Former MP critical

Former MP and Minister of Economic Development Lado Papava is critical of the current economic situation in Georgia. Though officials are cheerful about the state of the economy, highlighting the fact that the world economic crisis did not touch Georgia as much as many other countries, Papava suggests that the problems in the Georgian economy are not only connected with the global crisis. He thinks that they have deeper reasons and these should be considered if the country is attempting to find a solution.

Papava thinks that if in the West the crisis was caused by overproduction, in Georgia it was the inflow of hard currency which created the problem. Instead of using those resources for the development of industry entrepreneurs were buying land, real estate and sometimes even enterprises but not developing them.

Papava thinks that the Georgian banks also facilitated the crisis. They mostly gave out consumer loans rather than financing new enterprises and their development, thus encouraging imports. There were some mistakes made in the construction business as well, as most of the development companies operated on the so-called financial pyramid system, in which they started new projects without finishing the previous ones and financed the old projects with the money received from the new project. This is a wrong practice and doomed to fail, Papava says.

Papava does not like the new construction initiatives in Tbilisi either, which target the rehabilitation at the reconstruction of Tbilisi’s old districts. The former MP thinks that this is yet another attempt to create means of further manipulation through financial pyramids.

Papava’s conclusions are rather pessimistic. He says Georgia is becoming more separated from Europe and growing closer to Russia. He also highlights the dire situation of the Georgian population.