Anatomy of Act of Economic Freedom

On October 6 the President aired a new initiative called the Act of Economic Freedom. This requires certain crucial boundaries of economic management being enshrined in the Constitution. This step would be very controversial as many economic analysts already suggest. It has some positive but many negative aspects.

Economist Akaki Tsomaia gives his opinion in an interview with the 24 hours newspaper. If State expenditure is not allowed by the Constitution to exceed 30% of GDP, as the President suggested, economic freedom is protected and good conditions for conducting business are created, which is why this figure was proposed by the President. Limiting the budget deficit to not more than 3% of GDP comes from the Maastricht Treaty signed when the European Union expanded in 1991. The new applicant countries were given certain conditions, a less than 3% budget deficit being one of them.

The idea that the national debt should not exceed 60% of GDP is also a classic and generally acknowledged one. Today Georgia’s Government debt is just less than 30% of its GDP, so in fact theoretically this could now be doubled. Analysts say this would be a dangerous move, but the Government thinks otherwise. Putting 60% in the Constitution might therefore yield some dramatic consequences, but Georgia is still experimenting, unfortunately.