Home / Business / Business Sector Supports Small Government
small government

Business Sector Supports Small Government

Mamuka Bakhtadze, the nominee for the Prime Minister position, has introduced a government optimization plan to the parliamentary majority:

“The concept of a small government does not imply only a reduction in the number of ministries. This concept also determines the government’s ratio in the GDP and the whole economy. We have made considerable progress in this respect. This year, our expectable costs in this direction will constitute 4.2%-4.3% of GDP. The concept of a small government implies a reduction of the government size in relation to the economy to no more than 3.9%. This signifies that we will be able to direct considerable funds—100-120 million GEL—to other important social programs.

I would like to stress that according to certain erroneous stereotypes, a small government signifies only fewer ministries. However, this concept, first of all, signifies the ratio of expenditures in the economy. Consequently, our program will reflect this component, and the top margin in the component of expenditures, and determine the directions for freed financial resources. We believe that these funds, first of all, should be directed to social projects,” Bakhtadze said.

Caucasus Business Week (CBW) has inquired how businessmen and experts appraise the initiative proposed by Mamuka Bakhtadze.

Economist Zviad Khorguashvili: “The number of Ministries will decrease to 11 from 14. They say 120 million GEL will be saved. Each tetri reduced in the budget is good news, but this amount of reduction is ridiculous, because only 0.7% of the total will be saved. We do not know whether they plan to increase other expenditures and whether this money will be saved or not in reality. It is useless to regroup ministries: the bureaucracy of a small government is expressed by the reduction of their expenditures, not by renaming ministries. We should not be hooked on false expectations for the 37,000th time.”

Expert Gia Khukhashvili said that it is an absolutely correct decision to reduce the number of ministries. “There is an international standard that rules out the existence of artificially shaped ministries. It is good that the country has chosen this direction. But this is the initial stage, as fewer ministries cannot resolve the real problems. Internal optimization should be carried out within ministries, and this is the heavier and more hardworking component. I mean staff optimization at legal entities of public law LEPLs and non-commercial legal entities,” Khukhashvili said.

“Regretfully, these problems exist in not only at ministries. For example, at Tbilisi City Hall, all components are artificially enlarged. If local governments, including Tbilisi City Hall, follow the same trend, the governance system in the country will become simpler, and we will have a more optimal and easily-administered state governance system,” Khukhashvili said.

Serious crisis was a key problem for the previous administration, he added.

“It was absolutely unclear who was making decisions and how those decisions fit the vertical,” Khukhashvili said. This uncertainty should be overcome. Bakhtadze has made correct statements, according to Khukhashvili, but reality will emerge from the government’s actions.

In response to the question of whether the decision was made to get rid of some officials, Khukhashvili said that it was no problem to push aside any person. Therefore, this version is less persuasive. Khukhashvili hopes that the Prime Minister genuinely wants to make the state machine more understandable and easily administrated, and this decision serves these objectives.

As to where the freed funds will be directed, this is the subject of parliamentary discussion and the government should make a decision, Khukhashvili said.

Soso Pkhakadze, the chairman of the Wissol Group supervisory board, welcomed the announced package of reforms. “This decision will increase efficiency and cut expenditures,” Pkhakadze said.

“These steps will bring positive results for everybody, including for the business sector, because fewer ministries signify more efficient decisions for the business sector in a shorter period, and this factor will promote economic development,” Pkhakadze noted.

“The optimization process should be carried out at legal entities of public law (LEPL) and non-commercial legal entities too, because Georgia is a small economy and the country needs a smaller government with a highly professional staff. This decision will strengthen the country,” Pkhakadze added.

Businessman Temur Chkonia urged the Government to carry out the optimization process in local governments, too. “Several government offices should be abolished, and considerable funds will be saved,” he said.

“It would be wonderful if the Ministry of Finance and the Ministry of Economy genuinely merge, as well as the Ministry of Corrections and the Ministry of Justice, as announced. Simultaneously, the optimization process should be expended to several government offices, specifically a merger of the Ministry of Refugees and the Ministry of Infrastructure,” Temur Chkonia said.

“The merger of ministries alone does not suffice. The Office of Governors and structure of regions should be also revised. Local governments should be reduced in villages and districts. Similar offices and structures are not appropriate. Many of them have no function. At the same time, it is important that the words “reduction” and “merger” should be substantiated. We should determine why we do this and how much money we will save. We have a small country and it is improper to divide this country into so many units. I do not object to individuals. Our country is not ready to feed such a big government,” Chkonia said.

The number of government vehicles should be also reduced, the businessman noted. “We love to live a careless life, and this is our mistake,” Chkonia said.