PM Bakhtadze addresses economy-related issues at the Parliament
By Natalia Kochiashvili
Monday, June 3
"First of all, I wish to tell you that we have transited to parliamentary democracy and it was indeed a choice made by our executive team… Every member of my Cabinet of Ministers and I demonstrate great respect towards this format. When questions of high public interest are addressed, the government is obliged to give answers to them," said Bakhtadze.
PM stated that the government wants to "create a decent pension system for our citizens and in the world, no successful country has a decent pension without a pension fund. This is the truth and the economic norm." Regarding specific figures PM lets the public make analysis and choices: "Considering all factors, Considering the inflation, the 25-year old that will enter this system when it comes to retirement age, will receive today's purchasing capacity of 2300 GEL only from this component. The law, which was introduced and supported by the Parliament, envisages a voluntary system - the so-called third pillar."
PM also answered questions related to the management of the pension system and which infrastructural projects this accumulated money will be spent on. According to him, the opposition is also represented in the Investment Board. "This investment council includes people, who managed Finnish pension fund, French pension investment fund, world giants, Vice-President of the number one investment bank - JP Morgan - and many others," said Bakhtadze, adding that the pension fund is the only alternative.
Regarding the TBC Bank issue, Bakhtadze stated that the agreement has been reached between all the institutional shareholders, including the TBC management, and with the NBG.
Prime Minister commented that the central bank of the country applied sanctions as a result. He assessed the measures taken by the NBG as legitimate, including those that are to follow. Bakhtadze stressed that the agreement reached by TBC Bank and NBG has been was shared by all institutional investors and international financial institutions. "If you agree with an agreement of the NBG and TBC Bank, you should agree with everything that follows this case," said PM.
Issue of the TBC bank started at the beginning of the year. Founder of the Georgian leading bank TBC Mamuka Khazaradze resigned from the bank's supervisory council amid a row related to a money-laundering case involving him and another top banker at TBC, Badri Japaridze.
Another major topic of discussion was the National Bank of Georgia (NBG) regulations on responsible lending practices that means that commercial banks in Georgia are restricted in issuing loans without meaningful analysis of consumers' solvency.
Bakhtadze explained that these are the financial sector regulations and not banking regulations. "We intended to set a ceiling on interest rates to drop them way down from 700 and 800 percent per month. Georgia should no longer have unfair rules of the game that you left as a legacy. My second point is that a cap should exist on the sanctions and interest for overdue payments to make sure that people no longer lose their houses to meet their liabilities towards creditors. We introduced a bank exposure limit at 200,000 GEL, to promote lending in the national currency," said Bakhtadze.
He also reminded parliament members, that new products have been offered to its customers by the commercial banking sector of the country in the form of a 7% interest on loans denominated in GEL and reminded opposition members that back when they were in power interest rates were as high as 21%. "Refresh your minds! Interest rates have been reduced three times!" he added.
Bakhtadze recalled the Open Budget index, released last year which ranked Georgia 5th in the world out of 82 scores, based on an analysis of 115 nations' budget transparency, participation, and oversight.PM assessed this as a historic achievement "At the same time, we took the obligation to reduce the budgetary expenditure of government agencies as much as possible. I took political commitment and said that it would be 3.9 percent", said Bakhtadze.
About 225,000 citizens are employed including State Legal Entity of Public Law and non-entrepreneurial (non-commercial) legal entities and among them are firefighters, rescuers, doctors, people employed at cultural and sports organizations.
This was the second time the PM met with members of Parliament for interpellation, where the opposition MPs have the right to summon top officials to Parliament and ask them questions on specific issues.