Regressive, but optimal revolution in Georgian economy

Sophico Sichinava

Today, one should not be a shrewd politician to understand which political party will undertake the responsibility of ruling the country.

Preparations for elections do not make it possible for the National Movement to define its economic views in the form of programme. Yet, the principles and directions of the group are already obvious. Gia Maisashvili’s pre-election programme became his personal property. The party will have to begin work from nothing. At least, it will have to make great efforts in order to develop economic model for our country. As far as we can learn from presidential candidates’ public speeches, economic revolution is yet in the initial stage. Beso Jugeli, one of the National Movement leaders, says, the political party will have to take an unordinary, regressive, but pragmatic step. This certainly depends on many reasons: on the Cabinet, on the new Parliament and on the agreement of the second winning group – Burjanadze-democrats ? with nationalists’ revolutionary ideas. We should also take into account views of international financial institutions. Tax and customs codes are supposed to be changed. In accordance with simplified translated code, the volume of parameters should not exceed 25%. We should take into account long-term indicative plan, WTO parameters and countries with which we have export and import relations. The new customs code should be developed in accordance with the above-mentioned. The draft of property law remains to be in force. It will, probably, become a law (though, this yet depends on many external factors). Funds derived from it will become a main source of budget revenues along with international injections. Besides, there is a plan to abolish taxes on farms with less than 20 hec. land plot and to establish fixed tax that will promote the development of small enterprise. This makes it possible for the state to bring greater part of shade economy to light and to reduce it to admissible levels.
Beso Jugeli speaks to us on the subject:
– What are the main principles and directions for driving the country out of crisis?
– It is necessary to change economic system of the country. A state should have a long-term indicative plan. Unfortunately, there is no such plan in the country.
There are several directions in Georgia. They will be reflected in the indicative plan and defined as priorities. As far as we know, the country has a strong processing industry. Thanks to natural conditions, the country has resources and definite capacities. It is destructive for the country when this trend is strong without being reflected in either long-term or short-term indicative plan. When working on indicative plan, on tax and customs code, an economic group should take into account the parameters that finally form economic environment.
Creation of economic model is a colossal work to be done by several persons. The work can be written only by people who have extensive information and know what happens in the country. Thus, we say that an indicative plan is necessary as the development of the country can not be stopped while plans and projects are being prepared. Accession to WTO was a mistake. Neither Russia and China are members of WTO. It is not only a political step, but also an economic one, so we have to think it over.
– Do you think the tariffs will be revised?
– We can not make revision as the agreement is signed. We will reap results in 2005. The matter is that as economy of Georgia found itself in such an extreme situation, there are always exceptions in this sphere as well as in jurisprudence and intergovernmental relations. For this once the World community might give us the chance to make revision. I think the Georgian political establishment already has sufficient authority for this. Yet, it is only a wish. At any rate, there is such possibility theoretically. Let us now revert to theses. We are going to abolish land tax in the whole of Georgia. The basic point of liberalisation is that Georgian peasants cannot afford paying the tax. Land-owners will pay the tax if plot is more than 20 hectares. This will serve to throw down prices for peasants’ production. Our principle is that budget might have less revenue, instead production would make it possible for a farmer to stand on his foot.
– What gives you grounds for taking such risk?
– As the whole world supports us, we hope that promises will not be vain as it was during the previous government. The whole world will help us to recover our economy for a couple of years…
– No one knows what will change during this time. The civilised world had supported the previous government earlier. Can we reasonably hope for the support of the external world if our internal resources are not yet set in motion?
– Georgia will need help only for a year. This time will be enough for Georgian economy to recover. Minimum 8 billions and maximum 27 billions had been taken from the country. We have spoken much about it with Mikhail Saakashvili. No one knows the exact sum. Unregistered property law was submitted to the Parliament by Mikhail Saakashvili, yet the law was not passed. The New Parliament is supposed to pass the law so the partial, if not the full sum will return to the budget. This will be a great injection. This will help small business to recover.
– We spoke about small as well as large business before elections. Do you really intend to fulfil the promise and exempt small business of taxes?
– We do not intend to exempt small business of all taxes. Small business is supported differently in world countries, but we have not yet decided which model to choose.