2016-12-15
Yesterday the Government's Budget for 2017 was approved in Parliament, which is a budget focusing on fiscal sustainability, rapid development, and fast economic growth. You are aware of the debates in the country on our proposed budget, which directly reflects the goals and steps we take.
I would like to say a few words about our plans and the goals targeted by our actions, also about the ongoing processes in our geographic neighborhood.
Firstly, I would like to say about the depreciation of GEL that, in our geographic area, practically every currency of our partner countries is declining. Looking at the percentage, which our opponents often appeal to, and which is nothing but a political manipulation to score points, all major currencies have dropped 100%: the Turkish lira, Ukrainian hryvna (over 200% depreciation, Russian ruble (within 90%), Azerbaijani manat (over 100%). There have been talks about the year 2012 since which GEL has dropped 60-65%. It is not good, though I would like to say that Georgia, with the dynamics of its economic development, and despite all challenges and the social conditions of our population, our country, given its level of development, is in good shape to talk about crucially important development plans for the future.
Every step we take focuses on higher dynamics of development compared to the countries in our neighborhood. It is a regular competition; Georgia is in competition of investments, which is why our competitiveness indicators must be better to attract into Georgia larger portions of investments made in the region. Consequently, we need to focus on directions that can ensure more ways to generate foreign currency and attract investments, and it is to this end that we direct our steps.
Of course, we can take the financial resources the Government has every year and channel a greater portion of the budget toward social issues, but we have a balanced approach. Our budget seeks to put an end to the problems that we, by the way, have been facing for decades, running in a vicious cycle, to embark irreversibly on a path of solving the country's economic problems. It involves our economy's structural improvement and bettering; it involves the development of such directions as export-oriented production; it involves developing the services that also focus on generating foreign currency, tourism predominantly. Significant resources are being invested in tourism infrastructure. Ultimately, we will not be independent from other processes, but we can say as that, with high development dynamics in the region, Georgia will have higher development indicators. Even with a poor economic situation in the region, we, thanks to the steps we are taking, will nonetheless have better indicators.
We understand the problems facing our population, and we understand them better than anyone else does, by the way. It is very easy for our opponents to score political points in times like these. The situation will surely change, because we feel responsible for every step we take. We are not talking about inventing the wheel. We are not doing anything innovative in this case; we only take steps that effect greater economic dynamics, greater development, and greater growth.
Georgia is about to launch a very important process of development. It will not be easy, but it will make our economy healthier. It will place Georgia among the developed Eastern European countries and rid our citizens of the problems we are discussing today. We assume full responsibility for this process, and I would like to urge our citizens once again to maintain reasonable views on this process and keep in mind that the Government is taking a number of necessary steps.
We are carrying out a 10% optimization. Some suggest cutting expenses by 30%-and it is mathematically feasible-but it is a completely irresponsible approach, which we will not take. We are cutting expenses at the level that can maintain the dynamics of healthy development. Similarly, we are liberalizing taxation in the directions that will have the highest positive impact on the dynamics of economic growth. We are increasing taxes in the directions that will have the least negative impact on our economic growth. Every step we take seeks to ensure the right development process in the country, to better our economy structurally, to better our balance of trade, to mitigate our dependence on foreign currency fluctuation, so that our citizens may finally disregard currency exchange rates and, instead, focus on price changes and inflation.
Prime Minister's Press Office