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Friday, 28 October 2016


Georgia’s business development hampered by… banks

2010-09-17 20:34

7713.jpegGeorgian leader Mikheil Saakashvili thinks that the economic problems in the country are not connected with halt in production sector or a failure in the state privatization program. According to the president this all is banks' fault! Mikheil Nikolayevich threatens: if banks don't invest in business projects and continue to keep money on interest the amounts may very well "get lost".


The economic community is resentful over Mikheil Saakashvili's ultimatum. As Nodar Javakhishvili, an economy expert, former president of the National Bank stated, the president's suggestion is anti-statal in itself. "The statement is not only absurd, it is maleficent, - he is quoted by Business Georgia. - The society has gradually woken up realizing that Saakashvili's speeches must not be taken seriously". According to Javakhishvili if Georgia was a normal state, Saakashvili's words would provoke a large-scale financial and banking crisis and panic that would eventually result in long queues at the bank doors.

Thank God there are no queues yet. Georgia's people are so used to their eccentric leader that his calls and promises are always divided by ten. Another thing is curious here.

The point is that the economic crisis that swept the world in 2008 looking in Georgia, naturally, was a heavy blow to the republic's banks. Realizing complexity of the situation the state decided to throw a bone to the banks resuming sale of treasury bonds for two-month loans in 2008.  

The Financial Ministry's initiative was received positively. Lasha Papashvili, head of supervisory board of Respublika bank highlighted: this financial measure is needed when banks have excessive liquidity. TVS-Bank vice-president Paata Gadzadze added that the government's decision will let banks have more profitable and secure assets. "Investing funds in state securities, albeit low-profit ones, is beneficial to any bank since it bears absolutely no risk", - he stated reminding that this will help the government to refill the budget and avoid problems meeting social obligations.

Now that the government is trying to turn Sakartvelo into Europe's Singapore and Europe's number one sea resort, the state needs money. Yes, probably, speaking about business projects and calling on Georgian entrepreneurs to invest, Saakashvili only wanted to motivate local businesses. The result, however, is directly opposite.

In an interview with GeorgiaTime Giorgy Khukhashvili, a Georgian expert on economic issues, stated he had strong doubts about availability of funds needed for implementation of such projects with the businesses independent of the authorities. "We have the so-called nomenclature capitalism with the state leadership managing businesses as senior partner, - the expert says. - Our leaders should not have delivered a TV speech to the business community. They could have discussed that with their partners personally. I believe that here Georgia's economic model is very much like that in Russia". Khukhashvili is also rather skeptical about Saakashvili's words on benefits granted to participants of state projects. "There is a liberty here: exemption to property and profit tax offered verbally is provided by the law, not by the president or government", - he remarked.

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