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Possible economic results

By Messenger Staff
Wednesday, April 8
The economic situation in the country at present is far from desirable. The opposition is accusing the authorities of conducting the privatization process unwisely, selling strategic assets, promoting monopolies, encouraging elite corruption and many other sins. The state officials on their side blame everything on the world financial crisis and the Russian aggression of last August, though the opposition maintains that the war broke out because of state policy failures.

So arguments rage but the real threat could turn out to be the forthcoming protest rallies. These could paralyze the whole country and damage its economy fatally.

Recently the IMF expressed its concern that the downturn in Georgia will be more severe than was expected. With most of the population living in poverty anyway, any downturn would have a proportionally greater impact than a recession in a rich country which will always have the economic means to survive in the short term. Of course this is no time for domestic confrontation. Both sides should use common sense and behave in a responsible manner, with possible economic threats being realistically assessed. However, with both sides blaming the other for economic problems present and future, economic arguments are being lost in the mass of accusation and counter accusation, and neither side is addressing the economic aspect sufficiently.

Some experts predict that the authorities are preparing a number of economic surprises designed to discredit the opposition and direct public anger towards it. Analyst Soso Tsiskarishvili expresses his fear that the National Bank could force the GEL down to a new low so the Government can blame the opposition for it. There are also other issues creating a basis for mutual allegations. Budgetary revenues for the first three months are far below what was projected, so a budget cut can be expected. The administration has taken on extra liabilities such as providing cheap credit, the five lari insurance programme, assistance to IDPs, the ‘hundred new hospitals’ pledge and others. All these spending programmes with no financial return will not enhance economic development, and if the April events further deteriorate the situation in the country there will be even more scope for argument but correspondingly les scope for saving the situation.

The opposition is making populist suggestions. One of these is that the state should pay back the bank loans people can no longer pay back themselves. This idea is supported by those damaged by the war or economic crisis but it also helps dishonest people who never intended to pay back their loans. Coca-Cola Bottlers President Temur Chkonia proposes a financial amnesty which will eventually damage the whole business environment. Meanwhile the opposition says that every single day the administration remains will damage the country.

The political confrontation will certainly create extra problems for the country in one way or another, or maybe several ways. If common sense does not prevail and both sides do not start acting more responsibly, the country very survival may be at stake. It will be galling for both sides to discover, if it comes to that, that after all their efforts to beat each other up they no longer have a country left to fight over.