President of the Republic of Abkhazia

 

Economy

Information on socioeconomic state of the Republic of Abkhazia.

Карта АбхазииThe Republic of Abkhazia (Apsny) is a sovereign, democratic, lawful state historically established according to the right of nation to free self-determination. The names the Republic of Abkhazia and Apsny are equivalent. The total area is 8,7 thousand square kilometers. Average extent from north to south is 54 km, from west to east – 160 km. 57 % of the territory is covered with forest (oak, beech, hornbeam, chestnut, fir and spruce). The climate is damp, subtropical, the average January temperature on the seacoast is +4 +7 C, in the mountains +2 -2 C, in July - +22 +24 C correspondingly. Precipitations – 1300-2400 mm per year.

On 26th of November 1994 the Parliament of the republic adopted the Constitution of a soverign Abkhaz state, the subject of the international law, approved by the nation-wide voting on 3rd of October 1999 with the amendment adopted on a nation-wide voting (referendum) on 3rd of October 1999. The state language of the Republic of Abkhazia is Abkhaz along with the Russian language which is counted as a language of state and other institutions.

Abkhazia is a presidential republic.

The head of state - the president – is elected for five years. Today Raul Djumkovich Khadjimba is the President of Abkhazia. The legislature is represented by the People’s Assembly – Parliament of the Republic of Abkhazia.

The executive branch in Abkhazia is represented by the Government that is led by the President. For the conduction of the general executive activities throughout the territory of Abkhazia the President of Abkhazia leads the Cabinet of Ministers of the Republic of Abkhazia. The Cabinet of Ministers is formed by the President of the Republic of Abkhazia and is accountable to him.

The Premier, Vice-premiers, ministers and other officials are part of the Cabinet of Ministers.

The population is 242 756 people, 122 309 of which are urban citizens, 120 447 are rural citizens.

Currency – Russian ruble.

Administrative and territorial division of the Republic of Abkhazia.

Abkhazia is located in north-west part of Caucasus. It has borders with Krasnodar region of Russian Fedeartion in north-west (on Psou river), with Georgia on south-east (on river Ingur). It has borders in the north with the republics that are part of Russia – Karachay Cherkessia and Kabardino-Balkaria. It is washed by the Black sea. The Republic of Abkhazia has 8 territorial administrative units – Gagra, Gudauta, Sukhum, Gulripsh, Ochamchira, Tkvarchal, Gal districts and the city of Sukhum. Regionals centers are towns of Gagra, Gudauta, Ochamchira, Tkvarchal, Gal, towns within districts are Noviy Afon (Gudauta district), Pitsunda (Gagra district). The republic has three seaports: Sukhum, Ochamchira and Pitsunda seaports. 18 km away from the capital of Abkhazia Sukhum there is an international airport n.a. V.G. Ardzinba (the length of the airstrip is 3,6 km). The second airport is situated in Gudauta district (Bambora).

The description of industrial and economic activities.

Industry

Once highly developed industry of Abkhazia numbering to more than 500 enterprises falled into decay after the war of 1992-1993 and the subsequent 7year blockade (result of economic sanctions of the CIS countries). Main funds, infrastructural objects were destroyed, ransacked or technologically fell behind, which led to considerable flow-out of skilled personnel. All of the above significantly limits the prospects of development of the industry in modern Abkhazia. However, in spite of the above-stated context the industry of Abkhazia is reviving. The main directions of the development of modern industry of Abkhazia are: hydroelectric power, woodworking industry, production of construction materials, food industry, light industry, extractive industry.

The most dynamically developing directions are: food industry, production of construction materials and extractive industry. The basis of modern food industry is export-oriented wine industry.

The food industry also includes the production of honey, bear, adjika, mineral water and lemonade.

In 2012 in the framework of the Complex plan of assistance to socio-economic development of Abkhazia for 2010-2012 Sukhum milk factory was placed in operation, state investments to processing industries.

The increase of construction activities within the framework of assistance of the Russian Federation aimed at capital construction and renovation of objects of social infrastructure has positive effect on the level of internal production of construction materials and led to increase of proportion of extractive industry.

The increase of export of inert activities essential in building sport and infrastructure facilities for Sochi Olympic Games also had positive effect in the volume of output of construction materials and extractive industry.

Power generation is a strategic field of industry. It is necessary to underline that all electric power generated in Abkhazia is generated in the biggest hydroelectric power station in Caucasus on Ingur river. Considering the hydro resources of Abkhazia more than 13,5 million cubic meters of streamflow makes 3,5 million kilowatt annually. The development of hydro-power engineering is both a strategic and highly prospective task.

Population.

According to the information of the State statistics office the population of Abkhazia stands at 242 756 people (as for 1st f January 2014).

including:

• Urban population - 122309 people, (50,4 %)

• Rural population – 120447 people, (49,6%)

Finance

The official currency of the Republic of Abkhazia is the ruble of Russian Federation (according to art. 140 of the Civil Code of the Republic of Abkhazia). “Ruble of Russian Federation is the legal currency compulsory to reception at nominal cost on the territory of the Republic of Abkhazia”.

Considering the fact that Abkhazia is ön the list of countries that declined national currency the main source of accumulation of money supply is black ink.

However, the underdeveloped state of economy becomes apparent with the negative relation of the aggregate demand to the aggregate supply at the internal market and leads to the annual increase of red ink of the foreign trade turnover, thus limiting the opportunities of monetary and credit policy of Abkhazia, which as a result puts the country in a position of dependence on volume of services export (tourism), of external injections (transfer and other types of payments), international investment.

The National Bank of the Republic of Abkhazia is developing and implementing along with the Cabinet of Ministers of the Republic of Abkhazia the state monetary and credit policy of the Republic of Abkhazia.

The main indices of the Bank of Abkhazia that characterize money-and-credit relations are:

• Prime rate of the Bank of Abkhazia – 12 %;

• Interest rate on refinancing credit of the Bank of Abkhazia (taking into account margin 6 of the annual interest rate) – 18 %;

• Average weighted rate of interest on interbank credits represented in rubles – 22 %;

The Credit system of the Republic of Abkhazia is represented with 11 credit institutions.

Due to absence of wide recognition of sovereignty of the Republic of Abkhazia credit organizations implement foreign economic activities through correspondent accounts in banks of Russian Federation. Correspondingly, the conversion and further transfer into accounts in other countries are implemented through above-mentioned accounts on preliminary notice. This procedure usually takes one bank day.

State budget

One of the most important financial documents of the Republic of Abkhazia is the State budget. The budget is examined, approved and controlled by the People’s Assembly – the Parliament of the Republic of Abkhazia.

For the period since 2007 till 2009 the profitable part of the budget increased to 8 billion 90,7 million rubles. The sharp increase is related to the inclusion of the gratuitous financial help of the Russian Federation to the profitable part of the budget.

In the law on “state budget of the Republic of Abkhazia for 2013” the financial assistance of Russian Federation of 1 billion 939,5 million rubles is also envisaged in the budget, and own profit is 3 089,9 million rubles, which is formed mostly by means of VAT, income tax and custom duty.

Gross Domestic Product

According to figures of the bureau of state statistic of the Republic of Abkhazia, the growth of the nominal GDP for 2009-2012 was 14,2% at an average, in real terms 12,7% in a year.

Volume and dynamics of GDP (mln rub)

 

  2009

  2010

  2011

2012

Gross domestic product (based on current prices), mln rub.

15676,6

20777,8

21988,1

25069,7

Gross domestic product (in real terms), in percentage to previous year.

-

    121,7

102,5

114,0

GDP deflator index, in times to previous year.

-

1,3

1,1

1,1

As previously stated, the specificity of the economy of Abkhazia is that it is highly import dependent in main fields of production and is to a greater degree subject to influence of the internal markets conditions.

Moreover, despite growth of the nominal GDP high expenses capacity and low efficiency of the use of available resources remains, which, in turn, indicates predominance of the evidence of economy extension.

Tourism

One of the most dynamically growing and prospective fields of the economy of the Republic of Abkhazia is tourism. In view of a number of national competitive advantages(climate, nature, historical monuments and architecture pieces, etc), the touristic product of Abkhazia holds strong positions on touristic service market, attracting attention to Abkhazia of more than 1 million people annually.

The most eagerly sought field of tourism in Abkhazia is educational tourism which makes up to 60 % of the touristic flow.

Along with educational tourism coastal tourism successfully develops. The majority of tourists that come to Abkhazia to vacate or to be treated stay in Gagra region, because more than 70 % of functional treatment resorts of Abkhazia are situated in Gagra or Pitrsunda.

In spite of relatively positive development dynamics of the tourism in Abkhazia, the potential of the touristic product of the republic is not fully exploited due to several circumstances. Among the competitive advantages that are listed above is the ecological cleanness of the republic.

Agriculture

Traditionally Abkhazia is an agrarian state and according to the figures of the population census, more than 49 % of the population reside in the countryside. On a par the households sector covers up to 50 % of the GPD structure.

Among the main branches of the agricultural development are: fishing industry (anchovy, horse-mackerel) and crop farming (citrus, hazal-nut, grapes). Most of the agricultural products is exported to Russian Federation from Russia.

(mln rub)

Export of farm produce

2011

2012

2013

Fish

51,5

43,3

0,9

Fish products

160,2

208,5

135,7

Citrus culture

178,5

361,2

584,5

 

Taking into consideration the key role that agriculture plays in the economy of Abkhazia, the leadership of the country arranged support of this sphere. Thus, in the frameworks of the complex plan of assistance to socioeconomic development of the Republic of Abkhazia for 2010-2012 year, more than 1000 hectares of perennial crops were planted, and it is planned to plant more than 1000 hectares in 2013. It is planned to build the fruit and vegetables store cellar with the capacity of 2500 tons, the necessary equipment is being bought. The enterprises on the processing of horticultural crops, honey, etc. are projected. These and other measures are aimed at increasing the quality of the output product, diversification of Abkhazian agriculture on competitive markets of other countries, Russia in particular.

Transport.

Vehicular traffic is the main in the republic. The length of the roads of republic importance is 473,8 km, of local importance - 1830,9 km that lack construction works.

There are two airports in Abkhazia. Sukhum airport is designed for wide-body passenger liners and cargo carriers with the capacity of 200 tons. Bambora airport near Gudauta is designed for reception of civil airliners and all-weather maintenance of naval aviation and transport aviation.

The country prepossesses three seaports, including military Ochamchira seaport.

The length of the railroad is 221 km, the branch from Psou on the border with Russia to Ingur on the border with Georgia located along the seacoast of the Black sea, and also the branch Ochmchira-Tkvarchal.

Communication.

Abkhazia has the following types of communication:

• Telephone communication (with the access in all regional centers)

- digital telephony

- analogous telephony

• Mobile communication (with the extension to 96 % of the territory of the republic)

- AQUAFON GSM

- A-MOBILE

3) Broad Band WL (in all regions)

International economic activity.

External turnover of the Republic from 2008 and till 2013 increased 2,5 times. The positive dynamics is preconditioned on positive changes in the economy of the republic, the increasing paying capacity of the population and the growth of volumes of consumption correspondingly, the growth of touristic flows, the change of volumes and structure of export and the beginning of activities related to the complex plan of assistance to socioeconomic development of the Republic of Abkhazia for 2010-2012 years.

 
 
 
 
© 2015 Administration of the President of the Republic of Abkhazia, Sukhum, Naberezhnaya Makhadjirov, 32, phone.: +7 840 226 46 31, fax: +7 840 226 46 31
mail: info@presidentofabkhazia.org
The development - AIT