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Govt Vows to Step Up Privatization Amid GEL Depreciation
Civil Georgia, Tbilisi / 25 Feb.'15 / 17:53

Government said it expects to raise USD 300-350 million within two-three months as a result of intensifying privatization process of state-owned property, which, among other measures, the authorities hope will help to “stabilize” falling national currency lari (GEL), Economy Minister Giorgi Kvirikashvili said.

Kvirikashvili, who along with Finance Minister Nodar Khaduri met business community on February 25, said that among the state assets, government plans to sell, are Economy Ministry’s building in Tbilisi center, as well as a building previously housing the central bank in downtown Tbilisi, seaside government residence Bobokvati and residences in Tskneti in outskirts of the capital city, and 70% of Georgian Lottery Company.

Kvirikashvili also said that the government plans to sell thermal power station. Earlier the Economy Minister said that the state-owned Partnership Fund (PF) was planning to sell its shares in 230 megawatt combined cycle thermal power plant; 51% of the plant is owned by the Georgian Oil and Gas Corporation and 49% by the Partnership Fund, both state-owned entities.
 
“The list also includes other [state] assets, privatization of which will significantly stabilize lari and we expect that the rate may appreciate,” Kvirikashvili said.

2015 state budget, adopted by the Parliament in late December, set revenues from privatization only at GEL 85 million (at the time of adopting 2015 budget it was about USD 46.1 million and now about USD 38.6 million).

The meeting between business representatives and two government ministers was organized by the Business Association of Georgia. Association’s deputy director, Irina Kvakhadze, said that the meeting aimed at sharing business community’s “concerns” with the government and hearing from the ministers how they are going to tackle existing economic challenges; she said that “messages from the government were positive” and now it should be followed by concrete steps.

President of information and communications technology company, UGT, Giorgi Chirakadze told journalists after the meeting that the existing economic situation should be a wake-up call for the government.

“What has happened might be even good as it may serve as a wake-up call for [the government] to realize that there is no time now for our country to introduce business unfriendly laws,” Chirakadze said.

Economy Minister Kvirikashvili said on February 25 that 2015 economic growth is expected to be 2% instead of initially forecasted 5%.

Cutting of growth forecast will lead to revision of 2015 budget by cutting “administrative spending,” Finance Minister Nodar Khaduri said and added without elaboration that spending cut will not affect state-funded social programs and infrastructure projects.

Meanwhile on February 25, president of the National Bank of Georgia, Giorgi Kadagidze, met senior executives of commercial banks to discuss possible restructuring of dollar loans for those individuals who have income in lari.

Kadagidze said that the commercial banks were “tasked” to present within a week measures, which might be, among others, prolonging loan maturity, to ease the burden of lari depreciation for those who have loans in dollar and income in lari.

Since early November, when GEL started depreciation, the Georgian currency lost 29% of its value against U.S. dollar and 16.3% against euro.

“We have enough reserves to secure financial stability,” Kadagidze said. “According to available data lari has to stabilize in near future.”

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