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Georgia: Price Policy
Country Study > Chapter 6 > The Economy > Economic Reform > Price Policy

PRICE POLICY


Gamsakhurdia understood little about economics, and he postponed major economic reforms to avoid weakening his political position. In an effort to maintain popular support, he stabilized fares for public transportation and prices for basic consumer goods in state retail outlets. In March 1991, a new rationing system bound local residents to neighborhood shops. In April 1991, price controls were imposed in state stores. Price liberalization began only after Gamsakhurdia's departure as president, and it did not cover several basic consumer goods and services. Continued food subsidies were an additional factor contributing to the national budget deficit. In the interest of stimulating competition, a government decree removed restrictions on trade in May 1992, and at the same time taxes were eliminated on goods brought into Georgia. Persistent shortages of bread led the government to introduce ration cards for bread in December 1992. Under these conditions, inflation soared in private markets in 1991-92, although prices remained substantially lower than in Moscow for similar items.

In 1993 wholesale prices increased especially quickly under the influence of falling productivity. In the second half of 1993, the construction industry was hit hard by increases in the cost of materials of up to thirty times, although gasoline prices rose only gradually. The prices of heavy engineering and ferrousmetallurgy products rose by three to five times in the second half of 1993.

Data as of March 1994




Last Updated: March 1994


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Georgia was first published in 1994. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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