Issue 4, 2012. August-September



On June 4, Prime Minister Vano Merabishvili outlined the government's new four year economic program. is publishing an overview of the state's spending plans and anticipated results.

Billions for Development

The government's plan revolves around four major issues: unemployment, rural development, health care, and education. Prime Minster Vano Merabishvili told parliament on July 4 that the government plans to spend approximately 20 billion lari ($12.2 billion) on all four sectors.

The largest cost to the budget will be for increasing pensions, which will require 6 billion lari - $3.68 billion - over the next four years. Plans to increase pensions will bring monthly payments (including health insurance coverage) to $100 - one of President Mikheil Saakashvili's election promises.

Tied for second in the big ticket items are the education program and rural development - both calculated to cost tax payers 4 billion lari ($2.45 billion) each over the next four years.

Merabishvili told MPs, during his presentation on July 4, that the rural development program includes plans to cultivate some swamp land into good farming soil, as well as to purchase new tractors for villages and build more storage units to help farmers use modern techniques for packaging and exporting Georgian-grown goods overseas.

The education program includes plans for a state-of-the-art technical university in Batumi, as well as three new vocational schools in the country. There are also funds allocated for insurance for school children, and special internship programs to help students obtain hands on experience. Finally, plans to make health insurance more accessible, and a new social program, are both estimated to cost the budget 3 billion lari ($1.84 billion) a-piece.

The health insurance program includes plans to "stimulate" growth in the health insurance industry, according to MP Giorgi Kandelaki, and some effects will be nearly immediate: by September, 2.5 million families will have insurance.

One aspect of the social program, 1000 lari ($609) vouchers for every family, has garnered national attention as Merabishvili travels around the country to introduce the plan.

Merabishvili told members of parliament that the government's plan to issue vouchers to every family in Georgia with provide them with "rainy day" funds that can be spent on utilities, medicine, or any other need over the next four years.

The voucher program is estimated to cost 1.25 billion lari ($767 million), according to an interview with Minister of Finance Dimitri Gvindadze published by local media.

More Investment, More Jobs

At the heart of the program is the government's strategy to tackle unemployment in Georgia. Officially, slightly over 15 percent of the population is jobless; a recent survey published by the National Democratic Institute found that 36 percent of the population is actively looking for work.

When Merabishvili was appointed on June 30, a new state ministry for employment was also created - tasked with designing a plan to identify the country's unemployed, and provide training and job placement programs.

During his presentation to the parliament, Merabishvili predicted an additional $4 billion in investment over the next four years, money that will help create jobs. Also, an increase in tourism is anticipated to employ an additional 140 thousand people, and road construction projects will require an estimated 40 thousand people.

Other projects, including gasification in villages and the process of creating a nationwide list of the unemployed, will also generate job opportunities outside of the capital.

"There is no detailed information about the location of the unemployed today, no data about who is looking for work, or about their qualifications. There is also a lack of systematic information about employers - and about what sort of qualified work force they are looking for," Merabishvili was quoted as saying.

"It is necessary to develop the regions [outside of the capital] and create new jobs so the local population does not have to move to Tbilisi to find work."