Minister of Finance Reports on 2010 Economic Achievements

Georgian Minister of Finance (MOF) Kakha Baindurashvili presented his annual report for 2010 at a special briefing on December 26th. Summarizing ongoing economic events, Baindurashvili named the adoption of a new Tax Code and the introduction of the New Course program, which was created in order to simplify the tax administration, as the No. 1 priorities for the upcoming year. “Despite the 4% of downfall in 2009, this year had been more oriented on promoting economic development by all possible methods. As a matter of a fact we have reached a growth rate of 6% instead of the supposed 2% increase,” Baindurashvili said stressing that according to international analysts Georgia has been named as one of the most successful countries of the year with regards to overcoming the negative impact of the world economical crisis.

As the Minister explained to the media, the 6% increase was achieved through effective mechanisms ensured by the Government of Georgia. This all was done with great support given through international donations which assisted in carrying out all the economic activities that had been deterred by the lack of investments in Georgia. “We have given a successful investing opportunity through international financial assistance which specifically deals with infrastructural issues. We have succeeded in keeping the activities of the construction sector without causing problems for the banking system, moreover we have invested in tourism and ensured fiscal stabilization,” Baindurashvili said summarizing the achievements of Georgia at an internal level.

As for the international success it was in 2010 when Georgia regained the BB level it had lost after the Georgian-Russian war and the world economical crisis. Georgia has also been announced as the No1 reforming country in Doing Business 2011. Transparency International has also named our country as being less corrupted this year. “Another mission the MOF has to deal with managing State debts. Despite the fact that we had to ensure contracts with high inflows for working out the economy we still managed to keep a stable amount of debt,” the Minister said explaining that the state debt of 46% of the GDP will remain in 2011 but will gradually decrease to 44-41%.

Emphasizing the importance of long-term debts for the private sector development Baindurashvili stressed that Georgia has the potential to repay its foreign debt even before the deadline in 2013 from the1 billion balance of the state budget. The Government has managed to finance all the obligations taken in within the current year, including the first precedent of investing in hospital rehabilitation processes. It was also in 2010 when the most “ambitious” projects started to be carried out in the educational system along with the infrastructural campaigns like motorways, tourist zones, which have been the basis for the rapid economical development of Georgia. Activities carried out by the legislative body especially in preparing the new tax code, integration of duty free code, new regulations, services or infrastructural projects have also been named among the achievements of 2010.

Summarizing the economical achievements for 2010 analyst Gia Khukhashvili spoke of the systemic problems within the MOF to The Messenger. “The MOF has no real basis for pride and when the Minister talks about success this would only mean that the worse results might have been received. We have seen lots of “loyal” declarations about the financial situation in our country and it’s really nice that the downfall has been decreased but problems like taxation system remain unsolved,” Khukhashvili told us stressing that this situation won’t be changed without the political will of the Government.