Georgia’s Economic Reforms

The Discussion Paper describes the radical reforms undergone by Georgia since its 2003 Rose Revolution, the results of which are impressive: The country’s GDP has increased more than two-fold, the total volume of bank deposits and number of businesses more than five-fold, and economic growth has exceeded eight percent.

This has been the result of sweeping tax and other reforms designed to make the country and easier place to do business and more investor-friendly. This has included, for example, the wholesale privatisation of 13,000 industries, reform of the tax code including a reduction in corporate tax from 47 percent to 15 percent, the abolition of capital gains, interest rate and dividend taxes, and lowered personal tax at a flat rate of 25 percent (scheduled to reduce to 15 percent within five years); opening markets to the point that Georgia is among the four countries with the least import tax (the others being Singapore, Hong Kong and Macau); the easing of regulations; improving tax collection (up tenfold in revenue in five years); and putting an end to widespread corruption. Key international indices have reflected the success of the reforms: on the Doing Business Index Georgia is in 15th place; on the 2008 Economic Freedom Index it is in 32nd place (from 93rd place in 2005); and on the Corruption Perception Index it is in 67th place (from 130th place in 2005).

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