New Policy Advice on Migration and Development in Georgia

Migration is a major factor in Georgia. Many Georgians live abroad, and by some estimates the money they send back accounts for nearly 10% of Georgia’s GDP. Did you know that households in rural areas who receive such aid are less likely to be poor, but that in Tbilisi, the opposite is true? Robert Tchaidze from the IMF and Karine Torosyan from CRRC’s partner institution ISET are about to reveal not only who in Georgia migrates, and when and where they go, but also how the country could take advantage of these migration flows in the future.

Their report “Measuring and Optimising the Economic and Social Impacts of Migration in Georgia” is not yet available online, but you can find an early summary. Robert and Karine’s work is part of the global project “Development on the Move” that was created by the Global Development Network and the Institute for Public Policy Research. It aims at analyzing the impact of migration on development around the world, and how these flows can be profited on with adapted public policy, as we had previously mentioned in our blog.

Georgia is one of six countries that have been selected for in-depth quantitative and qualitative studies. In this particular case, CRRC carried out the fieldwork, and we are happy to see our high-quality data used for valuable public policy advice.

Please let us know if you would like to receive the full document once it gets released publicly.

Focus on non-oil tax policy as oil revenues predicted to decline

The IMF has recently published its analysis of the developments in non-oil tax policy, administration and revenues in Azerbaijan. Non-oil tax policy could be an important tool in stimulating the development of non-oil sectors of the country’s economy.

In 2007 the oil sector accounted for over the half of the country’s GDP. Last year 62% of FDI went to the oil industry. While the non-oil sector is reported to grow by 15.6% during the first half of 2008, the oil sector remains the major source of budgetary revenue.

The IMF has warned previously that the growth rates in Azerbaijan are expected to decline significantly after 2010, once oil production passes its peak period. Even though this forecast was later refuted by some experts, who believe that the oil potential of the deep-water oil fields has not been fully explored yet, the importance of development of the non-oil sectors is widely recognized.

The decline of oil production will directly affect the revenue from the tax collection. Although the non-oil tax revenues have been steadily increasing since 2003 (see the chart below), the collection level still is below its potential. Several reforms aimed at modernizing the tax administration were implemented. Still, the wide-spread underground economy adversely affects the level of tax revenue. To broaden the tax base, the IMF recommends to reduce tax exemptions and benefits, and to make the tax privilege procedures more transparent. Also, to increase compliance, tax regulations, as well as all instructions and forms must be simplified and made easy to understanding of all taxpayers. The author of the report also recommends to reduce direct tax rates and to apply a unified rate to personal and corporate income. Tax and custom administration in general must be strengthened. The paper is available at the IMF website.

Source: IMF 2008

Inflation in Armenia? | Lecture by IMF Representative

Readers here may not be aware that actually our Armenian CRRC also runs its own blog, to announce and describe CRRC's events. One of the most recent events was a lecture by the IMF Resident Representative in Armenia, Dr. Nienke Oomes.

Dr. Oomes discussed what is happening to prices in Armenia, and offered a very comprehensive analysis. For a quick overview over the event, click here. Her PowerPoint presentation, which sets out her argument in good detail and includes four recommendations (more effective inflation targeting, facilitating reduction of import prices, tightening fiscal policy, and increasing the public's knowledge of inflation targeting), is available.

One snapshot:



Curious? The full presentation, with 38 slides, is right here.