On November 28 Georgia will hold rerun presidential elections. What do election programs say about economic problems and what promises do they offer?
Independent presidential candidate Salome Zurabishvili, backed by the ruling Georgian Dream party, says:
“The president is to protect business, care for its freedom, because economy depends on business. I will be a female President that will care for vulnerable and unprotected strata that need more attention and more resources. This will be my European Georgia of Tomorrow, my Georgian Georgia.
Grigol Vashadze, presidential candidate from the United We Stand opposition alliance: “The state budget analysis shows how much money is spent without unposeless. No country spends state budget funds on Football League. It is evident that we have catastrophic size of bureaucracy in Georgia.
As to pensions and salaries, pensions should increase, initially, and then, salaries, step by step, by reducing state expenditures, narrowing bureaucracy and relieving the state budget from all excessive spending. More than 400 million GEL was spent on tillage and sowing and today peasants have no fuel money for tillage and no other resources; Vouchers system in kindergartens; – raising minimum salaries of schools teachers to 1000 GEL; – based on the market research and the customers’ interests, introduction of vocational programs, development of priority educational programs and their popularization.
We will lower income tax to 15%, reduce excise rates on oil products, decrease excise rate on strong drinks to medium European indicator; only companies with more than 200 000 GEL annual turnover will pay VAT; to achieve high economic growth, we will ensure macroeconomic stability, balance the state budget and stabilize GEL.
Attractive investment environment will draw more foreign currency and new technologies to the country, increase exports, develop tourism and other fields of services. We will foster real independence of the National Bank of Georgia (NBG) and strengthen financial stability”, Vashadze said.
The Caucasus Business Week (CBW) has inquired whether presidential candidates have applied valuable economic calculations.
Rati Abuladze, doctor of economics, says that election programs of presidential candidates reflect economic problem resolution mechanisms proportionally to presidential powers.
The president of Georgia is a head of the state and guarantee of unity and national independence of Georgia. The president’s power is limited in foreign and internal policy, but he/she is elected by nation-wide voting and therefore:
- Charismatic and political viability can ensure an efficient implementation of state powers (state development depends on efficient implementation of powers of state offices);
- The president is able to strengthen positon of the country in globcal politics (because he/she executes representative powers and holds negotiations in foreign relations, with various countries and international organizations);
- Based on Georgian reality, the president is able to shape a new political team and a new political structure that may launch a new economic wave;
Rati Abuladze explains that the presidential elections have essential importance for economy. The society knows how the economy works, how incomes are distributed, how social environment is shaped, how economic innovations are achieved.
Facts prove that the more economy develops, the more citizens trust political parties and persons put forward by them directly or indirectly.
Based on evaluation of priorities of candidates participating in the rerun presidential elections, we can outline the following circumstances:
- Salome Zurabishvili’s program make focus on tourism, culture, healthcare, sports, medicines, territorial integrity and independence of the country, public solidarity, strengthening regions, establishment of European standards and integration into EU, role of youth and diaspora. At the same time, she does not make accents on such important directions as: education and science, digital and investment policy. In whole, her program seems imperfect and invaluable and does not enable to make broader analysis. This program shows that the presidential candidate dos not have intellectuals in her team, such as economic experts and academicians;
- Grigol Vashadze’s pprogramme makes foucs on education, science, healthcare, reduction of taxes, growing employment, social safety, balancing drugs policy; security policy, growing economy, defending territorial integrity, ensuring environment protection and defence policy.
Promises for reduction of taxes, excise rates, VAT are populist rhetoric, because it is easy to decrease them, but it is difficult to find new sources for replenishing the state budget. Promises about growing salaries and pensions, doubling GDP per capita are unreal and populist, because the President does not have such authority. If his political team is able to reduce taxes, excise rates and VAT, on the one hand, and grow pensions and salaries, on the other hand, they could submit a due program to the parliament and bring benefits to our society in this way. In whole, this program seems more diverse and multilateral, but with more populist tendencies”, Rati Abuladze said.
In both cases, priorities of the presidential candidates does not match their political capabilities. Consequently, their election activities and public evaluations demonstrate the level of their presidential charisma, political technologies and programs. That’s why, the rerun elections will be held in the country.
President is part of state policy. Therefore, I stress that titles only waste political time, whilst it is impossible to cope with political and economic challenges, foreign debts and unanswered questions, and the condition of our citizens worsens day to day. There is not public group and team in our country that would revive the country. We do not have political situation, where new political and economic wave would be shaped independently. Regretfully, the ongoing presidential elections seem hopeless in this respect.
The solution should be found by honourable politicians and citizens:
- Who disagree with the policy that frustrates a development of economic and social environment and want to shape a new political environment;
- Who are taking efforts to stimulate new political forces (not revival of bankrupt policy);
- Who aspire to leave trace in our society and shape valuable political milieu;
- Who consider themselves obliged before the family, country and nation to change Georgian political environment and immortalize their names, Rati Abuladze explains.
“ At this stage it is impossible to raise pensions to 400 GEL. Similar decision will ruin the budget and depreciate the national currency”, Vakhtang Charaia, head of the TSU Centre for Analysis and Prognosis said.
Promises made by Grigol Vashadze, presidential candidate from the united opposition, about growth in pensions is not based on valuable calculations, he said.
“If the population wants to receive 400 GEL pension with 10 times less solvency compared to current 180 GEL, naturally, this is possible theoretically and we can print money and issue not only 400 GEL, but 1000 GEL, but this decision will worsen living standards of more than 3 million residents in Georgia. We will sink in the period of Coupons again, when a bread cost 2 million Coupon. Therefore, pre-election promises should be based on valuable calculations.
For example, total annual budget of Interior Ministry, Defence Ministry and Foreign Ministry is 1.6 billion GEL, while 2 billion GEL is required to raise pensions to 400 GEL. This signifies that even theoretical abolition of these Ministries will not suffice to increase pensions to 400 GEL. Total payments to all public workers in the state sector amounts to 1.8 billion GEL, including 60 000 teachers, 30 000 soldiers, several thousands of policemen. In one word, even if we fire all public employees, the saved funds will not suffice to raise pensions to 400 GEL”, Vakhtang Charaia noted.
Under the 2019 state budget bill, universal healthcare program will be financed by 754 million GEL. Abolition of even similar major program does not suffice to increase pensions to 400 GEL, while the negative effect of the universal healthcare program suspension will worsen the condition of our population, including pensioners.