Georgy Kalatozishvili, Tbilisi. Exclusively to Vestnik Kavkaza
The year of power changing in Georgia ended sadly for the country's economy. Georgia is moving backward, according to all economic indices. The growth of GDP reduced drastically. If during the last years of President Saakashvili’s term the economy grew rapidly – 5-6% annually, as the result of 2013 it will grew by 1.5-1.8% at most. The budget revenues got a huge gap of 1 billion lari, considering the fact that the whole volume of the budget is 7.422 billion. At the same time, payment of pensions, social benefits, and salaries of state employees continues. However, it is being made because the government rejected major infrastructure projects, i.e. it saves money at the expense of the construction of roads, bridges, renovation of the water supply system, energy facilities, and so on.
The national debt is growing. In 2014 it will reach 9.977 billion lari. The Cabinet of Ministers headed by Irakly Garibashvili decided to loan 500 million lari to meet expenditures. Otherwise, it would be impossible to fulfill all current financial liabilities on foreign and internal debts.
At the same time native currency slumped. Few months ago $1 cost 1.65 lari at the financial market, but by the end of the year lari fell down to 1.73 per $1. At the same time, the National Bank has already spent a significant part (about 10%) of external reserves for preventing slump of native currency.
Meanwhile, turnover with Russia is booming. After the unspokeb embargo was eliminated, Georgia exports all kinds of its traditional products to Russia, including wine, Borjomi mineral water, as well as fruit and vegetables. It has already led to a reduction of the export deficit. However, export to Russia was renewed only in the second half of the year, and the trend doesn’t influence the economic situation significantly, though the positive tendency is encouraging. At the same time, everybody understands that it will last only till August 2014, when Georgia signs the association agreement with the EU. Moscow will hardly continue supporting Georgia after that.
Therefore, the slowdown trend will remain, but for billionaire Bidzina Ivanishvili who directly invests into major projects which could influence the GDP growth.
Economists think that the main reason for the economic slowdown is inactiveness small and medium business, which is caused by political uncertainty. Mikhail Saakashvili left the political arena, but Bidzina Ivanishvili did it as well; and now 31-year old Premier Irakly Garibashvili is in office. It doesn’t encourage economic subjects.
