Economy
Posted: 2 months ago

Government Reshuffle and Economic Initiatives

Levan Kalandadze, Deputy Business Ombudsman, Mikheil Chkuaseli, Gurieli company director general, Giorgi Abashishvili, Iliauni business school director and GEPRA consulting company founder Soso Galumashvili have talked about government reshuffle and economic initiatives at the Business Partner TV program.

Ex Prime Minister of Georgia Mamuka Bakhtadze failed to provide valuable communication with small business sector, Soso Galumashvili noted.

“Communication with business sector was an evident weak point for Bakhtadze. Fundamental factors affecting GEL exchange rate is one side and management of the exchange rate is another issue and this is the competency of Prime Minister and his cabinet. Certain meetings were held and certain communication was held with major business, but this was not sufficient, because similar expectations are not shaped only in major business. The problem with expectations come from micro, small and medium businesses. Bakhtadze had no problems with communication with major business, but people felt abandoned in lower segments”, Galumashvili said.

It is important to determine what kind of a Prime Minister we want to see. The new Prime Minister should follow specific strategies and views. Moreover, there are certain issues for which specific strategies should be developed in the shortest period to determine where the countries aspires, Soso Galumashvili noted.

“For the first time over the past 25, this July Georgia bought electricity. Our power system structure cannot ensure all technical needs. Therefore, first of all, we should develop strategy for hydro power plants”, Galumashvili noted.

Gurieli company director general Mikheil Chkuaseli has also appraised the performance of Prime Minster Mamuka Bakhtadze. About a year ago Bakhtadze was appointed as Prime Minister and he determined 5 principles and 36 strategic directions, including the concept of a small government and reduction of bureaucracy.

Chkuaseli asserts that  the Government has taken steps for implementing the small government concept and the number of Ministries decreased, but bureaucracy has not become more efficient, Chkuaseli said.

“His strategic vision was absolutely right. He took certain decisions for optimization of Ministries, but fundamental reforms were not carried out for achieving efficient state governance and bureaucracy”, Chkuaseli noted.

 

Mamuka Bakhtadze has provided serious job in terms of technologies and innovations, but failed to develop the so-called e-government mechanism, he added.

“He announced technologies and innovations as very important directions and he took serious decisions in this respect. He had a lot of meetings with the US leading research centers and universities. We will reap results of these meetings in the future, because a lot of projects will be implemented. However, we have not made progress  in terms of introduction of new technologies in state management.

The s-called e-government was not developed, the government structure was not integrated into the so-called blockchain system that would enable to lower bureaucracy and take quick decisions. This concept will cut expenditures and the management will become more optimal. Regretfully these plans have not been implemented yet”, Mikheil Chkuaseli said.

It is also important to determine whether inflation is calculated in right way, he added.

“After we determined the inflation rate by 3%, have we analyzed why have chosen this very rate? Maybe, we should have 6% or 7% and this decision would give absolutely different impulse to the economy. We should explore this issue”, Chkuaseli noted.

Deputy Business Ombudsman Levan Kalandadze explains that Mamuka Bakhtadze’s resignation statement comprises self-criticism referring to the fact that undefeated occupation and poverty could not be considered as the success of a prime minister. “I like this statement and self-criticism very much, because, GEL exchange rate remains number one challenge”, Kalandadze noted.

The Business Ombudsman’s office actively discusses the GEL exchange rate problems too, despite the currency exchange rate is not the competency of our office, Kalandadze noted.

During communication with business, GEL remains number one challenge for business, whilst a lack of rapid decision-making practice as another major challenge, he added.

„We realize that Georgia is a small and open economy and a small  economy with open policy comprises a lot of risks and this factor requires due management.

We do not have time to delay this or that project too long. We need quick decisions. Let’s see how the Government and the government’s economic team will be structured. The fact is that decision-making efficiency is necessary in combination with GEL-related issues.

When talking about small-size government, this means a little bureaucracy with quick decisions. We remember a lot of power projects and we do not talk about them and these projects have not been implemented yet”, Kalandadze said.

We should know where we area heading, whether we build a state, where all citizens are oriented on social allowances or the country relying on strong business and rich people, Kalandadze added.

Economic risks should be managed better and state security does not mean only prevention of military aggression, the Deputy Business Ombudsman noted.

We should preventively foresee such risks that arose after Russian embargo in July 2019, when currency inflows were corrected. The Deputy Business Ombudsman believes that a certain plan should exist for specific cases and risk management will be less painful in this case, Kalandadze pointed out.

“Consequently, economic policy should become one of the important components of the state economy security”, Kalandadze noted.

Iliauni business school director Giorgi Abashishvili has also appraised Mamuka Bakhtadze’s performance. Mamuka Bakhtadze has always prioritized collaboration and efficiency of state structures and institutions and I thank him for these efforts, Abashishvili said.

As to New Prime Minister, Abashishvili suggests him to make emphasis on economic and security issues.

“Prime Minister Bakhtadze has always prioritized collaboration and efficiency of state institutions and I appreciate these efforts. I would like to see the new prime minister who takes decision quicker and who prioritizes both economic development and security issues. As a result, each citizens of Georgia will have better economic conditions, in terms of inclusive aspects and on the other hand, they will have maximum security in terms of domestic and external threats”, Giorgi Abashishvili noted.

As to GEL exchange rate, fundamental factors should be better analyzed, he added.

“What will we receive if the National Bank employs currency reserves? Ok, it spends all reserve and what then? Somebody should explore where the reserve money has gone. My key question is  - why has the NBG spent this money, did they have any calculation, analysis? We can spend reserves, but first of all we should analyze fundamental factors.

When we bought electricity in July, this meant foreign currency was taken away from the country. We should analyze development in this direction”, Abashishvili said.