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Why is the Rate of Economic Growth Falling?

An interview with the Head of Finance and Budget Committee of Parliament David Onoprishvili

Statistics for the   last few months shows that either recession or a serious slowdown  is observed in key areas of the economy. What is a reason?

I would not agree with such apocalyptic assessment of the country’s economy. Of course, there is some downward trend due to last year’s  significant growth in some sectors of the economy – respectively, the starting point is quite high.

At the same time,  the fact is that during 9 months the economy has been  growing  by 6% per year, which is more than the forecast of 5%.

The Prime Minister said that exports were growing at a record pace in recent months, and by GDP growth rate Georgia is ranked  the 2nd among the countries in the region. But it turned out not to be true.

Several countries are ahead of us really. For example, Azerbaijan. With regard to GDP growth, we perform our forecast. In addition, we have a low inflation rate – about 3% per year, despite the fact that the forecast was 6%. We can say that the current situation is much better than last year.

You say  that in terms of macroeconomic indicators, this year is better than the past. What are your expectations for the development of the current budget, especially when the budget for 2014 has not been fully spent?

This will not happen if we do not consider the possibility of a serious external cataclysm. Now there is no such danger.

We analyzed the budget for 2014 for the last two months. Tax revenues exceed the target figure. Pace of spending is  low and we accept this criticism, and although the rate increased, this problem is still relevant. Costs are uneven, and it was evident by the results of the first half. It’s desirable and necessary to avoid this imbalance next year.

The fact is  that funds are allocated  but  the projects are not carried out. Of course, this is aproblem of management. But the funds are not always used effectively even in projects that are being implemented. And there is no response, precisely, the response only at the political level. Are you going to put in Parliament the question of the need for more strict control of expenditure and their efficiency?

Any tender may raise questions. But this does not mean that we must put everyone immediately in jail. This is the wrong approach, as officials cannot make quick decisions after such precedents, because they are afraid. This in turn complicates the tenders.

In general, the mechanism of the tendering clearly needs to be improved, as there are obvious problems.

There is another issue that needs to be regulated, but has not been settled so far at the level of the law – it is a salary increment to officials – about 1 000 high-level government officialsreceive large salaries and not smaller bonuses. Is anyone going to be interested in this question?

Several initiatives were offered on this matter. The fact is that the problem still cannot find a legal solution.