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World Bank Sees Georgia’s further Economic Growth in Export Promotion, Job Creation and Agricultural Development

Published: June 24, 2013 | 9:19 am
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World Bank’s Regional Director for the South Caucasus: “With the recent pick up and forecast of improved business take-up in the coming months, we expect that 4 percent is a reasonable forecast for the growth rate.”
The COMMERCIAL TIMES
World Bank published Global Economic Prospects- the flagship report forecasting economic growth indicators worldwide. According to the publication, Georgia’s economic growth indicator for 2013 is defined by 4%. The COMMERCIAL TIMES interviewed Mr.Henry Kerali, the World Bank’s Regional Director for the South Caucasus.
- Georgia’s economic growth indicator for 2013 is 4%, according to the Global Economic Prospects, published by the World Bank. What were the basic criteria for drawing this conclusion?
- The growth forecast given by the bank is consistent with that given by the IMF and other international financial institutions, which is really a slight downturn. At this moment we are forecasting 4 percent for 2013. This is largely based on the country’s VAT revenues for the last few months. Earlier, the prospects were, in fact, less optimistic, the growth appeared to be much lower than 4 percent, but with the recent pick up and the forecast of improved business take-up in the coming months, we expect that 4 percent is reasonable.
- Where would you say Georgia faces economic problems most? In which directions has Georgia’s new government made positive steps?
- I think Georgia really needs to strengthen its exports. The most important thing for a country like Georgia is to be able to ensure that its products can compete on the European markets, in Asia, and throughout the world. So, it is important for the government to ensure that the private sector in particular will have access to European markets, will have products that pass the standards required in Europe, and will have the facilities, transport facilities in particular, that will enable it to export its goods.
- What’s your opinion regarding the communication Georgia’s new government has established with international financial institutions and businesses?
- I think that the government needs to maintain a stable macroeconomic framework, particularly with the IMF. There’s an agreed macroeconomic framework that defines deficit levels, budget levels, and borrowing levels as well. So, as long as that fiscal framework is maintained, I believe that the communications with the IMF and the EBRD will be fine, but as far as the businesses are concerned, it goes beyond the economic and business environment, there also needs to be political stability.
- What are the major attractions about Georgia that would get investors interested in the local market?
- I think for Georgia in particular, there needs to be the certainty that business will have access to financial markets, there needs to be the certainty that inflation will remain low, and there also needs to be the certainty that exchange rates will remain stable. So far, Georgia has managed to do that. What is now required is for the government to give confidence to business is particular, that they will maintain this in the long run.
- Would you agree that investors are less interested in Georgia’s financial sector?
- I think that access to finance, in particular, is important. Large businesses do have access to finance. The issue is that small and medium size enterprises do not have as much access to finance. In other words, loan rates for small companies, medium sized companies and individuals tend to be rather high. It will be important for the government to continue to work on it and to reduce rates, so that people are able to invest locally in Georgia.
- What main issues would you recommend that the Georgian government should focus on?
- Well, Georgia has great potential, Georgia has great population that is well-educated, and its geographic location is also great, ensuring transit between Europe and Asia. However, one of the important things is to ensure that there are jobs. Employment in Georgia is relatively low, compared to Europe. I think it should be the government’s focus to increase the number of jobs that are available for people. Agriculture is an important sector for Georgia, it’s important to promote investments in agriculture and ensure that Georgia’s exports are competitive. And finally, I would say that it’s important to have an infrastructure that will support businesses, and in this case I’m talking about energy, transport, rural water supply, irrigation – these are the key elements of infrastructure that bind together economic development.

Sandro Vepkhvadze

 

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