The 2012 elections can be regarded as one of the most important events in the political life of Georgia. More so than at any time during the country’s 20-year history of independence, these elections were distinguished by a high level of uncertainty regarding the final results, and fierce competition between the ruling party and its major opponents. Therefore, unlike previous elections, greater importance was given to the accuracy and strength of the action plans and pre-election programs presented by the parties. As a result, the majority of the political parties that qualified to participate managed to present competent and consistent programs that were more feasible and of a better quality than in previous elections. However, the competency with which the election programs were produced was not absolute, since a major problem with the presented programs was their consistency and the likelihood that their election promises could and would be delivered. At the same time, this is not to say that the 2012 October elections were not distinguished by a significant increase in the quality of the programs presented by the political parties compared to previous elections.

The purpose of this report is to present the Financial Soundness Indicators (FSI) data in a way that is accessible and easy to interpret by a wide array of stakeholders, and help them analyze the economic implications underlying the FSI concepts. The report presents a “birds eye view” of Georgia’s financial system and its’ standing relative to other countries in the world and the developing countries in Europe/Central Asia. Additionally, the report analyzes the potential banking sector weaknesses, which if unchecked could stun growth and undermine further financial deepening.

The report presents the analysis of investment climate, which highlights the lack of experience in the line of business, lack of qualified management and personnel, and issues with financial literacy of the bank clients as some of the main obstacles to securing bank credit. High leverage ratios among the qualified borrowers appear to be one of the obstacles to securing credit as well. The report points to the lack of developed capital markets and lack of alternative ways to finance capital as one of the primary reasons behind high leverage ratios.

The purpose of this report is to take stock of the existing regionally disaggregated data and to identify disparities between the regions of Georgia. Few similar studies exist, with the major exceptions being the Diagnostic Report by the Task Force for Regional Development in Georgia (2009) and the Georgia Urbanization Review by the World Bank (2013). This report thus fills a gap, attempting to inform both future research and the formulation of regional policy. The analysis in this report is mainly building on Geostat statistics, in particular the Integrated Household Survey, the Millennium Challenge Corporation Survey, and the Village Infrastructure Census. While in principle this allows for a detailed analysis of regional disparities, this is limited by issues with the data. Two issues are of importance. First, with the last census dating back to 2002, the reliability and quality of the current survey data is potentially compromised. Second, large and systematic data gaps exist for infrastructure, environmental issues, and cultural and recreational resources. It should also be noted that most surveys for any observation only indicate the region, but not the municipality. Thus any analysis is restricted to be along existing regional boundaries.

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