Kakha Gogolashvili, Senior Research Fellow and Director of EU Studies at GFSIS (Georgia)
The European Commission has adopted a proposal for a COVID-19 macro-financial assistance package for its Eastern neighborhood partners to help the countries limit the economic fallout of the coronavirus pandemic.
As part of its global response to the coronavirus outbreak, the European Commission is mobilizing an emergency support package for Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova, and Ukraine of up to €80 million for immediate needs and up to €883 million for the short and medium term to support the social and economic recovery of the region. StrategEast has interviewed leading experts from Eastern Partnership countries to comment on the implication of EU support measures in each country. Here are the answers from the expert on Georgia.
Even if the EU assistance was not sufficient and effective the ethical citizen of Georgia or the government should never complain about it, and here is why. First, the EU itself is in a deep crisis and suffered from the COVID-19 outbreak more than any other region of the world. Secondly, the EU stood and supported Georgia all along since its independence and there is no reason for not being grateful for all that was done up today. Thirdly, it was already a real sacrifice on behalf of the EU to commit EUR15 billion for external aid globally, including for EaP partner states for whom EU will spend more than EUR2 billion in grants and long term favorable credits.
In fact, this is just an assumption, saying “even” and “if”. In reality when COVID-19 affected Georgia EU has been supportive and effective offering the country immediate assistance of EUR20 million practically immediately, for urgent medical equipment needs. Another EUR80 million is already available supporting small and medium businesses around the country.
EUR 150 million worth macro-financial assistance is also committed and will be disbursed in two tranches on the course of 2020-21 to support the country’s balance payment and the budgetary deficit. Also, the EU is contributing significantly to the IMF lending package that presumably may amount to USD1.5 billion and which Georgia expects to receive in 2020-2021. Any other assistance expected from the international organizations contains EU funding share too. At the same time, EU owned financial institutions – EBRD and EIB continue financing already committed projects in Georgia. The infrastructural projects financed/claimed to be financed by EIB in 2019-2030 amount to EUR3.5 billion. Continuation of these projects is crucial for Georgia’s future including perspectives of getting out from the COVID-19 caused the economic slowdown.
The assistance is never enough and exhaustive. No country in the world will get easy from the crisis itself or through assistance provided by the partners and the international community. Indeed, the feeling that there is such a friend as the EU makes the government and the society in Georgia confident, full of beliefs and expectations for survival and improvement.
A big part of the EU assistance will go to support business, but the important question is “how to support?”, in what areas? Georgia’s problem with or without COVID-19 is a weak industry, inefficient and still not competitive agriculture, low professional and immobile workforce resulting in structural unemployment, low productivity, low level of competitiveness of products (domestically or externally), chronic devaluation of the currency. The tourism sector, upon which all expectations lay, cannot become a driver for full economic recovery and development. Georgia needs new technologies, know-how, more investments, assistance in the training and education of professionals, development of industries in regions. One important lesson learned from the pandemic is that any country – big or small should be self-sufficient at certain/minimal levels. It cannot fully depend on the import of goods, foodstuffs, or equipment. Georgia probably is one of the countries that need to overcome this dependence and become a “Faber society” and international and EU assistance, first of all, should serve this aim.
