Solid Economic Policy Must Be A Priority

The Georgian Messenger
30 April 2004
Solid Economic Policy Must Be A Priority

By M. Alkhazashvili
According to a study conducted by the World Bank, Georgia is one of the 64
countries with the lowest per-capita incomes in the world. Also on the list
are the post-Soviet countries of Azerbaijan, Moldova, Kyrgyzstan, Tajikistan
and Uzbekistan. According to the calculations of World
Bank analysts, the main reason behind the poverty in these countries is the
lack of adequate financing for social programs, health care and education.

The Georgian government intends to fight poverty with a special program
adopted last year during the Shevardnadze administration. This program
foresees economic growth in the country by the year 2015. The new government
has talked about making certain changes in the program and some analysts
point out that if this document does not undergo some alterations, reducing
poverty in the country will be an exceedingly difficult task.

Many foreign experts are of the same opinion. They predict a rather grim
future for Georgia and its neighboring countries. Due to the complicated
social and political situation, Georgia’s population is projected to
decrease by 1.5 million by the year 2015, rendering it less than 3 million.
The population of Armenia, meanwhile, will fall slightly to 3 million and
that of Azerbaijan will increase to 9 million. But population
growth in Azerbaijan will not be caused by good living conditions. On the
contrary, it will further inflame the problem of poverty.

As analysts say, in order to overcome the current dire situation, it is
necessary to develop a wholly new economic vision. So far, the government is
continuing to follow the priorities of the old administration – that is,
focusing on the budget, pensions and salaries. If we closely examine these
notions, Solid economic policy must be a priority however, we see that there
is nothing behind them. The amount of the country’s budget is insignificant
and salaries and pensions are miniscule. In other words, we need to put
these old priorities aside, though not
as unimportant issues, but rather we should view a strong budget and
sufficient salaries and pensions as a consequence of a well-thought-out
economic policy.

Nothing yet can be said about the new government’s vision for the nation’s
economy, as no such document has been adopted that expresses a coherent
vision. A new economic vision must first of all mean the creation of a new
tax code. Work on a new code is underway, but the hurried pace of this work
creates the danger that many mistakes will be made. One specialist who has
seen the draft code warns that it looks no better than its predecessor and
little change is visible. These mistakes will be difficult to correct in the
future. Without a consistent and liber-al economic policy, the nation’s
economic and consequently political and social development will be stalled
for several years.