Georgia’s crumbling economy, which sparked the unrest that forced President Eduard Shevardnadze to resign, now lands in the lap of its new leaders and could decide whether they manage to stay in power.
Corruption will be a major issue facing the new team — many Georgians blame the government for letting corruption and the illegal economy flourish to such an extent that it now finds itself unable to raise the taxes needed to help relieve poverty.
”Today we have reached a stage where corruption is so great, it has become such a parasite, that it is draining the blood out of its host,” said Fady Asly, who heads the American Chamber of Commerce in Georgia.
Asly was cautiously optimistic on the ability of Georgia’s new leadership to tackle graft.
”The will is there,” he said. ”The main theme of their campaign has been corruption, but between literature and practical life there is a world of difference.
”The way they start is very important because they will send out a message. If they start by closing their eyes to corruption then it will send out the wrong message,” he said.
”We have already started talking with the [new government] on this issue,” Asly said, noting ”they were all very receptive”.
The economy of Georgia — a fertile land rich in natural resources that used to be the fruit bowl of the Soviet Union — today has two faces.
On the one hand, the currency is stable inflation is low, gross domestic product (GDP) in the year to September grew by 8,3% and the country sports dozens of billionaire businessmen.
Factories that have stood empty since independence in 1991 are being revived, huge sums are being earned from the transit of goods across Georgia, swanky apartment buildings are going up all over the capital, and drivers are trading in their beaten-up Soviet saloons for Western cars, mostly imported from Germany.
But there is another side to the Georgian economy. About 54% of Georgia’s population is living below the poverty line, according to World Bank figures.
The problem has lay in the government’s inability to tax the country’s economic activity: revenue collection as a percentage of GDP is the lowest in any former Soviet republic, experts say.
The huge illegal economy pays no tax and smuggling across Georgia’s borders accounts for more of the revenue shortfall.
Budget revenues are way below what they should be, the government is now almost broke and has this year missed some repayments on its $1,75-billion foreign debt.
As a result, state benefits are tiny and often go unpaid, state employees’ wages are also paltry and late, while gas and electricity bills are crippling consumers because the state can no longer afford to subsidise them.
Things have gotten so bad that in some government-owned buildings, anyone wanting to use the elevators has to drop a coin in a slot because there are no funds to operate them.
Nino Burjanadze, a former speaker of Parliament who will act as Georgia’s president pending new elections, had not replaced any of Shevardnadze’s ministers.
There are rumours in Georgia that Vladimer Papava, a former economics minister, may get his job back.
”He is a very competent person. He is open-minded, he is pragmatic. I would not rule out that he could become economics minister again.
”But if the current minister stays on, he is a good man and hopefully he would be able to work with fewer hurdles in his path,” he said. — Sapa-AFP