Giorgi Kadagidze, the former president of National Bank of Georgia (NBG), has released a special statement on his own social network page.
In his statement Kadagidze talks about simple mechanisms for recovering the state economy from crisis. This is an Estonian model of reacting to crisis situations (external shocks), when government pledges to cut state expenditures twice compared to contraction in revenues of our population. This signifies:
- If we grow taxes by 600 million GEL, budget expenditures should be cut by 1.2 billion GEL.
- Budget’s revenues part should be balanced. Spendings should be commensurate with revenues.
- We should not take internal debts.
This famous Estonian model is such a simple mechanism and this simple model brings real results. This country was adopted into EU and NATO because of its willpower and readiness to take similar decisions.
That’s why Estonia is recorded among the world’s top three countries in terms of education system quality. That’s why Estonia is called a star of Eastern Europe.
P.S. Estonia’s fiscal consolidation made up 16% of total GDP in 2008/09. Therefore, this country is often mentioned as anti-Greece.