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Highlighting the elements of the economic crisis

Monday, October 20
The Georgian administration, observing negative tendencies in the country’s economy, blames the August Russian aggression and the global economic crisis for these. Some Georgian economic analysts however blame mistakes in the overall economic policy of the administration and the misexecution of positive policy elements. They maintain that the Russian action and current international trends have simply exacerbated the existing problems rather than causing them.

Demur Giorkhelidze calls the Georgian leadership incompetent, claiming that there is almost no Georgian economy, criticizing the banking system in the first instance. Soso Tsiskarishvili also thinks that the Georgian economy was moving into crisis even before the August war. He criticizes the state’s lack of commitment to following market economy principles and mainly blames former Minister of Economy Kakha Bendukidze for this. Tsiskarishvili thinks that the solid financial assistance Georgia will be receiving should be used properly and expresses his concern over the likely inefficiency of the expenditure of this aid.

Gia Khukhashvili speaks of short term and long term risks. Short terms risks include whether the country receives direct compensation for the loss it endured thanks to the Russian aggression. A long term risk is the investment climate. Existing investors are slow to expend their resources now and new ones are slow to enter. Projects such as energy transit schemes are now under threat more than formerly.

Is this just panic by some Georgian economists or an expression of common sense? This is difficult to judge right now. But the opinions being expressed by these qualified professionals differ greatly from the optimistic prognoses of the ruling authorities and the concerns they mention should not be ignored.