Economy
Posted: 2 months ago

The World Bank and Georgia

Cooperation between the World Bank (WB) and Georgia, and the World Bank’s new project worth 102 million USD – Sebastian Molineus, the WB’s regional Director of the South Caucasus, has discussed these issues for Business Partner TV, and noted that this project aims to develop human capital and the education system in Georgia. The current year will test economic steadiness, and Georgia is expected to withstand this dramatic year. 

The Coronavirus has generated serious risks to the global economy, and Georgia cannot be an exception. The year 2020 will test Georgia’s crisis management capabilities, Sebastian Molineus pointed out, and added that two fields will be affected the most: healthcare and economy. 

As for March 5, the number of infected people has exceeded 95,000 in 60 countries and the death toll has surpassed 3,500. Naturally, this factor will essentially affect Georgia, which is a very small and open economy. This will be a real test for Georgia to show how ready the country is to overcome a period of crisis.

“As for the economy, I see black clouds gathering over Georgia. The World Bank, the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) have lowered the global economic growth forecasts. Naturally, this trend will affect the Georgian economy, too. Tourism is one of the sectors that will shrink, and face certain problems. Imports-exports and trade will also suffer negative outcomes. These tendencies may affect consumers, and they may refrain from buying certain products. We believe that the Government will take all necessary steps to overcome the economic crisis”, Sebastian Molineus said. 

The WB’s Regional Director for the South Caucasus has also discussed the education sector’s challenges. According to the OECD study, 12-grade pupils at secondary schools are rated at only an 8th-grade level of education. The quality of education is the most important thing, and we should improve these aspects. Georgia is an exemplary country in this regard, because it plans to grow investments in this field. However, there are serious shortcomings in the Georgian education system, and they should definitely be improved, he said. 

As noted by Sebastian Molineus, many countries confirm that education is an important field, but only few of them make real investments, while the Georgian government plans to expand funding of the education sector by up to 6% of GDP. 

“I would like to talk about challenges, first, and then to offer mechanisms for resolution, or how to overcome them. Based on 2017 PISA studies, the Program for International Students Assessment (PISA) fulfilled by OECD, Georgia ranks 71st among 79 countries, while Georgia ranks 61st among 157 countries in terms of human capital. According to this study, the productivity of children born in 2018 will reach only 61% of their potential. 

Let’s imagine the scale of the potential of what needs to be rebuilt. In Georgia, children go to secondary schools for 12 years, but the study has shown that 12-grade pupils reach only the level of 8th graders. Quality is the most important thing. We should ensure corresponding education quality. Another important thing is the qualification of teachers. A teacher is a key figure, even if we have the best education system. 

According to my information, at this stage, universities are developing a special course for pre-school education and primary education teachers. Energy efficiency also matters, because frequently, classrooms are cold. In the winter, it is too cold, and in summer it is too hot in classrooms. Heating and infrastructure issues should also be resolved. Children should have corresponding conditions”, Sebastian Molineus said.

Georgia is a reforming country, and the time has come to become a country of advanced achievements, Sebastian Molineus pointed out. 

“These reforms have already brought real results, because the country ranks 7th in terms of Ease of Doing Business. This is not an easily achievable goal. This means that the country has carried out consecutive reforms. As for the management’s indicators, Georgia is reported among the top 20 countries with similar revenues in terms of the first six indicators. Naturally, these figures will be reflected in economic growth. 

Maybe you are discontent with 5% growth, but I would name many other countries with similar revenues that dream of such a pace of growth”, Molineus pointed out. 

As for global problems – coronavirus, it will generate serious problems for the global economy, and Georgia cannot be an exception. Georgia may also receive a certain portion of finances from the 12 billion USD assistance package that the World Bank has been allocated for developing countries for overcoming coronavirus related problems, Sebastian Molineus noted. 

“We have talked about coronavirus, and this is a real challenge for the economy. It will negatively affect Georgia, if not directly, indirectly, because it hits the tourism industry and other fields of the economy. The WB has allocated 12 billion USD to assist other countries in overcoming economic problems. 

Naturally, we will cooperate with Georgia, too. I do not know whether Georgia needs these funds at this stage, but we always stay ready to assist you”, Sebastian Molineus said.