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Khaduri talks about the Georgian economy

By Tatia Megeneishvili
Tuesday, February 25
Minister of Finance Nodar Khaduri, spoke about the economic problems in Georgia, in an interview with the Georgian weekly Kviris Palitra.

Khaduri spoke about the socioeconomic development strategy, accordingly to which, economic parameters are planned to be improving for 2020. For example, today the country's gross domestic product per capita is around 5,800 GEL, while by 2020 this number must become 13,000 Gel, also the unemployment rate must be reduced to 12% from 15%.

Khaduri said even though the document was presented by the economic and finance ministries, the whole cabinet of ministers took part in its creation.

“Georgia had no analogue of this document. We have foreseen the experiences of other countries, mostly the post- Soviet Union countries,” Khaduri said.

According to the minister, the deepest problem for the Georgian economy is that it is not competitive.

“Georgian products are not competitive even on the Georgian market. I am not even talking about foreign states,” Khaduri said. He added that low availability of funding is the main reason, referring to bank credit resources.

On the paper’s question of how to make cheap credit resources more accessible, Khaduri answered that banks do not have a shortage of liquid assets, but there still is problem of long-term money.

“They have short-term money, they are motivated to refrain from short-term projects, and for the most part it is serious investment projects,” the finance minister said, adding that the government has already taken the first step in this direction.

He said the Georgian administration has launched a project called the money extension project.

“We borrowed 44 million GEL from banks, [this year we are going to borrow another 200 million GEL from the same banks] and pay it back at about +1%, but it will be long term debt,” Khaduri stated.

The minister spoke about unemployment in the country. He said that in Georgia there are very high levels of self-employment. “For solving problem we are working to move people from informal employment into formal employment,” Khaduri said, explaining that for example the banks gave the government money for “A%” they will have them bank for A+1%.

According to Khaduri, the banks thus have the state guarantee that they will not use this money. Thus they will have interest and opportunity to finance long-term investment projects with lower interest rates.

Minister Khaduri also spoke about the recent inflation of the GEL. He said this process has occurred throughout the world, of course, in some places more, and in some places less. He said the Georgian economy is dollarized so that 70-75 % of all business transactions are concluded in USD.

“When the economic recovery begins, the demand for dollars increases. Government debt is in foreign currency and the dollar rate has taken toward increasing the GEL,” Khaduri explained.

According to the National Bank of Georgia official, the lari exchange rate on February 22 was 1.738.