Refusal of EU assistance creates a threat of economic recession in Georgia

An economic recovery has been outlined in Georgia in connection with the resumption of the operation of enterprises after stagnation during the pandemic. However, according to the experts interviewed by the “Caucasian Knot”, the refusal of the authorities to cooperate with the European Union (EU) creates prerequisites for a decrease in investment and an economic downturn.

The "Caucasian Knot" has reported that on August 31, Irakli Garibashvili, the Georgian Prime Minister, stated that country's authorities decided to refrain from receiving 75 million euros from the EU, explaining that Georgia has begun to reduce its foreign debt, and, therefore, there is no need to borrow more money. The Georgian authorities' refusal to get EU's financial support, which was offered in exchange for reforms, including in the judicial system, threatens to cause imbalance in relations with the West, Georgian analysts believe.

The economy of Georgia stagnated during the pandemic, and the growth began with the resumption of the operation of enterprises, Doctor of Economics Mikhail Tokmazishvili says.

“However, this is a short-term phenomenon, and we should not make any strategic conclusions, since in April, the economic growth exceeded 20%, but now it is constantly declining,” Mikhail Tokmazishvili notes.

Meanwhile, the inflow of investments in the country is decreasing, which depends on the behaviour of the Georgian authorities: in this case, on their refusal to fulfil international obligations. In addition, the reduction in the loans coming from the EU affects the international business, and this is a signal to international investors not to expand their activities in Georgia, Mikhail Tokmazishvili explains.

Paata Sheshelidze, the president of the New Economic School, notes that the Georgian authorities are interested not in all foreign investors, but only in those who will meet their requirements, including “the deduction of funds and employment of affiliated persons of a certain political group.”

According to Paata Sheshelidze, when the country is artificially hindering the attraction of investments, it is “pointless to talk about its economic potential.”

This article was originally published on the Russian page of 24/7 Internet agency ‘Caucasian Knot’ on September 2, 2021 at 12:13 pm MSK. To access the full text of the article, click here.