An interview with a former Finance Minister Mirian Gogiashvili
Many regulations adopted by the Government in recent years spooked investors. How would you appreciate the investment climate in Georgia?
I can say that real investments practically don’t come into Georgia and mainly speculative investments dominate in the country. Many countries do not welcome such investors as they come for a year or two in order to obtain very high profits, and this is not good. In general, serious investors should be attracted differently that will cost much more.
For example, an idea of turning Georgia into a regional hub is very good and will allow to attract serious companies which will enjoy benefits in the tax system, infrastructure construction, etc while investing. But it requires huge financial and human capital, as we are suffering a large deficit in both sectors, including human capital.
Despite the fact that there are many good specialists in the country, but their skills can’t be used as they are adapted to another economic system. They need to be retrained that is a problem. In general, it is easy to do it, and it does not require high finances, but the state should spend the money for this purpose.
You’re talking about speculative investments, and the government claims that in 2014 $ 1.1 billion was invested in the country which is significantly more than in 2013 and 2012. How would you assess these statements?
There are not many serious investors in Georgia, they are a very rare exception. Neither the previous government nor the present can boast of it. A speculative capital is very short-term and unfavorable. In the end, we will be in big trouble because of this speculative capital.
The National Bank of Georgia is often accused of devaluation of the national currency. Is it true?
Any statements that unequivocally say that the problem is with the National Bank are a big mistake, and even crime. No one can blame the National Bank for everything, or for example, the decline in exports. Of course, all factors affect the state of the national currency, including those which are beyond our control.
But we can demand a more rapid response from the authorities to avoid creating negative expectations in society. The National Bank must intervene more actively and bring the refinancing rate at the previous level, as its increase by half a percentage doesn’t give anything in the short term – to put this measure into affect at least a few months are needed.
No one personally is responsible for what happened in the economic system of the country. The National Bank has a lot of levers that can be used and are already being used – for example, $ 240 mln of foreign exchange reserves have been spent, although it did not bring much good.
How would you rate the government’s economic policy? What is its role in the ongoing processes?
It seems to me that the government does not have any analysis of the current situation. The National Bank analyzes the situation, and the government, in my opinion, does not. The problem is that the government did not expect what has happened. Nobody has analyzed how the war in Ukraine and the crisis in Russia may affect Georgia’s economy, although both of them did not fall from the sky. But the situation has not been analyzed that was the main problem.
Two months ago, the Government presented to Parliament a plan to resolve the crisis, which consists of several stages, including accelerated privatization. How justified is the accelerated privatization?
I think it is a big mistake. In my opinion, it would be better to follow the path of development of sovereign funds and development funds, while the state-owned property should be directed as collateral to obtain cheap credit in the international market.
If a large investment project is not behind a privatization process, then it is a wrong step.