Advice on spending the aid

Georgia has received unprecedented support from the international community to help it recover from the Russian aggression. The huge financial assistance which is flowing in should however be spent wisely because it is both an advantage and a disadvantage.

The Georgian President’s advisor in economic issues, former Estonian Prime Minister Mart Laar, has warned the authorities about the challenges country might have to confront whilst utilizing the money. He has advised the Georgian leadership to elaborate a clear policy on how to receive and spend the donations. “Unwise expenditure of this sum could have catastrophic consequences for the country,” warns Laar. Certain countries have destroyed their economies while receiving great financial assistance so the Georgian Government should be very pragmatic and treat the money with caution.

The President’s advisor has highlighted that improper expenditure could create serious inflation. Laar warns that sometimes humanitarian assistance hinders local business development. Some countries, who claim to be sending assistance to an afflicted ally, are actually assisting their own industry by exporting surplus production as aid. The receiving country then creates a disadvantageous climate for its own businessmen, who cannot sell their own products and therefore have to close their businesses.

The adviser recommends creating a special council which would consist of opposition politicians, professional economists and business representatives. This should decide how best to utilize the assistance to facilitate Georgia’s progress. The Estonian specialist recommends that Georgia should first develop its infrastructure and communications systems, as these can positively influence a country’s development.