Economy
Georgian currency puzzle
27 February, 2014
The frequent fluctuation of the Laristill puzzles business and consumers as prices rise. Sector pundits ascribe the unstable Lari to the high dependence of Georgia on imports, and advise Georgian government to encourage development of national industry properly. On the other hand, they blame the National Bank of Georgia for an inadequate monetary policy, and suggest more open currency trade as a solution.
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Economic Strategy 2020 – no breakthrough?
27 February, 2014
The much expected draft paper for social and economic development in Georgia until 2020 was released on 12 February. The paper is the fruit of collaboration between the cabinet of ministers, business associations, and the central bank, as well as independent economic analysts – and it aims to raise the competitive power and welfare of the country as its ultimate goal. The draft is up for public review on the official web-pages of the economic and finance ministries, prior to approval of the public sector and its legal confirmation.
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Maritime freighters beware monopoly
20 February, 2014
International maritime shipping companies are increasingly wary of an emerging monopoly on terminal business in Poti. Eight terminals owned and run by international maritime shipping companies there fear they will be shut down soon if the Revenue Service (RS) of Georgia, part of the Ministry of Finances (MOF), does not put all market players under equal conditions.
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Curbing banks’ appetites
20 February, 2014
Four Georgian analysts have appealed to Georgia’s authorities and its central bank to prohibit non-profile business activity to commercial banks. When banks become dangerous competitors with their own clients, it compromises market competition, and has a heavy impact on the national economy. Three economic analysts - Levan Kalandadze, Irakli Lekvinadze, Giorgi Abashishvili - and a legal analyst - Levan Alapaishvili - sent a joint letter to the Prime Minister, Speaker of the Georgian parliament, and Governor of National Bank of Georgia on 13 February, in which they called for prohibiting non-profile business activity to banks, as well as restricting financial, but not banking, business. Initiators of the idea believe that there is an obvious trend when banks enter all sectors of the economy, both financial and non-financial, and take monopolistic positions due to their access to financial resources, enabling them to oust weaker competitors from the market.
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Tbilisi Budget Rejected Again
20 February, 2014
On 12 February – for the second time in six weeks - Tbilisi City Council (Sakrebulo) voted down a draft of the capital city’s 2014 budget proposed by the Tbilisi City Hall. The draft budget, rejected by a 22-17 vote, has turned into a major source of conflict between Sakrebulo, where the Georgian Dream holds a majority, and the UNM-controlled Tbilisi Mayor’s Office, which is the executive branch of the municipality. The draft was revised by the Tbilisi City Hall in late December, when the budget was first voted down by the Sakrebulo.
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Viticulture research launched
20 February, 2014
Georgia has launched a project for scientific research of its viticulture aiming to confirm its claim to be “the cradle of wine.” “I would say without exaggeration that the wine culture is identified with the nationality of Georgian man,” Irakli Gharibashvili, Prime Minister of Georgia, stated during an event presenting the Georgian Vine and Wine Culture Research that took place at the National Museum of Georgia on 11 February. “The historical roots of the Georgian people are entwined with the roots of the vine, and the history of Georgian wine producing is integrated with the history of the Georgian people.”
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Agriculture Ministry report
20 February, 2014
On February 13, Minister of Agriculture reported to media on recent achievements and short-term plans. The Georgian Government Open Management project entails monthly public reports from each ministry. According to Shalva Pipia, Minister of Agriculture, authorities continue a three-year project aiding small farmers in spring works. The project started in February 2013, and has already spent around GEL 184 million on 649 thousand farmers.
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Digital broadcasting strategy
20 February, 2014
Starting from 17 June 2015, Georgia will be able to fulfill international obligations and transmit on terrestrial digital broadcasting. Its government has approved an action plan and is setting up a special agency to implement this. Ministry of Economy and Sustainable Development of Georgia, after several months of intensive work, has developed a document that determines main directions and plans for digital television transition. According to Dimitri Kumsishvili, First Deputy Minister of Economy and Sustainable Development, who presented the action plan on 14 February, the document was developed after taking into consideration requirements of broadcasters, and with active involvement of local non-governmental organizations.
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Indexed interest affects borrowers
20 February, 2014
The recent increase of the monetary policy rate by 0.25% means that the price on credits will equally increase, but the problem is greater for outstanding loans.
The point is that Georgian commercial banks exercise the indexed interest rate tied to the monetary policy rate defined by the central bank. This mechanism allows commercial banks to vary their interest rates fixed on all credits, including already disbursed loans, on par with monetary policy rate variations. Though, once National Bank of Georgia increased its refinancing rate or monetary policy rate from 3.75 to 4% on 12 February, borrowers have to pay 0.25% more.
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