Will budget-financed projects be a substitute for foreign investments?

The August Russian invasion and world economic crisis have considerably reduced the investment inflow into Georgia. Some time ago President Saakashvili promised at a Government session that budget-financed projects would act as a substitute for foreign investments. Some economic experts however think that although budget-financed projects might be equally important they shouldn’t be confused with foreign investments.

Economic expert Davit Narmania thinks that the economy is much better and healthier when the share of investments increases. Therefore we should not mislead the population, and should explain to it that money spent by the state is state expenditure, while money coming from abroad is investment, which makes the country’s economy healthier, increases employment and improves the economy, Narmania says.

However Narmania does admit that when there are no investments state financing is the best alternative.