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On 28 October 2015, the World Bank released its new Report on the Index of the Ease of Doing Business. The study assesses the business sectors of 189 countries reflecting the 2015 business environment. According to the Report, Georgia holds the 24th place in the overall ratings whilst it was in the 15th

place in 2014.

Commenting upon this issue, the Prime Minister of Georgia, Irakli Gharibashvili, stated that the fact that Georgia had moved from the 15th to the 24th

position in the Doing Business study was due to the new research methodology. Had this not been the case, the country’s ratings would not have worsened.

The World Bank Group publishes annual ratings describing the business sectors of various countries and providing information about those where it is the easiest to conduct business. As already mentioned, Georgia holds the 24th place in the ratings this year whilst it was 15th in 2014. The changes in the country’s positions were mainly due to the changes in the study’s methodology. If the World Bank had analysed the ease of doing business with the same methodology it employed in 2015, Georgia would have been 24th in 2014 as well. This is further confirmed by the information available on the study’s website. The Acting Regional Director of the World Bank in the South Caucasus, Eavan O’Halloran, also talked about the changes in the study’s methodology which was altered in 2014 as well and resulted in Georgia moving from the 9th to the 15th position (in reality, Georgia’s position worsened by only one position). FactCheck also wrote

about this issue at the time.

According to the latest study, from the ten main criteria assessing Georgia’s business regulations, its position worsened in two of them, improved in three and remained the same in five.

Table 1:

 Changes in Georgia’s Position According to Index Criteria

2014 2015 Change
Georgia’s Rating 24 24 -
Starting a Business 4 6 -2
Dealing with Construction Permits 11 11 -
Getting Electricity 70 62 8
Registering Property 3 3 -
Getting Credit 6 7 -1
Protecting Minority Investors 20 20 -
Paying Taxes 40 40 -
Trading across Borders 78 78 -
Enforcing Contracts 18 13 5
Resolving Insolvency 105 101 4

Additional sub-criteria have been added to the study with the new methodology which include: quality of building regulations, reliability of electricity supply and the transparency of tariff policies, quality of the land administration system and the quality of legal processes. The assessment methodology of some of the already existing criteria has also changed.

The changes in a country’s position in the Doing Business study depends upon both the reforms conducted by the individual country as well as by the other countries participating in the study. This means that if other countries ease their business regulations whilst Georgia fails to continue its reforms, Georgia will stay in the 24th

position whilst others will attain higher rankings.

During the past year, two or more reforms were conducted in 63 countries (see Table 2). About three or more reforms were conducted in 26 of these countries. The highest number of reforms – seven – was conducted by Kazakhstan whilst Rwanda holds the second place with six reforms. Russia, Cyprus and Vietnam conducted five reforms each.

Table 2:

 Number of Countries by Reforms in 2014 and 2015

Number of Reforms Number of Countries
2 37
3 14
4 7
5 or more 5

According to the World Bank’s assessment, a total of two reforms in the field of the ease of doing business were conducted in Georgia from June 2014 to June 2015. These include: the decrease in the amount of time needed to obtain construction permits from ten to five days and the ability to electronically upload documentation for court proceedings.

It should be pointed out that the number of reforms aimed at making it easier to do business in Georgia dropped in the past three years (from 2013 to 2015). A total of three reforms were conducted in this period of time. At least four reforms were conducted in Georgia from 2007 to 2012 with the exception of 2009 (see Table 3). In the past 12 years (from 2003 to 2015), Georgia conducted more reforms in the field than any other country in the world.

Table 3:

 Reforms Facilitating the Ease of Doing Business in Georgia

Years Number of Reforms
2007 6
2008 4
2009 2
2010 4
2011 4
2012 6
2013 1
2014 0
2015 2

Conclusion Georgia had a rapid advance in the World Bank’s Doing Business rating from 2005 to 2012. It held the 100th place in 2005 whilst it was in the 9th position in 2012. According to the Report on the Index of the Ease of Doing Business for 2015-2016, Georgia holds the 24th

position. Despite the fact that the country has not moved forward in the rating due to the drop in the number of reforms, the worsening of its position in the ratings was due to the changes in methodology.

FactCheck concludes that the Prime Minister’s statement: "The fact that Georgia moved to the 24th position in the Doing Business study was due to the new research methodology," is MOSTLY TRUE.