The flow of privatization money has sharply decreased

The world financial crisis on the one hand and the August war on the other have caused a near-total stoppage of foreign investments in the country. The situation is no better regarding privatization income.

In the first nine months of 2008, including September, the state budget received GEL 518 million from the privatization of state-owned facilities, this being GEL 4 million less than intended. However these funds were mobilized before the war, i.e. in the first and second quarters. As for the third quarter, during that period the Georgian Government was able to sell the property costing only about GEL 36.5 million. By October 21 just GEL 6 million had been added to the budget funds received from privatization and the total had reached GEL 524 million.

It seems that the budget has lost an important source of income through the significant decrease in the funds received from privatization. One reason for this decrease is that most of the “attractive” state facilities have already been sold. The war and the financial crisis have also made buying state property less attractive, as the risks involved have increased much more rapidly than the potential returns.