New economic plan lacks proficiency
28 November, 2013
New economic plan lacks proficiency
The content of the economic plan of the new government of Georgia contains impressive ideas but lacks proficiency and details about mechanisms expected to achieve targeted goals. After approving Irakli Gharibashvili, a former Interior Minister, as the new Prime Minister, parliament approved a new cabinet of ministers this past week. But in fact there were no new faces in the team, except the new Interior Minister who replaced Gharibashvili in the post. Thus
the same Cabinet has been working since the last fall. Nevertheless, once their office terms were reconfirmed on 20 November, the new cabinet released a new policy paper that suggests their political, economic and social policy.
To establish free market principles in Georgia, the government promises to shape effective legislative and executive tools that will guarantee fair market competition. To encourage entrepreneurship and establish an investor-friendly environment in the country, the plan promises to remove artificial barriers and blueprint the best legislative practices anywhere.
Moreover, to increase effectiveness of business, the new government intends to develop independent arbitrage as an alternative mechanism to courts in settling business disputes. To create a stable and transparent business environment, they promise to insure high involvement of business in decision-making processes.
To avoid creation of additional burdens to business, the Regulatory Impact Analysis system will be adopted. There are also plans to develop internationally acknowledged trade protection tools in Georgia to establish a competitive market in the country and encourage local business.
The new government is intent on developing a Public Private Partnership mechanism that will establish partnership between the state and private business through joint ventures. It also promises to boost small and medium enterprises, and make financial resources more available to this sector. To this end, development of a capital market, including the Georgian Stock Exchange, is built into the plan. Boosting public savings and pension fund development is also part of the program.
Economic analysts say the content of the plan is impeccable, but it lacks details.
“We have seen a lot of similar plans developed by previous authorities but we also witnessed distorted implementation of the ideas,” Ditrikh Muller, a co-founder of Georgian Investment Group+, said in an interview with Georgian Journal. “Investors need details and timelines for orientation, apart from the good will described in the new governmental program.”
The reality of which Muller reminds us is that the competition law, as well as the package of bills reforming the dying Stock Exchange of Georgia, have been suspended for a year already by Parliament. Besides, a growing pile of cases requiring restoration of infringed rights of seized property still remains unresolved at the Prosecutors’ Office.
“These are vitally important issues to Georgian economy,” Muller elaborated. “Property rights are crucial to investors.”
Irakli Lekvinadze, an economic analyst, believes the government will present a more detailed action plan in the upcoming Strategy of Economic Development of Georgia. This paper is expected to be approved by the end of this year. He agrees that blunders were made this year but he expects things will work better now that dual power has ended.
“There were a number of legislative initiatives this year that disappointed investors, such as the moratorium on agriculture land sales, the expected moratorium on execution past-due mortgages, the pending competition law, pending property rights disputes, etc. However, I believe the diarchy has made a decisively negative impact on economic policy this year, and once the new president is elected and cohabitation is put to an end, I expect new government to become more active,” Lekvinadze said.
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