already, means that the socio-economical position in the country is still unstable. In this respect, the government surely needs such statements and some reassuring actions that would bring down the level of social tension in the society. I admit that now this tension is not as strong as it was in 2007-2008, and something has been done in this direction already. But in my opinion, Georgia cannot overcome the crisis completely: it simply has got no resources for it, and the lack of resources is compensated by such statements of the Georgian governors.

- Will the republic be able to pay the foreign debt back by way of Eurobonds issue?

- Well, of course, four billion dollars of external debt is a significant amount for Georgia and the republic will hardly be able to repay it in the nearest future. In my opinion, the debt is a dynamic thing that is actually going to grow. This is a rule of economic development. Yes, the Georgian government takes certain steps and conducts privatization. But it does not mean privatization will be efficient. It is not yet clear the way enterprises will be managed, just like the sales market for them. I think it will be CIS, anyway, especially if we are talking about the food and processing industries. That is why, Georgia won't repay its debts in the nearest future and they will grow. Everything will depend on the efficiency of reforming and enterprise management, which is a big question so far.

Ruslan Chigoev

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