During his speech at the plenary session of the Parliament of Georgia, United National Movement MP, Giorgi Baramidze, addressed the Parliamentary Majority and stated: "You lied to the people about pensions, tariffs, wages, petrol prices and loans – about everything and now you have done the same about the grape harvest, too, saying that it has gone well and everything is fine."We took interest in the accuracy of this statement. Even though FactCheck
has written about these issues in earlier articles and addressed these topics within different studies, we nonetheless will provide a short review once again.
The Georgian Dream’s pre-election programme states: "The election block Bidzina Ivanishvili Georgian Dream, at the first stage, takes the responsibility that all categories of pensioners will receive pensions at least equal to the minimum income which will be guaranteed by a respective legal act." It should be pointed out that before the 2012 Parliamentary elections, the then opposition stated that the minimum income at that time (GEL 160) had been artificially decreased whilst expert opinion indicated that the actual amount varied from GEL 200 to GEL 220. Bidzina Ivanishvili made a similar statement in which he promised people that he would determine the actual amount of minimum income.Pensions varied from GEL 110 to GEL 125 in 2012. Pensions were set at GEL 125 for all categories of pensioners from April 2013, increasing to GEL 150 from September 2013. Pensions did not increase in 2014 whilst they went up by GEL 10 in September 2015 and amounted to GEL 160. If we consider 2013 to 2015’s inflation rate (which was 9%), we can say that pensions have not actually increased as a pensioner could acquire more goods with GEL 150 in 2013 than with GEL 160 in 2015. However, according to the 2016 budget plan, pensions will increase by GEL 20 from 1 July 2016 and amount to GEL 180 (see Link).
The new government has not reviewed the amount of minimum income. According to the information of the National Statistics Office of Georgia, the minimum income of an able bodied man in Georgia is GEL 161.9 as of September 2015.
Decreased utility tariffs were another of the Georgian Dream coalition’s pre-election promises. According to the promises, utility tariffs would be reviewed as soon as possible with significant decreases being implemented until a fair amount was reached. According to the statement of the former Prime Minister of Georgia, Bidzina Ivanishvili, the prices for widely used products, electricity and petrol had been artificially increased and this would definitely be changed. In addition, the price for natural gas would be decreased three times.After January 2013 when the new government assumed office, prices for electricity for those consuming up to 300 kWh were decreased by 3.54 tetri and by 2.7 tetri for those consuming more than 300 kWh. The decrease was achieved in the main by lowering provider company profits. In 2015, however, it became more expensive for provider companies to import electricity or produce it using thermal power plants owing to the depreciation of GEL. Tariffs for electricity increased in August and September 2015 and exceeded the prices before the decrease in all categories (except for those using below 101 kWh). FactCheck wrote
about this issue earlier as well.According to Bidzina Ivanishvili’s promise, the price for natural gas was to have decreased three times. According to the information of the Georgian National Energy and Water Supply Regulatory Commission, natural gas tariffs were reviewed after 2012. From 1 March 2013, the price for natural gas for home use dropped by five tetri (10%).
Petrol Prices FactCheck has also previously written about the issue of petrol prices (see Link 1, Link 2). At a briefing on 10 February 2012, a representative of the Georgian Dream coalition, Levan Izoria, spoke about the artificial growth of petrol prices. He accused members of the incumbent government of increasing petrol prices by 50 tetri
as compared to its real prices at the time. According to Platts, the average price for one tonne of petrol on the world market was USD 1,050 in 2012 whilst in 2015 it is down to USD 555.
According to the information provided by the Union of Oil-Product Importers of Georgia, the average price for petrol in the retail network in September 2012 was as follows:
- GEL 2.33 for one litre of Super type petrol
- GEL 2.27 for one litre of Premium type petrol
- GEL 2.12-2.17 for one litre of Euro Regular type petrol
- GEL 2.12 for one litre of Regular type petrol
According to the data of November 2015, the average price for petrol on the retail network is as follows:
- GEL 2.07 for one litre of Super type petrol
- GEL 1.96 for one litre of Premium type petrol
- GEL 1.84 for one litre of Euro Regular type petrol
- GEL 1.79 for one litre of Regular type petrol
It should be noted that the average price for petrol on the world market in 2015 decreased by about 47% as compared to 2012. As the data above make clear, the price for petrol on the retail market in Georgia in 2015 dropped only slightly, by 14%, as compared to the prices in 2012. Among other factors, the depreciation of GEL with regard to USD has one of the biggest influences upon petrol prices. Hence, if it were not for the depreciation of GEL observed in the past years, petrol prices in Georgia would be much lower today.
The Government of Georgia did not decrease the amount of excise tax or value added tax after the 2012 Parliamentary elections. Hence, in this case, government policies have not had a direct influence upon petrol prices. In addition, the prices for petrol both increased and decreased several times after the Georgian Dream coalition assumed office in response to world market prices. Hence, we cannot say that petrol prices have dropped due to interventions by the government.
In his statement, Giorgi Baramidze also pointed out that the Georgian Dream coalition promised its electorate that it would increase wages. According to the coalition’s pre-election promises, wages of those employed in educational facilities were to have increased dramatically. However, neither the coalition’s programme nor its leaders maintained that wages would be increased for every Georgian citizen.As for the wages of school teachers, they increased from 26% to 59% (according to categories) in 2013. According to the 28 September 2015 Directive of the Minister of Education and Science of Georgia, the basic wage for a school teacher increased by 16.4% and amounted to GEL 355. Surpluses according to category will amount to GEL 180, GEL 200 and GEL 300 (see Link).
It should also be noted that according to the 2016 state budget plan, the basic wage for school teachers will increase to GEL 405 which is 14% more than their wages are in 2015.
Interest-free long-term loans were one of the Georgian Dream coalition’s most attractive promises for the electorate: "The agricultural project aims to provide you and everyone else with free, available, long-term money for ten or 20 years. These loans will mainly be free but where there is interest, it will amount to 1%, 2% or a maximum of 3%," stated Bidzina Ivanishvili.
After the new government assumed office, it started to distribute long-term loans for the development of the country’s agriculture. The loans were aimed at various numbers and categories of projects. According to the information of the Ministry of Agriculture of Georgia, loans with an interest rate from 0% to 3% were distributed in terms of the Preferential Agro-Credit and Product of Georgia projects.
The interest rate determined for the financial institutions in terms of the Preferential Agro-Credit project amounted to 11%-12% based upon the size of the loan. The interest rate was set at 15% for leasing activities. The state funds 10% of the interest rate for loans and 12% for leasing.
The interest rate determined for financial institutions in terms of the Product of Georgia project amounted to 11%-12% based upon the size of the loan. The interest rate was set at 13% for leasing activities. The state funds 10% of the interest rate for loans and 12% for leasing. The interest rates of loans distributed in terms of these projects vary from 0% to 3%.
Despite the fact that these projects have indeed been implemented, it is still difficult to say how available they are for everyone. For example, in terms of the Preferential Agro-Credit project, an individual is obligated by the financial institution to fulfil the loan criteria as well as that of the specific project which means guaranteeing the loan with one’s property which oftentimes is not available for every individual.
It is important to note that according to the information of the Ministry of Agriculture of Georgia, a total of 27,177 loans were distributed in 2013 and 2014 in terms of the Preferential Agro-Credit project. The amount of money distributed as a part of the project was GEL 722,766,660.
A total of nine projects in the field of agriculture were funded in terms of the Product of Georgia project in 2013 and 2014. A total of USD 14,670,000 was allocated for these projects.
Grape Prices In 2012, Bidzina Ivanishvili stated that the prices of grapes should not be less than GEL 1. In 2015, the grape supply increased by about 30,000 tonnes. This year has been very productive in the sense that a total of 144,000 tonnes of grapes were processed. This indicator was down to 124,000 tonnes in 2014. However, parallel to the growth in the supply, the demand for grapes dropped which was due to the decrease in wine exports. Hence, grape prices should have dropped in parallel with the decrease in demand. However, the promises of politicians and the subsidisation policies exercised by the government during the previous years created high expectations among the grape farmers. This was the reason why grape farmers were not satisfied with the prices for grapes (Rkatsiteli – 60-70 tetri, Saperavi – 85 tetri)
despite the fact that a total of GEL 30 million was allocated from the state budget for the subsidisation of the grape harvest as the prices were much higher in 2014.
The Georgian Dream coalition’s pre-election promise about increasing the minimum pension to GEL 200-GEL 220 was partly fulfilled. Pensions did indeed increase but the amount as of 2015 is GEL 60 less than the GEL 220 promised. However, it should be pointed out that the pension amount will be increased by GEL 20 from 1 July 2016.
As for a drop in tariffs, the price for natural gas decreased by 10% after 2012 which means that today’s tariff is definitely not three times less as promised. The electricity tariff also decreased after 2012 but it increased again after the depreciation of GEL.
The wages for school teachers increased according to the coalition’s promises. However, Giorgi Baramidze interpreted this promise incorrectly. He stated that the Georgian Dream coalition promised to increase wages for the whole population which was not confirmed by the information we obtained.
The prices for petrol have indeed dropped since 2012; however, this was due to the decrease in petrol prices on the world market. The Government of Georgia has not taken any specific steps in this direction.
As for long-term loans, the Georgian Dream coalition’s promise concerning agricultural projects with free or low-interest loans with interest rates of a maximum of 3% was, in a way, fulfilled. However, it is difficult to say whether or not these projects have been accessible for everyone as in certain cases financial institutions require private property as loan collateral.The prices for grapes varied from 60 to 85 tetri
in 2015. Hence, the promise that grape prices should not be less than GEL 1 was not fulfilled in this specific case.FactCheck leaves Giorgi Baramidze’s statement WITHOUR VERDICT and offers a survey below where you can express your opinion about this topic.