10 most negative economic consequences of  the Georgian Dream’s rule

10 most negative economic consequences of the Georgian Dream’s rule

access_time2020-02-17 16:07:24

On October 1, 2012 the Georgian Dream coalition won in the parliamentary elections in Georgia which received a majority sufficient to staff the government and carry out  complete control over the country.

The coalition promised the de-politicization of state structures, the release of the private sector from state pressure, more democracy, transparency and more economic growth. 

The most recent was a promise to hold parliamentary elections in 2020 with a fully proportional voting system that would guarantee more equitable distribution of forces in parliament.

However, all these promises remained promises, moreover, the situation has not improved but even  worsened  compared with 2012.

10 major failures of the “Georgian Dream” coalition:

1. The increase in  poverty

According to the UN Children's Fund, 69% of the population is poor, 24% are close to the poverty line, and only 7% can be classified as middle class. It’s worth mentioning  that the head of the “Georgian Dream” Bidzina Ivanishvili dismissed Prime Minister Giorgi Kvirikashvili because of these data.

However, the dismissal  of head of government has not changed anything - poverty in Georgia continues to grow.

 2. A sharp depreciation of the national currency.

In 2012, the lari stood at GEL 1,65 per dollar, since 2014 a permanent devaluation has begun, as a result of which the rate reached 2, 85 as of today.

3. The external debt growth

According to the Ministry of Finance, in 2012-2019 the country's external debt grew by $ 4.8 billion and keeps growing - in 2020 the government is set to borrow another GEL 2.8 billion and the public debt will reach GEL 22,7 billion that is 46, 8% of GDP.

 4. A decline  in foreign investment

As  for the 3rd quarter of 2019, foreign direct investment amounted to $ 908 million against $ 1.04 billion in the same period of 2012.

5. The rise in inflation

 In 2012, Georgia’s inflation amounted to 1, 40%, after the change of power in 2013 it reached 2, 40%, in 2017 - 6, 7%, in 2019 - already 7%.

 5. The health system  collapse

At the end of 2019, the Ministry of Health decided to introduce uniform treatment tariffs within the state insurance program. Representatives of the clinics protested against this decision  for two reasons - in their opinion, the tariffs were low, secondly, different clinics treat the same diseases using different methods and  the cost cannot be the same.

The reform sharply decreased the clinics revenue, led to dismissals and lower salaries and the refusal to carry out the  planned operations.

7. Tight lending regulations

The lending restrictions imposed by the National Bank on obtaining loans entered into force starting January 1, 2019 , as a result,  mortgage lending decreased by 40%, and the construction sector - by 4, 6%.

 8. The rise in fuel price

 In 2012, the average petrol  price was GEL 2, 26, in 2019 - GEL 2,77.

Over the past 5 years, international oil prices have decreased by 48% compared to 2012, however, prices in Georgia are rising mainly due to the lari devaluation and the increase in excise taxes by more than 2-fold in 2017.

9. Deterioration in universal education

According to the PISA 2018 survey, among 79 countries included  in the list, Georgia holds positions next to Panama, Indonesia, Morocco, Libya, Kosovo, the Philippines and the Dominican Republic.

10. Migration growth

In 2018, 98 935 people left Georgia that is 15, 8% more than in 2017. Of these, 86% are of working age - from 15 to 64 years.


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