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Resume: In 2007, the National Statistics Office of Georgia corrected the figures for foreign direct investments. As a result of the corrections, the 2007 figure experienced a substantial decline by USD 263 million. It was a record-breaking number before the corrections when it exceeded USD 2 billion whilst subsequently amounting to USD 1.752 billon after the corrections. Under the renewed data, the highest figure was registered in 2017 instead of 2007. Because of amendments to the previous investment data, questions were raised by the public in terms of the revision methodology and the appropriateness of the motive behind it.

In terms of the foreign direct investments (FDI) to GDP ratio, the year 2007 was indeed record-breaking even after the corrections – investments accounted for 17.2% of the GDP. Under the Georgian Dream’s rule, the highest nominal figure was registered in 2017 when the FDI amounted to nearly USD 1.86 billion which constituted around 12% of the GDP.

Therefore, Roman Gotsiridze’s statement is fully accurate in terms of the 2007 investments to GDP ratio being record-breaking. However, he names the pre-corrections number as an absolute figure although this number was revised as a result of changes in the calculation approach and is no longer the highest one. The 2017 figure, however, has not undergone any changes which the MP refers to as being less than it really is both in terms of absolute or relative figures.

Analysis

On 5 April 2019, United National Movement MP, Roman Gotsiridze, stated: “USD 2.1 billion was invested in Georgia in 2007 which constituted 20% of the GDP. This has never again occurred in Georgia. Under this government, the maximum figure was USD 1.7 billion which constituted around 10% of the GDP.”

Foreign direct investments (FDI) means the owning of shares in a country’s enterprise by a resident of another country and carrying out a variety of economic operations related to that enterprise. The investor is direct if he owns at least 10% of the enterprise’s shares or something equivalent to such involvement.

Of note is that the National Statistics Office of Georgia corrected the FDI figures in 2017. Roman Gotsiridze’s FDI figure is the one which was true before the corrections. FDI statistics were first corrected on the National Statistics Office of Georgia’s website in autumn 2017 at the time of the publication of the investment figures for the first three quarters of the year. The International Monetary Fund’s 2016 recommendation, which required congruence between the National Statistics Office of Georgia and the National Bank of Georgia’s figures, was named as the reason behind the corrections. See FactCheck’s research in this regard.

As a result of the corrections, the record-breaking 2007 investment figure which amounted to USD 2.01 billion in the accounting period decreased substantially by USD 263 billion. In regard to the methodological decrease, questions were raised by the public in terms of the revision methodology and the appropriateness of the motive behind it. The National Statistics Office of Georgia clarified that issue although the questions did not completely disappear. Of note is that the National Statistics Office of Georgia does not make a more specific clarification because the accounting reports of the financial situation of enterprises is a commercial secret of these companies. Nevertheless, it was noted that the aforementioned changes had been stipulated by corrections in joint stocks, reinvestment and debt obligation components.

Table 1: Foreign Direct Investments (USD Million) in 2007-2018 Before and After Corrections

Year

Before Corrections

After Corrections

Difference

Amount

GDP %

Amount

GDP %

Amount

% point

2006

1,190

15.30%

1,171.1

15.10%

-18.9

-0.20%

2007

2,015

19.80%

1,752.6

17.20%

-262.4

-2.60%

2008

1,564

12.20%

1,569.7

12.30%

5.7

0.04%

2009

658

6.10%

664.1

6.20%

6.1

0.10%

2010

815

7.00%

845.1

7.30%

30.1

0.30%

2011

1,117

7.70%

1,130.2

7.80%

13.2

0.10%

2012

912

5.80%

1,022.9

6.50%

110.9

0.70%

2013

942

5.80%

1,020.6

6.30%

78.6

0.50%

2014

1,758

10.60%

1,817.9

11.00%

59.9

0.40%

2015

1,565

11.20%

1,652.5

11.80%

87.5

0.60%

2016

1,645

11.40%

1,602.8

11.10%

-42.2

-0.30%

2017

-

-

1,861.9

12.40%

-

-

2018

-

-

1,232.4

7.60%

-

-

Source: National Statistics Service of Georgia

As illustrated by the table, the year 2007 was indeed record-breaking in terms of the FDI to GDP ratio when the FDI constituted 17.2% of the GDP. Under the Georgian Dream’s rule, the highest nominal figure was registered in 2017 when the FDI reached nearly USD 1.86 billion and constituted 12.4% of the GDP. Of note is that the volume of the FDI decreased substantially in 2018 and dropped to USD 1.23 billion which constituted only 7.6% of the same year’s GDP.


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