• PM: key priorities remain unchanged;
• PM: 2010 economic outlook positive;

Cabinet, involving three new ministers, won confidence vote on July 2. The parliamentary minority refused to support.

Vera Kobalia, a newcomer in the government, has replaced Economy Minister, Zurab Pololikashvili; former head road infrastructure agency, Ramaz Nikolaishvili, became minister for regional development and infrastructure, replacing Davit Tkeshelashvili, who was appointed as chief of the President’s administration. Former governor of Shida Kartli region, Lado Vardzelashvili, became minister for youth and sports affairs – the new ministry established as a result of separate of a respective department from the Ministry of Culture.

The confidence vote was a formality, caused with the fact that one-third of cabinet members were replaced at various times since last similar vote in Parliament in February, 2009.

PM Nika Gilauri, who is one of the longest-standing government member, serving as energy minister since February 2004 and then as finance minister before becoming PM in January, 2008, told the lawmakers on July 2,  that the government’s “goals and tasks remain unchanged.”

“Our program [approved by the Parliament along with slightly reshuffled cabinet] has the same name – United Georgia Without Poverty,” PM Gilauri told lawmakers before the voting.

He said the priority was to restore the country’s territorial integrity through “through peaceful, diplomatic means and through maximum use of international monitoring mechanism.”

“Our policy of unification will be built around the State Strategy on Occupied Territories: Engagement through Cooperation.

In foreign policy, he said, Georgia’s priority remained “non-recognition policy” of Abkhazia and South Ossetia and NATO integration.

On economy, he said, that after “significant growth” in 2004-2008 with average of annual 7%, Georgia faced difficulties in 2009, which saw 3,9% contraction. He, however, also said that contraction rate was still not too high in comparison with other countries in the region.

He attributed the contraction to internal political instability last year, consequences of the August war and the global economic crisis.

Gilauri said that positive signs emerged this year with real GDP growing 4.5% in the first quarter of 2010 year-on-year. He said that the government’s conservative forecast was that annual growth would be 4.5% this year. 

Gilauri said that although rate of unemployment “still remains high, lot of new jobs have been created” since 2004 and an average salary was increased four-fold.

According to official data by state statistics service, Geostat, unemployment rate stood at 12.6% in 2004, increasing to 16.9% in 2009.

The PM said that problem remained with low foreign direct investments (FDI).

FDI in first quarter of 2010 was down to USD 75.7 million, 41.5% decline over the same period of last year.

Gilauri said that problem also remained with “reduced pace of privatization” of state assets.

He said that USD 4.5 billion aid, pledge by international donors after the August war, was vital for the country in face of reduced flow of investments from the private sector. Gilauri said that the government has already contracted USD 3.5 billion out of pledged USD 4.5 billion.

“Georgia will fully use the total of USD 4.5 billion within next two-three years,” PM Gilauri said.

He also said that government-proposed Act of Economic Liberty, which has yet to be approved by the Parliament, remained the government’s priority as this document was viewed as a major signal to international investors that Georgia’s long-term economic outlook would remain stable.