Economy
Georgian State Development Bank heading the wrong way
08 May, 2014
The Georgian government is setting up a Development Bank to fund projects important to the state. However, the suggested model falls far from the best world practice and many sector pundits think it is doomed to a failure. According to the bill on the State Development Bank, the bank will be established on the basis of a state-owned Partnership Fund set up by the previous authorities in 2011 with the aim to promote investment in the country by co-financing maximum 50% (equity, mezzanine, etc.) in projects at their initial stage of development and leave it 3-7 years after the investment.
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Civil responsibility insurance to be mandatory
08 May, 2014
Civil responsibility insurance or insuring responsibility of vehicle owners against a third person in case of an accident will become mandatory in Georgia. The Georgian authorities already addressed the issue and civil responsibility insurance is expected to enter into force by 2015. While insurance of the vehicle owners’ responsibility against third persons has been successfully implemented in developed European countries for over 50 years, Georgia remains the only European country which still lacks this obligation. As a matter of fact, Georgia is the sole country without this civil responsibility insurance within the entire post-soviet space.
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Georgian GDP of 2013 in figures
08 May, 2014
The Georgian economy grew with 3.2% in 2013 compared to 2012, the Policy and Management Consulting Group informed Georgian Journal. Agriculture and trade increased significantly, contributing to the real GDP growth 0.72 and 0.74 percentage points respectively. According to the PMCG research, in 2013 the real GDP increased 3.2% or GEL 463 million compared to the previous year. In 2013, the largest growth was noted in agriculture (9.8% or GEL134.4 million). Its contribution to the real GDP growth is 0.72 percentage points. The construction sector was the largest failure and shrunk with -10.6% or lost GEL 124.3 million. This caused a reduction of the real GDP with 0.71 percentage points. Compared to a similar reported period in 2012, the industry increased with 6.9% or GEL 200.2 million. This sector made the largest contribution (0.96 percentage point) to the real GDP growth (3.2%).
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Land moratorium discriminates non-banking finance sector
08 May, 2014
The exemption of the Georgian banking sector from the moratorium on the sale of agricultural lands puts banks into a privileged position and thus violates the principle of fair competition on the Georgian financial market. In order to put all market players in equal conditions, Transparency International Georgia, a non-governmental watchdog, appealed to the Georgian Parliament to honor the exemption to the entire financial sector. However, the legislative body turned down this suggestion as imperfect.
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Georgian highlands to go tax-free
01 May, 2014
Woing business in the Georgian highland regions will become tax free for 5 years. The due draft bill on the said change is already underway and slated for discussions.
The Georgian government launches a protectionist policy in the highland regions of Georgia. According to sector pundits, mountain regional policy will be a priority to Georgia at last. They underline that aside of the economic input of mountains, where the ample water resources of Georgia originate and where the most potential hydro power plants are situated, also include coal and manganese deposits and are a driving force for tourism thanks to their breathtaking landscapes, spa-and-ski-resorts. They are also of primary political and strategic importance. As a matter of fact, a significant part of Georgia’s border line is stretching through the mountains. While the west border of the country is guarded by the Black Sea, the north frontier line with Russia goes on to the Caucasian highlands, and the south line bordering with Turkey trails through the mountain range across the regions of Samtske-Javakheti and Achara.
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Georgia - among top three wine importers in Russia
01 May, 2014
The Georgian wine import to Russia exceeded its pre-embargo level as it takes over 6.4% of the Russian wine market compared to the 5% before the embargo. The unbelievably high demand for Georgian wines exceeded even the most optimistic expectations and laid ground to this success story, sector pundits say. However, the market remains risky. Georgian companies try to mitigate the risks through advanced payments.
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Better investments policy for petty fry required
01 May, 2014
Georgia lacks proper regulation of petty investors since it provides neither a clear policy on investment opportunities nor due protection of their investments. Sector pundits say Georgia as an investment-deficient country cannot ignore even the pettiest investor. The creation of a fair investment climate for all investors in the country is a must. Surprise or not, but an economically underdeveloped small country like Georgia with an unemployment rate of 16% [that stretches to 45% behind the screen] and over a million of its citizens looking for job opportunities abroad, lately became attractive to labor migrants from Asian countries. Labor migrants from China, India, Taiwan, Egypt, Iran and Africa come to Georgia for business opportunities. They open small trade outlets, run restaurants or a hotel business, some go to the regions for agriculture activity, and some simply trade on the street.
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Long money poses non-transparency risks
01 May, 2014
The so-called long money project launched this year by the Georgian authorities in order to provide the economy with long-term credits is swathed of non-transparency. The project is based on the emission of state Treasury Bills with a volume of GEL 200 million in 2014. Because only banks are allowed to participate in the securities auction in Georgia, banks will buy these state securities while the state will deposit the raised money at the purchaser banks under a single major condition: the state deposits should be disbursed on long-term credits only. Also, banks are required to pay in deposits 1% higher rates than the interest the state pays them for T-Bills. Otherwise, the state gives the banks a loan under 1% whereas it does not restrict them to charge the targeted credits as high as they would like.
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Black tomatoes to be imported to Georgia
30 April, 2014
Georgia is planning to import black tomatoes, which are no less delicious than red ones.
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