ISSUE #668

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14.06.13 - 20.06.13

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As FDI slows down, the government remains optimistic

IMF on investment funds

Author: By Nino Edilashvili

Foreign Direct Investment accounted for $226 million in the first quarter of 2013, according to the preliminary figures of the state statistics office, GeoStat. In the same period last year, this figure stood at $269 million and in 2011 – at approximately $210 million.

In the first quarter of this year, the five leading investing countries were Japan (20 %), Azerbaijan (17), the Netherlands (15%), the UK (8%), and China (6%).

Most highly attracted sector for investors was the finance sector with $65 million, making 29% of the total investment in the first quarter of 2013. Energy with $42 million and mining with $13 million came in second and third respectively. Transports and communications and manufacturing also made the top five.

In 2012, FDI dropped by 22% and totaled $865 million, according to GeoStat’s preliminary figures issued in early March. In 2010 and in 2011 the foreign capital made $814 million and $1.1 billion respectively.

Annually, Georgia needs around $2 billion in FDI to cover its deficits. Since the Rose Revolution in 2003, the highest volume of foreign capital which the country has seen was in 2007, when foreign capital stood at $2.15 billion, approximately 20% of GDP.

According to the economic growth forecast issued by European Bank for Reconstruction and Development (EBRD) in early May, Georgia’s economic growth slowed down at the end of 2012, “likely due to lower investment and uncertainty related to the post-election political transition.”

EBRD’s experts cut their 2013 growth forecast for Georgia by two percentage points announcing that the country’s economy will grow by 3% this year instead of the 5% it forecasted earlier in January. This forecast is also lower than the Georgian government’s official forecast of 6% growth for 2013. Last year, Georgia’s economy grew by 6.2%.

For comparison, EBRD predicts that Azerbaijan’s GDP will increase 3.5%, up from 2.2% in the previous year and Armenia will also face a decline as its economy will grow by 5.0% versus 7.2% growth in 2012.

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The Afghan gambit

Author: By Zaza Jgharkava

“We will remain in Afghanistan and will fully accomplish all the obligations that the Georgian state assumed in previous years.” The statement of Defence Minister Irakli Alasania should have been enough to end the dispute, which has been going on in the Georgian political elite recently. At the center if the dispute is a quite old question as to ‘what do we seek in Afghanistan if NATO is not accepting us?’

The occasional reemergence of the Georgian military’s presence in Afghanistan, as a rule, is related to the deaths of Georgian soldiers there. Last week tragic news came from Afghanistan: 7 Georgian servicemen were killed in the Helmand Province. For the last month this is the second tragic event in a row (before that 3 dead soldiers were brought to Georgia).

Hence, the reaction did not linger and debate broke out with a new force. The Afghanistan issue once again drew dividing lines between those political forces which are considered as the main actors in the Georgian political arena nowadays.

One of the first to express her negative position was the former parliament speaker and presidential candidate, Nino Burjanadze. Although she did not demand the withdrawal of the Georgian contingent directly, she recalled the fact of the death of 8 French soldiers and the reaction in Paris.

“When 8 French soldiers died in Afghanistan, the officials in Paris stated that it was withdrawing forces from Afghanistan. While NATO member states are reducing and minimizing the number of soldiers, I wonder what obligation Mikheil Saakashvili has taken and at what price are our best guys killed in Afghanistan; especially at a time when 20 percent of Georgia is occupied,” Nino Burjanadze said..

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