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GEORGIA



 

In-depth Business Intelligence

Key Economic Data
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 3,937 3,324 3,100 126
         
GNI per capita
 US $ 830 650 590 145
Ranking is given out of 208 nations - (data from the World Bank)

Books on Georgia

REPUBLICAN REFERENCE

Area (sq.km)
69,700 

Population 
4,693,892 

Principal 
ethnic groups 
Georgians 68.8%
Armenians 9% 
Russians 7.4%

Capital 
Tbilisi 

Currency 
Lari

President 
Mikhail Saakashvili



Update No: 297 - (29/09/05)

The afterglow of the Rose Revolution
Georgia is receiving a lot of attention after its Rose Revolution. The US is very keen to promote it to prominence as a new-found democracy. President Mikhail Saakashvili was made very welcome by Bush in the White House in September, the very emblem of what his administration's foreign policy claims to stand for and unalloyed by the unpleasant things going on in Iraq. 
If the revolution was bloodless, one must acknowledge that that was partly due to the way that Eduard Shevardnadze bowed out in time. He knew that the US-educated young lawyer was the man to succeed him and voted for him in the re-run of the elections in late 2003. Fluent in five languages and an urbane, articulate emissary for his country, Saakashvili is becoming a feature of the international diplomatic circuit.

Millennium Challenge approves aid for Georgia
The US is putting money where its mouth is. While Saakashvili was in Washington, he signed an epoch-making accord, reminiscent of the Marshall Aid programme for Europe after the war.
The Millennium Challenge Corporation (MCC), which administered the US assistance programme Millennium Challenge Account (MCA), has approved a five year US$295.3m assistance for Georgia. On August 16th, MCC signed the funding agreement with Tbilisi.
The US Congress must still approve the agreement. But Georgia officials are confident this will happen shortly, making Georgia the fifth country to receive funds from the corporation and the recipient of the largest amount of MCC aid to date.
According to a press release issued by the MCC on August 16th, the assistance aims to reduce poverty and stimulate economic growth in the country's regions. The compact will provide financing for several projects in Georgia, including US$102.2m for the rehabilitation of roads in Samtskhe-Javakheti, US$49.5m for the rehabilitation of the main gas pipeline and consultation help to Georgian government, US$60m for the development of regional infrastructure, US$32.5m for the creation of the Georgian development investment fund, and US$15m for the development of agricultural business.
Prime minister of Georgia, Zurab Noghaideli, is a key figure to ensure a smooth implementation of the agreement. Meanwhile, in Washington officials from the MCC praised Georgia for a "homegrown effort" to apply for the funds; and in Tbilisi officials praised the programme for its "new approach." After the approval of the compact, the funds would be transferred to the account of the Millennium Challenge Georgia Fund, the agency of the Georgian government that will supervise the implementation of the programme's mentioned four main priorities.
The CEO of the Millennium Challenge Georgia Fund, Lasha Shanidze, said:- Messenger "Millennium Challenge is a new philosophy, a new approach." Shanidze said that his team has "secured as much funds as possible and would spend the amount to make sure this 300m becomes 300bn in future." Shanidze said that the US Congress should approve the project within 15 days. A congressional delegation is expected to visit the Millennium Challenge Georgia Fund soon to be acquainted with the projects in place.
"Congratulations to the people and government of Georgia for developing an integrated programme targeted at helping the regional poor," said MCC Vice President Charles Sethness. He described Georgia's proposal as "a homegrown effort." He said that the government had a certain vision for reducing poverty and "submitted a thoughtful, results-oriented programme to execute that vision."
"By focusing on rehabilitating regional infrastructure and promoting private sector development, the programme will directly benefit approximately a half-million Georgians," reads the MCCs press release from Washington.
The Millennium Challenge Georgia Fund has predicted that the bulk of the currently envisaged projects would be wrapped up earlier than in five years, because the problems are acute and need urgent measures. "Some of the projects like the gas pipeline are intended to be implemented within the next two years, small infrastructure projects and agriculture projects will be also implemented and we will start doing it probably at the beginning of next year," Shanidze said, adding that the rehabilitation of roads in Samtskhe-Javakheti will take some time.
However, he predicts that in two years, Georgia will see real results. "We are going to see a new workforce in the region, new roads, new bridges and irrigation systems," Shanidze said. It was recalled that Georgia received a compact with a budget greater than any of the other four countries under MCC tutelage.

Georgia sees budget surplus
Its own domestic budget is of prime importance too. It would be unfortunate for Georgia to be a large beneficiary of foreign funds and yet be unable to keep its own finances in order. A budget deficit would hamper the image of Georgian administration and would even call for re-staffing of the current economic team.
Georgian media said that the problems linked to the fulfilment of this year's budget parameters and the accountability of the government on this issue would be topics presented at the autumn session of parliament. 
However, government representatives stated that there is no threat of any budget deficit. At a government session on August 25th, Georgian Minister of Finance, Alexei Alexishvili, announced that the government has a surplus of 26m laris thanks to higher than anticipated customs revenues. He added that this amount would refill the government's reserve fund and toward social programmes.
The members of the parliamentary majority agree that the political fate of Prime Minister, Zurab Noghaideli, is dependent on the fulfilment of the budget. MP Davit Zurabishvili stated, as quoted by Akhali Taoba, that "today the issue of dismissing the prime minister is not under consideration. This will be dependent on the fulfilment of the budget. If the budget is fulfilled successfully, I don't think this issue will come up."
Meanwhile, the opposition noted that several problems are emerging in the fulfilment of the budget. Conservative faction member MP Kakha Kukava claimed that the prime minister is "ripe for being replaced" due to the budget deficit. Tens of million of laris were paid in advance to cover the deficit. "I have absolutely infallible data that shows large sums of money have been paid to the state budget which, if the results are not falsified, is practically broke. This is sufficient basis for the dismissal of the government and in particular the prime minister," Kukava was quoted as saying by Akhali Taoba.
Kukava stated the authorities are using practices employed by the Shevardnadze administration while fulfilling the budget. He cited the instance where businessmen were forced to pay taxes for July and August in order to cover the planned parameters for June. The opposition has called for an open hearing to be held on budget issues immediately after the opening of the autumn session of parliament.
There is one thing - there may be problems with capital revenues, as sums were planned to be collected from the sales of Chiaturmanganumi and Varitsikhe HES.
But "if the government works intensely until the end of the year, this gap may be filled," said MP Lado Papava, as quoted by Akhali Taoba. He predicted that the real situation with the budget, and its fulfilment, would be visible by the end of the year.

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AVIATION

New company invited for Tbilisi airport talks 


Tepe Akfen (TAV) delegation, which operates the Istanbul Ataturk airport, visited Tbilisi at the request of Georgian President, Mikhail Saakashvili, to negotiate on the construction and operation of the Tbilisi airport, New Europe reported recently. 
Rustavi-2 reported the Georgian government established a September 2nd deadline for TAV to respond to the project. TAV officials stated that they "had no demand" regarding the Tbilisi Airport but Celebi officials could not understand why Georgia had invited TAV. The Georgian government had initially selected a consortium of the Turkish firm Celebi, Luxembourg-based Gestion en Technique Speciale (GTS) and the American company A&J Business Development but at the beginning of July the latter two firms were expelled as they were unable to provide financial guarantees on time. 
Meanwhile, one of the companies removed from the original consortium, GTS, is claiming the Georgian government violated the tender process and that Celebi company has no rights to use its architectural plans for the new airport. GTS has issued letters to the ministry of economic development indicating that the company had submitted the case to the London court of international arbitration. It was stated in the letter that the Georgian government was invited to the London court on September 5. GTS stressed that the case was filed not against the companies but the Georgian government. According to the management of Tbilisi International Airport, neither the government nor the airport management can interfere in the issue on the ground that it is a disagreement between private companies. "GTS cannot have any claims against us. This is GTS' personal problem and nobody has the right to interfere in the matter of two independent firms. As for us, the Georgian side is absolutely clean," said the Director of Tbilisi airport, Nika Manjgaladze.

TAM produces personal jets

The Tbilisi-based TbilAviaMsheni (TAM) aircraft factory has started production of Maverick style five-seat personal jets with initial price of US$1.5m, it was reported recently. The new TAMJet completed its first test flight on August 12th, Interfax News Agency reported.
Vazha Tordia, chairman of the supervisory board of the company, stated that this kind of modification of aircraft was being produced in Georgia for the first time. He noted that his company will launch mass production of the new aircraft in the near future. All necessary spare parts are produced in Georgia, only the engine was brought from the United States, he added. TAM, which has ISO 9001 Quality Management Certificate, recognising the high quality of its production, is producing 4 modifications of the Su 25 battle support aircraft. The most modern modification is Su 25 "Scorpio," designed in cooperation with Israeli Elbit Systems company.

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FOREIGN RELATIONS

Turkey aims to increase trade volume with Georgia 

Turkish State Minister responsible for Foreign Trade, Kursat Tuzmen, accompanied by a delegation of entrepreneurs, was scheduled to visit Georgia from September 13 to 15. The team will hold bilateral talks with representatives from Georgia's private sector, The Messenger reported. 
Tuzmen was expected to meet with Georgian President, Mikhail Saakashvili, and Prime Minister, Zurab Noghaideli, as well as Economy Minister, Serhy Teriokhin, and Finance Minister, Aleksi Aleksishvili. Tuzmen said that a Turkey-Georgia Joint Economic Commission (KEK) would be held during the visit. The issue of prevention of double taxation between Turkey and Georgia will be on the agenda. "We aim at increasing trade volume with Georgia," Tuzmen said in a separate statement concerning his visit, noting that the trade volume between Turkey and Georgia for 2004 amounted to 506 million Euro. He stated that Turkey will remove the barriers which hinder trade volume and establish legal infrastructure for trade. Turkey and Georgia along with Bulgaria, Russia, Romania and Ukraine - are partners in the Organisation for Black Sea Economic Cooperation and the Black Sea Naval Cooperation Task Group (BLACKSEAFOR).

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TRANSPORT

Azerbaijan, Turkey, Georgia to discuss railway project 

Azerbaijan, Turkey and Georgia are expected to discuss the Gars-Tbilisi-Baku regional railway project in Ankara in the near future. The meeting of the three countries' transport ministers, previously scheduled in Ankara for August 24th, had been postponed, reported Interfax News Agency. 
Deputy Minister for Transport, Musa Panahov, will represent Azerbaijan, as minister Ziya Mammadov will be on vacation, the State Railway Office (SRO) said. Prior to the minister's meeting, the joint taskforce will meet to discuss technical issues of the project, allocation of funds by the project partners, drawing funds from other interested parties, as well as establishment of a joint venture on operation and construction of the new railway line in the future. The work of the taskforce comprising Azeri, Turkish and Georgian experts is coordinated by the three countries' deputy transport ministers. The documents to be discussed by the taskforce will be submitted for signing at the ministers' meeting. Some details relating to the project were agreed upon in the previous meetings of the taskforce. The parties decided to build a new railway from Gars to Akhalkalaki in compliance with European standards and reconstruct the railway from Akhalkalaki to Tbilisi.

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