On 30 May 2016, the former Prime Minister of Georgia and founder of the Georgian Dream party, Bidzina Ivanishvili, addressed the population with a letter which gives a comparison of the situation under the rule of the previous and incumbent governments. Mr Ivanishvili believes that the new Government of Georgia has improved the situation in absolutely every aspect listed in his letter.
FactCheck verified the accuracy of several of Bidzina Ivanishvili’s statements in the letter (see link 1 and link 2).Now, we offer the third part of the facts from Ivanishvili’s letter which we verified.
In April 2016, the International Monetary Fund published the revised World Economic Outlook report. According to the report, Georgia’s per capita income in 2016 will be 10,015 Int'l $ which does in fact exceed the numbers of 2012 by 25%. The International Monetary Fund forecasts a 14,663 Int'l $ per capita income for 2021 which will mark a 46.4% growth as compared to 2016. The GDP per capita is expected to grow by 11.9% in 2021.
Despite the fact that the numbers stated in the letter are absolutely accurate, methodological errors and manipulation with numbers is still evident:
- It should be pointed out from the very beginning that the per capita income growth depends upon the growth of the country’s economy as well as upon the changes in the number of the population living in the country. Georgia’s population has been shrinking for 25 consecutive years which, mathematically, accelerates the growth rate of the GDP per capita. Based upon the 2014 universal census, the International Monetary Fund corrected Georgia’s population data in the previous years. The country’s population decreased by 159,000 from 2012 to 2016 whilst it will drop even further, by 164,000 people, from 2016 to 2021. The letter says nothing about these facts.
- Int'l $ by Purchasing Power Parity depicts the actual purchasing power of the United States dollar in various countries. Given the fact that prices differ from country to country, the purchasing power of the same amount of USD might differ according to the country. The purchasing power of USD 1 in Georgia is 2.6 times greater than it is in the United States of America. This methodology is used to correctly to compare the incomes of various countries to each other. Comparing the GDP per capita in Int'l $ of different countries actually shows which country is better off.
In addition, if we aim to calculate the changes in Georgia’s GDP per capita over the years, we should use the tool of the real GDP per capita (minus inflation) in GEL (as GEL is the dominant currency in Georgia) rather than in Int'l $. This indicator in Int'l $ might change according to the changes in prices in Georgia and the USA as well as according to the changes in the GEL exchange rate with regard to USD. It does not depend solely upon the economic growth in the country.
The actual per capita income was GEL 3,289 in 2012 whilst it will reach GEL 3,907 by the end of 2016, growing by 19%, according to the International Monetary Fund’s forecast.
- If the population were not decreasing at the current pace, the actual growth of the GDP per capita in GEL would be 14% instead of 19%. With a 14% growth in four years (without the changes in the number of the population) it would take 20 years for Georgia’s GDP per capita to double and 16 years for it to grow by 19%.
- The same approach was used in terms of the forecast data from 2017 to 2021 as well. The per capita income in GEL will be growing by 33% whilst the growth without taking the population drop into account would be 27%. With this rate, it would take 15 years for Georgia’s per capita income to double. As for the 11.9% growth of the GDP per capita (in Int'l %), forecast for 2021, this is also mainly due to the decrease in the population. With the number of the population remaining constant, the growth rate would have been 7.2%.
- It would be highly incorrect to assume that Georgia’s per capita income will have the trend of an 11.9% annual growth in Int'l $ from 2022 to 2030, thereby exceeding 40,000 Int'l $. The International Monetary Fund has made its forecasts only until 2021. Keeping the growth of 2021 until 2030 is Mr Ivanishvili’s assumption in his letter. The per capita income in Int'l $ grew by an average of 10% from 2010 to 2012. This went down to an average of 6% from 2013 to 2015 whilst the average growth will be 7% from 2016 to 2021 according to the forecasts. It should also be taken into account that the greater the GDP and the GDP per capita of the country are, the harder it becomes to maintain a high growth rate if the number of the population does not continue to decrease.
As already pointed out above, the changes in Georgia’s GDP per capita are mainly due to the country’s economic growth rate as well as the number of the population. The average economic growth rate from 2012 to 2016 (which is the actual source of income growth for the population) was 3.3% whilst the forecast from 2017 to 2021 is 4.9%. If the number of the population does not decrease further, it will take 14 years for the real income to double and 28 years for it to quadruple.
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2021 | |
| Economic Growth % | 6.2 | 7.2 | 6.4 | 3.4 | 4.6 | 2.8 | 2.5 | 5.0 |
| Real GDP Per Capita in GEL | 2,806 | 3,050 | 3,289 | 3,449 | 3,660 | 3,794 | 3,907 | 5,196 |
| GDP Per Capita in Int'l $ | 6,568 | 7,287 | 8,002 | 8,527 | 9,198 | 9,630 | 10,015 | 14,663 |
| Population, Million | 3.944 | 3.89 | 3.837 | 3.783 | 3.73 | 3.697 | 3.678 | 3.514 |
In his interview with the newspaper, Kviris Palitra,
the Head of the Caucasus Research Resource Center (CRRC) , Koba Turmanidze, responded to the sceptical attitudes of the Georgian political parties towards the surveys conducted by the National Democratic Institute (NDI). CRRC is a non-governmental organisation which the National Democratic Institute employs for its surveys in Georgia. Mr Turmanidze also talked about the survey conducted prior to the Parliamentary elections in 2012 which showed a 40% difference from the actual results of the elections. He explained that the survey was conducted two months before the elections (author’s note: the survey was done before the so-called Prison Tapes were published) which leaves plenty of time for the sympathies of the voters to change. "We did not show an incorrect image but, rather, indicated that 40% of voters were not yet sure about their choice. One of the political parties managed to mobilise these people in its favour whilst the second failed to do so. If the politicians believe that we should accurately predict the results of the elections, why do they bother to hold pre-elections campaigns at all?," said Mr Turmanidze.
NDI published it survey about the ratings of the political parties in September 2012. According to the survey, the answers to the question “If elections were held tomorrow, who would you vote for?” were distributed in the following way: 37% - United National Movement, 12% - Georgian Dream coalition, 3% - Christian Democratic Movement and 2% - other political parties. About 22% of those surveyed had not yet made up their minds whilst 21% refrained from answering the question. Hence, in total, about 43% of those surveyed did not name a specific political party as an answer to the aforementioned question (see Link).
Table 1 depicts the average annual nominal wage from 2008 to 2014. The National Statistics Office of Georgia has yet to publish the data for 2015.
Table 1:
Average Annual Nominal Wage (GEL)
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
| 534.9 | 556.8 | 597.6 | 636.0 | 712.5 | 773.1 | 818.0 |
As the data make clear, the nominal growth of wages from 2010 to 2012 amounted to GEL 155.7. Using real wages to compare the wages of different years to each other is a correct method. This means that the inflation level is taken into account (the growth of prices which decreased the purchasing power of the wages). Given the fact that in this case we compare average annual salaries, it would be appropriate to use average annual inflation numbers as well. Taking inflation into account, the real average wage in 2009, in 2012 prices, was GEL 639. The real growth of average annual wages from 2010 to 2012 amounted to GEL 74.
We only have quarterly data for the average real wages in 2015. Hence, in order to assess the changes in the average annual real wages we compared the quarterly average real wages of 2012 to the respective periods of 2015. The average quarterly growth of wages amounted to GEL 135.
Whilst evaluating the average growth of pensions from 2013 to 2015, it must be taken into account that the amounts of pensions differed according to the categories of pensioners for the year 2012, amounting to GEL 110 and GEL 125 for the two different categories. The amount of pensions has been unified as of 2015 and equals GEL 160. Taking the Consumer Price Index into account (the average in 2005 was GEL 100), GEL 110 and GEL 125 in 2012 is equal to GEL 121 and GEL 138 in 2015. The growth in the first case is 32% and the growth in the second case is 16%. The average growth rate of both categories combined is 24%. The same indicators calculated using the same methods amounted to 31% from 2010 to 2012 (hence the growth rate of pensions was higher in the past); however, unlike the other indicators, the letter does not use this method of calculation when talking about pensions.
In order to assess the changes in the pace of infrastructure construction, we studied the amounts of money allocated by the state budget for this purpose over the years.
In the overall state budget of Georgia, the expenditures for infrastructure construction are calculated in the non-financial assets budget line. This budget line allocated an average of GEL 1,775 million annually from 2010 to 2012, reaching its maximum in 2012 (Table 1). In 2013, infrastructure expenditure went down by GEL 524 million or 27%. This indicator started to grow again in 2014; however, even the planned expenditure for 2016 is lower than the money spent from 2010 to 2012. The average annual expenditure from 2013 to 2016 is GEL 1,560 million. We have a clear positive trend of growth in the past years as compared to 2013.
Table 1:
Infrastructure Expenditure (GEL Million)
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
| Infrastructure Expenditure | 1,540 | 1,869 | 1,916 | 1,392 | 1,444 | 1,680 | 1,721 |
FactCheck has already written
about the number of roads and bridges which were constructed during the offices of the previous and incumbent governments. If we compare the period from 2010 to 2012 and from 2013 to 2010 (Table 2), a total of 1,074 km of roads were rehabilitated from 2010 to 2012 whilst this number dropped to 730 km from 2013 to October 2015. A total of 151 bridges were rehabilitated from 2010 to 2012 whilst this number was 109 from 2013 to 2015. Many new bridges were constructed from 2013 to 2015 whilst we have no records of new bridges being built from 2010 to 2012.
Table 2:
Constructed and Rehabilitated Roads and Bridges
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 (Oct) | |
| Rehabilitated Roads, km | 600 | 274 | 200 | 260 | 265 | 205 |
| Rehabilitated Bridges | 100 | 23 | 28 | 45 | 42 | 22 |
| New Bridges | 9 | 11 | 3 |
It should be pointed out that Table 2 does not include data about internal (local importance) roads and bridges which were constructed or rehabilitated with the funds of local municipalities.
In his letter, Bidzina Ivanishvili himself states that he made a promise about founding a new technological university in 2011. During his pre-election campaign in 2012, Mr Ivanishvili stated: "We will create a university city in Kutaisi which will be equipped with ultra-modern technologies and infrastructure. It will have the same importance to Georgia as the Gelati Academy had during the times of David the Builder."
However, the promise remained a promise. In 2015, an initiative group started gathering signatures with the slogan "Technological University in Kutaisi" and demanded that the government live up to the promises it made during the pre-election campaign. "We ask and demand for the promises made in 2012 to be fulfilled and a technological university to be founded in Kutaisi. The city needs it very much," read the statement made by the group to the Government of Georgia and Bidzina Ivanishvili.
The presentation of the technological university was done four years after it was promised, in May 2016. A total of EUR 250 million will be spent on the construction of the technological university and it will be finished in seven years. The Cartu Fund will fully cover all of the necessary costs. At the presentation of the technological university, Bidzina Ivanishvili stated that the project also envisages the construction of a university city in Kutaisi. On 14 June 2016, during his meeting with the media, Mr Ivanishvili specified that the city will be built in a forest near Kutaisi. On 15 June 2016, the Mayor of Kutaisi, Shota Murghulia, stated that three locations are currently being considered for the construction of the city and the final decision has not yet been made.
FactCheck
will not, at this stage, engage in the discussion of whether or not the so-called ‘elite corruption’ has indeed been eradicated; however, it is a fact that opponents as well as representatives of civil society often speak about corruption, in general, and government-backed corruption, in particular.
In May 2016, Transparency International Georgia published a public survey whose results indicate a worsening situation in terms of corruption. In addition, Transparency International Georgia published another survey in May 2016 about the possible corruption risks in the Ministry of Culture and Monuments Protection of Georgia. According to the statement of a member of the United National Movement, Giorgi Kandelaki, the CheckIn Georgia project, launched by the Government of Georgia, shows clear signs of corruption schemes where the interests of high-ranking officials from the Ministry of Culture and Monuments Protection of Georgia are apparent (see FactCheck’s articleabout this issue).
Tbilisi City Council member, Aleko Elisashvili, also often points to the facts of corruption in the government. The main topic of the 8 May 2016 Differing Accents talk show was the so-called elite corruption and questions about the work of the Georgian Co-Investment Fund were also asked. Opponents also saw signs of corruption in the privatisation of the territories owned by and adjacent to the Tbilisi Botanical Garden. FactCheck has already written about these issues (see Article 1 and Article 2). As for the international ratings, the World Justice Project’s absence of corruption indicator for Georgia has worsened since 2012. In addition, according to Transparency International Georgia’s Corruption Perception Index (CPI), Georgia’s CPI has not changed as compared to 2012 (see FactCheck’s article about this issue).
