Ministry of Economy Poverty Reduction through Economic Growth. A Vision for Georgia Brussels, 16 June 2004

Strategic objectives of EDPRP In order to raise the welfare of the population of Georgia two strategic objectives have to be achieved by 2015: Fast, sustainable, diversified and broadly based economic growth Reduction of poverty in relation to the official minimum subsistence from 52% to 20-25% Reduction of extreme poverty from 15% to 4-5%

Georgian government is committed to undertake reforms in the following areas Macroeconomic stability Privatization Improvement in governance including structural and institutional reforms Public sector reform and deregulation to downsize public sector interference in the economy to the minimum Legal and regulatory reform to decrease costs for doing business and eliminate corruption Human development Socio-economic rehabilitation of post-conflict zones

Measures to implement EDPRP After the Donor conference continue working on concrete projects and prepare mid-term agenda for Regularly monitor the implementation of EDPRP through the system of economic and social indicators Prepare policy recommendations Inform the public on the objectives and results of the program

Georgia’s Economic Vision Statement Turn Georgia from a recipient country of foreign assistance into an economy in which sustainable growth is driven by the private sector and is targeted at poverty reduction

What kind of reforms are necessary to materialize this economic vision?

Privatization Reinforce property rights and increase private ownership of land, natural resources and enterprises

Which areas should the privatization reform embrace? Agricultural land - 74,8% of agricultural land in Georgia is still owned by the state Forests - the state entirely owns ca. 2,5 million hectares of forests The vast majority of state property, including enterprises and administrative buildings, must be privatized

Which areas should the privatization reform embrace? Transport and infrastructure linkages – airports, ports, roads and power plants are still state- owned Tourism and recreation – ca. 45 tourist accommodation facilities, out of which more than 30 are situated in Adjara, must be privatized

Business and Investments Create favourable conditions for effective business and growing investments

How can administrative and institutional rules for doing business be simplified and improved? Substantially reduce the number of licenses necessary to conduct business - currently there exist more than 1100 types of licenses and permits in Georgia Simplify administrative procedures necessary to obtain licenses and permits Eliminate the doubling of functions of controlling bodies by clearly demarcating their competences and reducing their number - currently 44 controlling bodies are registered at the Ministry of Justice

How can administrative and institutional rules for doing business be simplified and improved? In order to increase comparative advantage of Georgia eliminate unofficial costs for business and trade, such as corruption in customs and road police Decrease tariffs to boost trade volumes and improve business environment Simplify tax system, reduce tax rates, broaden tax basis and improve fiscal administration Divert donor assistance to the micro-financing sector to increase the supply of micro-credit to small business

What are the target groups of these reforms? Put a special emphasis on simplification of business conditions for self-employed persons, which amount ca. 1,2 million out of the ca. 1,8 million employed Since ca. 80% of self-employed persons are employed in agricultural sector, make a particular effort to eliminate financial and administrative barriers for doing business in this sector Poverty reduction strategies should be targeted at reintegration of post-conflict regions into Georgia’s economic space and improvement of living conditions of Internally Displaced Persons (IDPs)