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Survey that Sacrificed Prime Minister Kvirikashvili

UNICEF: Household Incomes Rose, Expenditures Declined, but Poverty Level Increased Anyway in 2015-2017

Increased poverty level, confirmed by the UNICEF survey, is named behind the resignation of Prime Minister Giorgi Kvirikashvili. UNICEF conducts Welfare Monitoring Study every second year. According to the research, poverty indicators in Georgia rose in 2015-2017.

It is interesting that official indicators also give analogical results. For example, according to Geostat, national statistics service of Georgia, the ratio of population under median consumption level rose to 22.3% from 20.2% in 2015-2017. Poverty level in Georgia is high and number of citizens in the list of social assistance also proves this. About 1 million persons of 3.7 million total residents ask for social allowances from the Authorities and about 0.5 million persons receive monthly assistance of 56 million GEL.

According to the UNICEF study, over the past 2 years real incomes of household economies significantly increased. In 2015 nominal monthly averaged incomes of household economies was 608.9 GEL, the figure rose to 771.9 GEL in 2017, up 26.8%. In 2017 nominal incomes of household economies in urban zones was 867.1 GEL and in rural areas – 672.7 GEL.

On average monthly household incomes  in urban zones are higher by 29%. At the same time, the survey results prove that in 2015-2017 real expenditures of household economies declined.

According to the survey, in Georgia, over the past 2 years, averaged nominal monthly expenditures of household economies (788.6 GEL) declined by 4.1%. Taking into account the inflation, averaged monthly consumption of household economies in 2015-2017 years decreased by 10.1%. As to distribution of expenditures, in 2015-2017 years, ratio of food products,  nonfood products of long consumption and education in total structure of real expenditures of household economies declined by 17.5%, 20.1% and 20.3%, respectively. At the same time, expenditures on healthcare, outdoor feeding and current nonfood products rose by 6.3%, 8.0% and 51.8% respectively. One more interesting fact from the survey – Inequality of revenues decreased in Georgia, while consumption inequality remains the same. In 2015-2017 inequality in incomes declined to 0.42 from 0.43.

According to the UNICEF survey, despite household incomes increased and expenditures declined over the past 2 years, the inequality remains on the same level. According tothe received indicators, poverty indicators have risen in Georgia.

4.3% of total number of household economies, 5.0% of our population, 6.8% of children and 3.7% of pensioners remain under the poverty level. (Extreme poverty level is appraised at 1.25 USD, which makes up 82.8 GEL a month for one equivalent person).

According to the assessment, ratio of persons in extreme poverty in villages makes up 4.0% and in urban areas – 4.5%. In 2015-2017 years number of household economies, population, children and pensioners under extreme power level has increased to 2.6%, 2.9%, 4.3% and 2.0% respectively.

The research has showed up that 22.5% of household economies remain under the comparative poverty level and there is huge difference between villages and urban settlements  (24.1%-20.9%). In Georgia general poverty level has increased. In 2015 this indicator was 16.4% in total number of household economies, while in 2017 the figure rose to 19.6%. Despite this fact, the situation has improved as compared to the 2013 situation.

In Georgia 19.6% of household economies live under general poverty level, as well as 21.7% of population, 27.6% of children and 17.6% of pensioners (general poverty level is assessed by 2.5 USD a day, which makes up 165.5 GEL a month for one body).

According to Welfare Study conducted in 2015, household economies had to spend more with less incomes (averaged expenditures 821.8 GEL, and averaged incomes – 608.9 GEL).

The survey authors supposed that excessive expenditures were covered thanks to savings, but we should take into account that Georgian citizens had insignificant savings  in that period (it is not high even today). According to the 2016 indicators of International Monetary Fund (IMF), Georgia ranked 80th worldwide in terms of savings in GDP (21.5% indicator). It is more trustworthy to think that the mentioned excessive spendings were financed through loans. In 2017 amid significant growth in incomes, household economies reduced expenditures (averaged expenditures made up 788.6 GEL, while averaged incomes totaled 771.9 GEL). The research shows that expenditures made by household economies on food, education and  products of long consumption declined along with the growing consumer prices.

We should ask Georgian Dream leaders whether Prime Minister Giorgi Kvirikashvili has genuinely resigned because of worsened poverty level indicators. Anyway, we should welcome the fact that Prime Minister has resigned only because of worsened economic indicators. Once and forever this practice should be established in Georgia, when economic team ministers or officials should bear responsibility for economic indicators in the country and quit positions if they fail to improve the situation.

By Merab Janiashvili
Economic Analyst
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