Real pension value increased by only ₾68 in 12 years, while inflation exceeds official metrics, Roman Gotsiridze

Former MP and economist Roman Gotsiridze argues that the country’s record inflation is driven primarily by the National Bank of Georgia (NBG) and the government’s mismanaged monetary and fiscal policies. He directly links rapid price increases - particularly in food and healthcare - to the sharp expansion of money in circulation, which he attributes to the NBG’s foreign currency purchases and large-scale refinancing loans.

In his interview with Front News Gotsiridze also questions the reliability of official statistics published by Geostat, claiming that high GDP growth figures conceal structural weaknesses that undermine household purchasing power - especially the real value of pensions. He further highlights risks associated with recent large-scale Arab investment projects in Gonio and Tbilisi, citing the secrecy of contractual terms and disproportionate land transfer volumes.

— Economists often point to the rapid growth of the money supply (M2) as the main driver of inflation. In your assessment, what immediate monetary tools should the National Bank use to combat record-high inflation, assuming you consider current policy ineffective?

— The National Statistics Office of Georgia is falsifying data and operating according to the government’s political instructions. The authorities manipulate economic indicators - artificially inflating GDP growth and understating inflation. They serve political interests, and real price growth in the country is far higher than official figures suggest. Every citizen feels this daily.

This month, inflation exceeded the NBG’s projections and surpassed the target rate. Prices are rising fastest in the areas where households spend 70-80% of their income: food, healthcare, utilities, fuel, and essential goods.

— Food inflation (nearly 12%) has become a major social concern. In your view, what macroeconomic or structural steps are needed to stabilize this segment and narrow the gap between incomes and prices?

— Yes, food prices have risen by up to 12% this year alone, and the cost of medical services has increased into double-digit territory. Consider how much a doctor’s appointment used to cost-40–50 GEL. Today the price is 100-150 GEL.

Look at real prices of basic goods - meat, fruit, vegetables. Whenever the government tries to justify inflation, it blames external factors. They claim wheat and oil prices have increased worldwide. But that is simply not true today. On the contrary, oil prices have decreased, and fuel imported from Russia is the cheapest on the market. There is no external factor the government can legitimately point to.

— Then what is causing the price surge? What drives inflation to such levels in Georgia?

— The main cause is the NBG’s mismanaged monetary policy, together with the government’s fiscal irresponsibility.

Ahead of elections, the NBG burned through 800 million USD in reserves last October and later had to rebuild them. It rushed into massive FX purchases - buying about 1.5 billion USD since the beginning of the year. The authorities boast about this, and PM Kobakhidze said reserves have increased.

But purchasing 1.5 billion USD means injecting 4 billion GEL into circulation. This growth in the money supply is directly linked to inflation.

Additionally, unprecedented remittances - up to 3 billion USD - are flowing into Georgia, twice the amount received before COVID. This also reflects mass emigration.

If the NBG had not injected 4 billion GEL to buy foreign currency, the lari would be stronger today. A stronger lari would reduce import prices - and 90% of supermarket goods are imported.

— The ruling party highlights GDP growth (7.5% in May), but businesses report a different reality - for instance, a 20% decline in retail trade. What systemic issues lie behind high GDP figures that fail to translate into better conditions for citizens and businesses?

— The NBG continues pursuing a “cheap money” policy by issuing massive refinancing loans to commercial banks - about 4 billion GEL in total.

At the same time, the government’s wasteful spending and widespread corruption - now even acknowledged by the ruling party - push prices higher. The discovery of tens of millions of foreign currency in the former prime minister’s residence is yet another indicator.

They openly admit that hundreds of millions of GEL are misappropriated annually through inflated tenders. Every day we hear about unfinished or never-started infrastructure projects. All of this fuels inflation.

Now consider the reality of pension growth: the 2026 budget envisions raising the basic pension (for those under 70) by only 20 GEL - to 370 GEL. This increase is lower than the price growth on goods that pensioners spend more than 80% of their income on.

In real terms (2012 prices), today’s pension is worth 193 GEL.
The basic pension in 2012 was 125 GEL; in 2025 it is 350 GEL. Over 12 years, the real increase - after inflation - is only 68 GEL. This is astonishing.

Under the Georgian Dream, the basic pension has increased by an average of 5.7 GEL per year in real terms, or roughly 5.3 USD per year. This alone shows how unjustly national income is distributed: hundreds of millions of GEL flow annually into the pockets of the ruling clan.

— A major criticism concerns the secrecy of the agreement signed by PM Kobakhidze with an Arab company. Land valued at over USD 1 billion is reportedly being transferred in exchange for only a one-third share. If the project indeed brings USD 6 billion into Georgia, as the ruling party claims, what financial risks or benefits could be hidden in these undisclosed terms?

— No one opposes Arab or other foreign investment.
The only exception is investment from Russia - an occupying power - especially in strategic sectors such as energy, telecom, or media. Outside of that, foreign investors face no resistance.

Historically, Arab investments have been welcomed. Before 2024, the UAE had invested roughly 1.2 billion USD in Georgia; other Arab countries invested far less. UAE investment was strongly supported by President Saakashvili.

Projects such as the Biltmore hotel (140 million USD), Sheraton Metekhi Palace (67 million USD purchase + ~45 million USD in renovation), Tbilisi Mall (worth around 70 million USD), Carrefour, the Poti Free Industrial Zone, Tbilisi’s Dry Port (100 million USD total planned value), and Terabank (capitalization of 120 million USD) all involve Arab investors. Large hotel developments in Adjara also rely on Arab capital.

No one in politics or society has ever objected to the origin of these investments. Criticism - where it exists - has been directed only at the height of certain buildings, not at the investors.

— Then why is there growing concern over the planned residential developments in Gonio and Tbilisi - essentially small new cities?

— Because these investments differ fundamentally from previous ones.

First, they are large-scale elite residential settlements - primarily intended for foreigners and, in many cases, for permanent residence.

Second, the Georgian side’s contribution - 8.5 million square meters of land - is disproportionately large relative to the investor’s input. That land is worth much more than the provided capital.

Third, the projects carry major environmental and urban risks, especially in Tbilisi.

Fourth, the secrecy surrounding the agreements heightens public concern.

In Tbilisi, a settlement the size of Mtskheta (6 sq. km) will be built - housing up to 10,000 residents, mainly in cottage-type homes. This will worsen the ecological situation, destroy Mtkvari’s riparian forest, damage green spaces, cause transport collapse, and further burden an already overloaded city instead of alleviating it.

In Gonio, a settlement comparable to Signaghi (2.5 sq. km) is planned. Most of the development involves residential housing, creating demographic risks. Sixty percent of apartments are expected to be sold to foreigners, including for permanent residence.

The project is opaque. The contract was never published in advance, preventing public scrutiny and raising fears of repeating the government’s earlier mistakes - such as the Namakhvani project, which cost the country around 400 million USD after an international arbitration ruling. The government also lost a 94 million USD dispute with Inter RAO - another example of poorly managed agreements.

By Elza Paposhvili