Business Ombudsman: Banking regulations should be mitigated

Irakli Lekvinadze, who has been Business Ombudsman since the beginning of 2018, presented statistics of activity and talked about the problems in the private sector on July 17, 2019. According to him, during the past six months, the construction sector was mainly challenged by bank regulations, as well as new legislation on labor.

According to the Ombudsman, bank regulations should be mitigated so that changes do not reflect on the construction sector so dramatically.

“As a result of consultations, there is a need for more mitigation in terms of construction as well as the sale of domestic appliances, since the regulations have important impact, especially in the regions and especially for midsize companies,” said Lekvinadze.

It’s noteworthy that Tbilisi Mayor and general secretary of the ruling party, Kakha Kaladze, commented on the bank regulations in June, noting that it is essential for the government to review the regulations.

Back in May, at the meeting held with the representatives from Georgian Business Association member companies, the President of the National Bank, Koba Gvenetadze didn’t rule out the simplification of bank regulations either.

In the spring of 2018, the National Bank has tightened regulations for loan withdrawals from banks and financial institutions within the fight against excessive debts. However, experts think that the new rules are too strict and impede economic development.

Besides that, Business Ombudsman reported that in six months in 2019, there were 171 cases registered based on entrepreneurs’ appeal, and the Ombudsman sent 44 meditations, 29 recommendations, and 17 legal conclusions. In these six months, the work on the 42 cases was completed, and the authorities have taken into consideration the positions of the Business Ombudsman in full or partial terms in 80% of cases.

As reported, 40 %of the addresses to the Business’ Ombudsman’s office are from the companies operating in the retail and wholesale trade sectors. 60% of applications are said to be submitted from Tbilisi. According to the statistics, most companies address the business’ ombudsman’s office requesting the mediation with the Ministry of Finance of Georgia and various departments within it.

According to the Lekvinadze, the main challenge of the business environment in Georgia today is the expected results of the Russian tourist embargo.

As business ombudsman said at the presentation, it is important to diversify markets further: “The interruption of air traffic and the sharp decrease in tourist flows has already made the reflection on the tourism industry and related sectors. In the current situation, it is important to diversify the markets, the opportunity that is provided by the current international free trade agreements,” said Lekvinadze.

Tax/Business Ombudsman Institute was created in 2011. The foundation and activity of the institute is based on Article 42 of the Tax Code of Georgia. The Law of Georgia on Business Ombudsman has been launched since June 5, 2015, based on which the Institute has continued its activities under the new name.