The former Prime Minister of Georgia and founder of the Georgian Dream coalition, Bidzina Ivanishvili, held several meetings with representatives of Georgia’s regional media where he discussed the state of the country and the achievements of the Government of Georgia. FactCheck verified several of Bidzina Ivanishvili’s statements.

"According to the 2011-2012 report of the World Economic Forum, Georgia was in the 137^th place in terms of the macroeconomic environment. Today, it is ahead of even some of the developed countries."

In order to verify Bidzina Ivanishvili’s statement where he talks about Georgia’s macroeconomic environment, FactCheck studied the last five Global Competitiveness Reports issued by the World Economic Forum.

The World Economic Forum uses different indicators for determining global competitiveness. These include a review of a country’s macroeconomic environment which, in turn, is based upon the following data:  budget deficit to GDP ratio, savings to GDP ratio, annual inflation, average interest rate, state debt to GDP ratio and a country’s credit rating. The research includes data from 142 different countries.

Each year’s ranking is based upon the indicators for the previous year. For example, the 2015-2016 rating comes from the assessments made in 2014. Therefore, if we want to compare Georgia’s position in the global competitiveness ranking under the previous government to Georgia’s position in the last years, we have to use the reports from 2013-2014 and 2015-2016. The situation for 2015 will be given in the report for 2016-2017 which will be published in autumn this year. At the same time, Bidzina Ivanishvili uses the 2011-2012 report to assess the United National Movement although a better choice would be if he had used the 2013-2014 report.

According to the 2011-2012 report (which assesses 2010), Georgia was 88^th in terms of global competitiveness. In regardto the macroeconomic environment, Georgia ranked 137^th. Taking into account these indicators, Georgia was sixth from the last among the 142 countries in terms of its macroeconomic environment.

According to the 2013-2014 report, Georgia has improved in both the global competitiveness indicator and its macroeconomic environment (61^st place). Of note is that after the 2011-2012 report, the World Economic Forum no longer uses the average interest rate indicator which had a positive impact upon Georgia’s ranking.

According to the World Economic Forum’s latest research from 2015-2016, Georgia is 66^th in terms of global competitiveness. In turn, the macroeconomic environment also improved and the country climbed to the 51^st place. In this regard, Georgia is indeed ahead of such countries as Belgium, France, the USA, Spain, Japan and the UK.

All of the factual data in Bidzina Ivanishvili’s statement is true. However, it is a mistake to use the 2011-2012 research to assess the United National Movement’s period in power. Of note is that Georgia is improving annually in its global competitiveness performance and is moving up in the ranking. In terms of the macroeconomic environment, it was only the 2015-2016 report which showed the country falling in the ranking.

"From a debt economy, we moved into an investment economy."

In order to determine the extent to which Bidzina Ivanishvili’s statement is true, we have to look at Georgia’s total foreign debt and foreign direct investment dynamics.

The National Bank of Georgia publishes statistics about Georgia’s total foreign debt. Data concerning the total foreign debt have been published, including the first quarter of 2016. FactCheck compared the last three years of the United National Movement’s time in power to the period from 2013 until the first quarter of 2016.

As of 31 December 2009, the total foreign debt of both the private and state sectors amounted to USD 8.8 billion whilst this figure rose to USD 13.2 billion by 31 December 2012. Therefore, in the last three years of the United National Movement’s rule, Georgia’s total debt increased by USD 4.4 billion whilst it increase by USD 1.3 billion in the three years and one quarter of a year of the Georgian Dream’s time in office. Of further note is that the government debt in 2010-2012 increased by USD 1.5 billion whilst it rose by USD 265 million in the period of 2013-2016. The growth of the foreign debt in 2010-2012 was largely caused by taking loans to eradicate the consequences of the Russia-Georgia War and the global financial crisis.

Separate note concerns the changes in Georgia’s state domestic debt. In 2010-2012, the country’s state domestic debt increased by GEL 202 million whilst it grew by GEL 932 million in 2013-2014. In 2010-2012, the domestic debt to GDP ratio dropped by 2.2% whilst it increased by 1.7% in the period of 2013-2015. As a result, if the previous government was taking more foreign debt, the Georgian Dream government is taking more domestic debt.

In regard to the amount of investments, the volume of foreign direct investments (FDI) was USD 4.2 billion in 2013-2015 whilst it was USD 2.8 billion during the last three years of the United National Movement’s time in office. Of note is that the highest amount of investments was registered before the world economic crisis in 2006-2009 – USD 4.7 billion. In regard to annual growth, foreign direct investments rose by 3% in 2013 whilst growth amounted to 87% in 2014. In 2015, however, investments dropped by 11%.

Table 1: Foreign Direct Investments, USD million

Source: National Statistics Office of Georgia

In the last three years of the United National Movement’s rule, Georgia’s total foreign debt in USD increased more than under the Georgian Dream’s time in office. Additionally, investments were higher in 2013-2015 as compared to 2010-2012. In 2013-2015, for each USD 1 taken in debt, USD 3.2 was invested. In 2010-2012, for each USD 1 one taken in debt, USD 0.6 was invested.

"If we continue to take the country in this direction and the kind of government which we have today, we have a real chance to have an economy similar to that of the United States by 2030."

One of the commonly used indicators to compare the economic situations of countries is their Int. Dollar denominated GDP. In order to compare the economies of the United States and Georgia, we need to use GDP per capita denominated in Int. Dollar because the characteristics of the countries (territory, population) differ significantly.

As of 2015, the real GDP per capita in Georgia was Int. Dollar 9,109 and Int. Dollar 52,549 in the United States. According to the data of the United Nations, the population of Georgia would be 3.87 million people by 2030. Therefore, in order to be equal with the present level of economic development in the United States, Georgia’s GDP denominated in international Dollar should reach Int. Dollar 203 billion by 2030. As of 2015, Georgia’s GDP equals Int. Dollar 33.5 billion, therefore, in order to reach the UN’s goal, the annual economic growth rate should continue at 12.74% for the next 15 years. Of note is that for the last 15 years, Georgia’s GDP calculated considering Purchasing Power Parity has been increasing by 5.8% on average. In 2013-2015, however, the growth rate was 3.6%. If Georgia’s economy continues to grow at this pace (3.6%), it would take 51 years to achieve the goal named by Bidzina Ivanishvili.

Of further note is that Bidzina Ivanishvili’s assessment is probably based upon data about GDP (PPP) changes given in the World Economic Outlook report published by the International Monetary Fund. However, the growth of this indicator was largely caused by the declining population trend, on the one hand, and the increased purchasing power of the USD as a result of the depreciation of GEL, on the other hand (see FactCheck’s previous research).

If we do not take Purchasing Power Parity into consideration, Georgia’s real GDP per capita in 2015 was USD 4,010 whilst it was USD 51,486 for the United States. Georgia’s GDP needs to reach USD 199 billion in order to become equal with that of the United States today. To this end, the real GDP growth rate should be kept at approximately 19% for the next 15 years. If we take into consideration the average economic growth rate (3.7%) in 2012-2015, it would take 71 years to achieve this goal.

"From 2006 until 2012, 26,000 jobs were lost. After we came to power, 60,000 or 65,000 new jobs were created and I would like to emphasise that job growth did not happen at the expense of increasing employment in state structures."

According to the data of the National Statistics Office of Georgia, the total amount of employed individuals in 2006-2012 decreased by 23,000 whilst the amount of those employed in the private sector increased by 63,000 in the same period. Therefore, the total amount of jobs decreased because of steps taken to cut bureaucracy. As of 2008, the amount of individuals employed in the public sector was already cut by 85,000 as compared to 2006 and the number was almost the same as it was in 2012. According to the National Statistics Office of Georgia, the amount of those employed in the private sector in 2012-2015 increased by 55,000 and the amount of public servants increased by 1,000. According to the Revenue Service, the amount of those receiving salaries increased by 94,286 in the period of 2012-2015.

Of necessary note is that figures named by Bidzina Ivanishvili largely correspond to the official data if taken separately. Their comparison with each other is not relevant because these figures measure different quantities. FactCheck believes that inadvertent or intentional errors made in the analysis of statistical data might mislead the public.

"We are the leaders in terms of economic growth which is unprecedented for the previous government. When there is crisis in the region, there is a crisis in Europe, and in general, there is an economic crisis going on and not a single country is able to advance rapidly. In this process, Georgia is a leader in terms of economic growth."

Georgia’s economic growth in 2015 was 2.8%. Amongst the 12 countries pooled by the International Monetary Fund in the same group with Georgia, we are outperformed by Armenia (3%), Uzbekistan (8%), Kyrgyzstan (3.5%), Tajikistan (3%) and Turkmenistan (6.5%). Among the developing countries of Europe, countries with a similar or higher economic growth rate as Georgia are Bosnia Herzegovina (2.8%), Bulgaria (3%), Hungary (2.9%), Kosovo (3.3%), Montenegro (4.1%), Macedonia (3.7%), Poland (3.6%), Romania (3.7%) and Turkey (3.8%). Therefore, it is groundless to assert that Georgia is a leader in terms of economic growth. At the same time, Georgia had a higher economic growth rate in 2005-2007 as compared to the developing countries of Europe. In 2010-2011, we were behind only Turkey and we held the first place in 2012.

In regard to the existence of a crisis in Europe and in our region, the assertion about the negative impact of regional events upon the economic development of the country is just. However, talking about a crisis in Europe is perplexing because Europe’s economy grew by 0.2% and 1.4% in 2013-2014 after contracting by 0.5% in 2012. In 2015, Europe’s economic growth continues to rise and constituted 1.9%.