The Government’s anti-crisis plan

President Saakashvili has promised the financial crisis would bring six disastrous months to Georgia. Therefore the Government is obliged to develop an anti-crisis strategy which will ensure the country survives. Independent analysts and the opposition are demanding that the state does this urgently and efficiently.

Economist Demur Giorkhelidze thinks that Georgia might be the only country in the world which has not so far elaborated practical mechanisms to resist the crisis. He thinks that the state budget should be part of the anti crisis strategy. Analyzing the budget presented, he concludes that the structure of expenditures given is more appropriate for a well-to-do and carefree country. The administration however denies such allegations. Finance Minister Nika Gilauri states that due to the Russian aggression in August Georgia was forced to elaborate an anti-crisis strategy immediately, and the state budget is an essential part of this strategy. He adds that in the presented budget the most-financed items are social projects.

Gilauri highlights that the budget decreases import expenditure and increases infrastructure expenditure, which according to him should facilitate the creation of extra jobs. The Government also relies on the imposition of free trade regimes with the EU and USA. Independent analysts however consider the measures so far taken insufficient. They say the reduction of income tax from 25 to 20% is not enough. Economic analyst Gia Khukhashvili thinks that the first step that should be taken by the state is to obviate political risks. The investment environment should be predictable and compatible. The country needs a trustworthy court system, which can protect private entrepreneurs from state pressure, giving businessmen a sense of security and safety.

Demur Giorkhelidze demands radical steps. First he suggests a financial amnesty, the exemption of small and medium-sized businesses from taxes, and decreasing VAT further. “We should do not what we want to do but what needs to be done,” warns Giorkhelidze.