Assistance to Georgia parallel to Marshall Plan

On October 22, 2008 the historic decision was taken at the donor’s conference to allot USD 4.5 billion in assistance to Georgia to address the consequences of the August Russian invasion. Some experts draw a parallel between this aid and the Marshall Plan devised to assist ruined economies after World War 2, which utilised USD 2.5 billion for this purpose.

Of course USD 2.5 billion was a lot more 60 years ago than it is today but Georgia is also a very small country. The Marshall Plan helped the European economy to such an extent that in three years it achieved 30% growth. So let’s hope the parallel lies not only in the amount of money given but in the results it achieves.

The amount promised will be received by Georgia over several years, but USD 602 million has already been received and the country is expecting USD 330 million more in the near future. Much of the money received so far has been directed to social needs. Serious amounts are set aside for the development of infrastructure, which will eventually create jobs. Financial expert Levan Surguladze recommends that the aid should facilitate the production of goods rather than going directly into the pockets of consumers, who would spend it, creating price increases which would result in inflation.

The assistance offered to Georgia is very solid but the most important thing is how efficiently and transparently it is spent. The experts express their deep concern over this issue. Former Economy Minister and MP Lado Papava thinks that the amount promised could rescue Georgia from economic crisis but the expenditure should be well targeted. Economic analyst Gia Khukhashvili thinks that if the country does not implement systemic changes, instead of decorating facades, we will not be able to overcome the crisis either in 2009 or 2050.