Caucasian Business Week #107

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July 13, 2015 #107

July 13, 2015, Issue 107

caucasus1

BE INFORMED, DO BUSINESS

David Sergeenko: Implementation of Primary Health Care Reform is Underway Pg. 10

GEORGIA

TEA INDUSTRY MAKING VITAL STEPS IN GEORGIA

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eorgia, with support of the European Neighbourhood Programme for Agriculture and Rural Development (ENPARD), is tackling the challenges and encouraging development of tea production in the country.

Pg. 5

NEW RAILWAY STATION OPENS IN BATUMI

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he Station is placed at the building of “Batumi-Central” and occupies 750 square m.

Service centers of the railway with box-offices are already arranged in the building. Passengers’ waiting halls are also well-furnished. Pg. 7

GEORGIAN INVESTMENTS AGENCY DRAWS 827 MILLION USD INVESTMENTS

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eorgian National Investment Agency (GNIA) in 2014-2015 attracted $ 827 million of large and medium investment.

“Commersant” was told at the Agency.

Pg. 7

ONE YEAR ON FROM GEORGIA’S EU INTEGRATION: POSITIVE EXPECTATIONS ARE MET

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hat are the benefits of Georgia’s European approximation? This question was raised most often in the Georgian media last year while discussing the Association Agreement and the Deep and Comprehensive Free Trade Agreement with the EU. Pg. 12

EXPECTED DECLINE IN 2015 REMITTANCES TO CUT NOMINAL GDP BY ABOUT 1%

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ccording to the data provided by the consulting company PMCG, an expected decline in remittances in 2015 will not decrease nominal GDP by more than 1%.

Pg. 13

64% OF RESPONDENTS BELIEVE THAT THERE IS NO COMPETITION IN GEORGIA

Pg. 5

Georgia has immense untapped hydro resources – it is assumed that only 20% of total hydro potential is utilized

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he Georgian electricity sector has been deregulated over the last decade. meaning they can choose their market and the price in which they are willing to sell. The state electricity company has been unbundled into

generation, transmission and distribution companies, and the generation and distribution sector is mostly privately owned. An independent regulator, GNEWRC, regulates the sector, while the Ministry of Energy sets policies and is responsible for facilitating large investment projects.

USD Stream - Current Statistics Includes no Grounds for GEL’s further Deprecation

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ast week the National Bank of Georgia (NBG) published the foreign sector’s statistics for the first quarter of 2015. The report includes information about the balance of payments, external debts and Georgia’s investment positions. The Banks&Finances provides a detailed

description of this important macroeconomic statistics.

The balance of payments represents an important statistical report that describes economic operations between Georgia and the remaining world.

This report reflects currency inflows and outflows.

Pg. 6

Georgian Railway Continues Modernization

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ccording to a survey conducted by the Competition Centre, 64% of respondents believe that in Georgia there is no competitive environment for businesses.

Pg. 13

NEIGHBORHOOD AZERBAIJANI BANKS INCREASE RESERVES

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he expanded monetary base in Azerbaijan totaled 7.984 billion manat as of June 1, 2015, the report of the Central Bank of Azerbaijan as of January-May said.

Pg. 13

WORLD NEWS GREECE HAS A PLAN

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n 8 july, Greece submitted its latest round of bailout proposal to its European creditors, ahead of a midnight deadline.

The Financial Times noted that this plan is part of a request for a new 3-year bailout.

Pg. 13

Paradox on Georgian Internet Market

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he Banks&Finances newspaper has published a lot of articles about the current situation on the Georgian internet market. These articles have submitted specific figures in relation to the market realities and inflated tariffs. Experts, journalists and various nongovernmental organizations have expressed their considerations there is a

HELTHCARE REFORMS IN GEORGIA Pg. 7

bipolar monopoly on the market. Ordinary citizens have also expressed their discontent against Caucasus Online and Silknet because of inflated tariffs and continuous growth in service prices. Under the hothouse conditions, these two major companies operate with almost the same tariffs and in practice, no other companies have the chance for development to find a niche on the market.

Pg. 7

David Usupashvili: Nothing Will Cause Harm to the Central Bank of Georgia Pg. 8

Nodar Khaduri: Georgia is China’s Priority Country within New Silk Road ProjectPg. 8 Nino Zambakhidze: Government should Gradually Withdraw from Agriculture Programs

Pg. 4

Irina Milorava: Electricity Tariffs will be Revised Due to Lari Devaluation Pg. 8 Nikoloz Shurgaia appointed as a member of Georgian Stock Exchange Supervisory Board

Pg. 9

Devi Khechinashvili: Georgia is the World’s Only Country without Mandatory Insurance Service

Pg. 4

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GOVERNMENT NEWS

TBILISI CITY HALL AGAINST RIGHT-HAND DRIVE VEHICLES

MAIN EVENTS GEORGIAN GOVERNMENT DEVELOPS SCHOOL PROGRAM FOR FIRST GRADERS

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new program developed by Georgia’s Ministry of Education will make young childrens’ school entrance easier and less stressful.

Education Minister Tamar Sanikidze and UNICEF representative in Georgia Sascha Graumann officially presented the ‘School Readiness’ program yesterday. The program targeted first graders and aimed to develop a child’s motor, social and cognitive skills, communication and speech, as well as desire for learning.

NEW GOVERNMENTAL WORKING GROUP FOCUSES ON GEORGIA’S CONFLICT ZONES

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he Georgian Government has created a new inter-agency working group that will focus on the current developments in Georgia’s conflict zones. The first meeting of the inter-agency group was held in the Government Administration today. The group is led by Prime Ministrer Irakli Garibashvili and consists of Georgia’s Minister of Defence, Foreign Minister, State Minister of Reconciliation and Civil Equality and other Government representatives.

The officials discussed the needs of the population living in Georgia’s occupied territories Abkhazia and Tskhinvali (South Ossetia).

THE NETHERLANDS RATIFIES EU-GEORGIA ASSOCIATION AGREEMENT

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he Kingdom of Netherlands has ratified the Association Agreement (AA) between Georgia and the European Union (EU).

The Dutch Senate today unanimously supported ratification of Georgia’s AA deal, which included the Deep and Comprehensive Free Trade Area (DCFTA). The legislative body of the Netherlands voted in favour to ratify the document on April 7, 2015, after which the document was sent to the Senate for consideration. Under local legislation, the King of the Netherlands will sign the document after the official ratification.

DETAILS REVEALED FOR NEW SUBWAY STATION IN TBILISI A Spanish joint venture has been selected to build a new subway station in Tbilisi’s Saburtalo district. The new University Station, expected to cost $83 million GEL to build, will be completed by joint venture of two Spanish companies Cobra Instalaciones Y Servicios and Assignia Infraestructuras.

T PRODUCE IN GEORGIA: 90 NEW ENTERPRISES LAUNCH IN 12 MONTHS

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ne year on from the establishment of the Produce in Georgia program, 90 new projects with a collective investment portfolio of $252 million USD have been implemented in the country, says Georgia’s Economy Ministry.

Today the Economy Ministry and Prime Minister Irakli Garibashvili summarised the first annual report of the Produce in Georgia scheme, which aimed to stimulate Georgia’s agricultural sector, and the achievements reached during the past 12 months.

PM Garibashvili said since the program launched, commercial banks in Georgia had issued loans to private sector entrepreneurs worth 122 million GEL. He added the 90 new enterprises, when operating at full capacity, would provide jobs for more than 5,000 people.

We know for sure our economy’s main challenge is unemployment, developing of local production and agriculture. Today more than 130 enterprises are financed and more than 600 enterprises are further supported. We invested a total of 900 million GEL in during the past two years in the agriculture sector,” said Prime Minister Garibashvili.

He stressed it was very important for Georgia to replace imported products with locally produced

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GENETICALLY MODIFIED FOOD WITHOUT MARKS WILL BE DESTROYED

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new law came into force from July 1, 2015, all products that contain genetically modified components must have proper labels informing consumers and allowing them freedom of choice. The new law regulated the type of information that must be written on the label. Specifically, if genetically modified components are 0.9 percent more than the product’s total mass, a label stating “GM” must be clearly identified on the top left corner of the product.

Those who break the law will be fined 5,000 GEL. If the wrongdoing repeats the fine will increase to 10,000 GEL.

ones, as this would create jobs and help to solve the country’s unemployment problem.

In one or two years Georgia will be able to replace imported agricultural products. I do not mean tropical fruit; I am talking about products that grow in Georgia. We are not against importing products … but our main concern is to develop local production and employ our citizens,” Garibashvili said.

“Georgia has huge potential. It is wrong to believe that Georgia is a poor country and does not have the natural resources. Several months ago I created a program ‘Strong Region for Strong Georgia’ where we learnt the potential of each of Georgia’s regions. I assure you the potential of Georgia is really unique. We found several resources are not being utilised yet,” Garibashvili said.

The Georgian official noted it was shameful that 50 percent of the Georgian population lived in poverty but the Government was doing its best to address this by developing the country’s agricultural sector. However people must also help themselves, he said.

“Not a single inch of land should be left untreated in Georgia. Georgia cannot have a better offer than the Produce in Georgia program or cheap agro-credit. We created unique conditions for entrepreneurs and now it is their turn to be more active,” said Garibashvili.

bilisi Mayor David Narmania believes that a large number of right-hand drive cars is one of the causes of traffic jams in the capital, in his opinion, the government should take the decision to ban this type of vehicles.

“There are many countries in the world that prohibit the right-hand drive cars in their territories as they interfere with the movement. I think that consultations should be definitely held on this issue, “- he notes.

In addition, the Mayor notes that the number of buses is planned to increase to make the public transport more popular.

“Automobile traffic research in Tbilisi is being conducted, after its completion we will be able to formulate our position, but it is clear that public transport needs to be supported. The decision in this regard has been taken, “- says the Mayor of Tbilisi.

According to the head of the Association of Transportation and Roads David Meskhishvili, the Mayor’s statement on the right-hand drive vehicles is thoughtless and irresponsible.

“It caused a great stir among the drivers. Unfortunately, the Mayor has not his own visions regarding the transport sector. Neither he nor the Mayor’s Office as a whole have idea how to deal with traffic jams in the city.

The decision to ban right-hand drive vehicles can be taken in no event, since this decision will have a devastating economic effect for about 150 000 drivers. In general, we find it unacceptable to consider this issue out of the context. The government should introduce higher standards for automobile fuel, boost imports of new cars, as it is done in Azerbaijan ,”- he notes.

MINISTRY OF ECONOMY: GEORGIA SHOULD BECOME AN INTERNATIONAL TRANSPORT HUB

NATO SECRETARY GENERAL COMING TO GEORGIA IN AUGUST he top official from the North Atlantic Treaty Organisation (NATO) is coming to Georgia next month. NATO Secretary General Jens Stoltenberg will visit Georgia in August and open the NATO-Georgia Joint Training and Evaluation Centre. The month of Stoltenberg’s visit was announced by Georgia’s Defence Minister Tinatin Khidasheli in aninterview with Spanish news agency EFE. Khidasheli also noted eight NATO officers would be permanently stationed in Georgia after the Centre had opened.

July 13, 2015 #107

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eorgia should become a transport and logistics hub, connecting Europe and Asia, and the government is working on various projects in this area - the country’s Economy Minister states.

According to him, one of the main projects envisages an increase of Georgia’s transit function in the framework of the “New Great Silk Road”.

“The important work has already been carried out in the frames of the project, in particular, it will allow the first freight train from China to reach Europe for 9 days. Georgia’s potential makes it possible to provide a quick and cheap transportation from Asia to Europe through the Black Sea ports and the Bosporus. Other routes can be also used - in particular, through Bulgaria, Romania, and Ukraine, “- says the Minister.

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In his words, a fund with an initial capital of $ 40 billion has already been established to implement the New Silk Road project.

“At the same time, Georgia has signed a Memorandum with the Ministry of Commerce of the People’s Republic of China, which will radically change the growth potential of trade and investment,” - George Kvirikashvili notes.

According to him, the potential of this route is evidenced by a study that showed that the shortest route from Kabul to Europe goes right through Georgia.

In all components, Kabul - Poti route proved to be more profitable. In this area, many different projects are carried out and their unity creates the potential network part of which Georgia will be now or in the future ,”- the Minister of Economy beleives.

The head of the economic department focuses on four major projects – Anaklia deep-water port, Baku-Kars railway route, construction of a new runway at Tbilisi airport and railway modernization. In his words, just these projects are the most important, as they determine the capacity of the corridor.

“The tender for expression of interest for the construction of the Anaklia port has already been announced and most likely by the end of the summer the company, which will be engaged in the port construction, will be revealed. The new port will have a number of advantages - a strategic location, the ability to accommodate larger ships, an acceptable rate for service, high throughput,

the ability of logistics services, and the potential for the creation of an industrial cluster. As for the Baku-Kars railway, it will increase the capacity by 5 million tons. Currently more than 60% of the work on the territory of Georgia has been completed, “- George Kvirikashvili says.

He adds that the cost of the Georgian railway modernization project reaches 260 million Swiss francs.

“To date, several tunnels with a total length of 4.4 km have been built. Upon completion, the capacity of the main sections of the railway will increase from 27 million to 65 million tons. Moreover, in the future it will be possible to increase it to 100 million tons. The project will be completed in 2019, “- Minister of Economy says.

He mentions the World Bank’s assistance in terms of transport and logistics infrastructure; in particular, the WB experts will help Georgia determine the location of at least 3 logistics centers.

Infrastructure of bus stations is also planned to be updated, which, according to the Minister, is very far from any civilized standards. “ A bill providing for a gradual entry of regulations into force obliging transport companies to achieve certain standards will be developed. In addition, adherence to international regulation will give vehicles new possibilities - in particular, the Georgian pin-codes will be recognized by the world. This will allow to create auto parts manufacturing enterprises in the country, respectively, will provide an incentive to investors, “the Minister concludes.

The weekly is distributed to top companies, banks, embassies, state sector, Tbilisi and Batumi hotels, Tbilisi, Batumi and Kutaisi Airports, as well as in the town of Marneuli. The newspaper will also penetrate Azerbaijan in the near future

Editor: Nino Gojiashvili. Mobile phone: 595 050404 Reporters: Nutsa Galumashvili; Lazare Gvimradze

Source: www.commersant.ge, www.bpi.ge, www.gbc.ge, www.agenda.ge, www.civil.ge

July 13, 2015 #107

PUBLICITY

caucasus business week

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4 HEADLINES GEORGIA EMBRACES VISA PAYWAVE TECHNOLOGY

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eorgia is the leading nation among more than a dozen countries in the Commonwealth of Independent States (CIS) and South-East Europe (SSE) region to embrace a contactless payment service where users can pay for a product in a matter of seconds. Interest in the Visa payWave service has grown immensely in Georgia over the past six years since it was first introduced and today, Georgia was the leader of 17 countries in the CIS and SEE region, where Visa cards were issued, said a Visa spokesperson.

Nowadays more Georgian customers pay by Visa payWave than in 2009 when the company first entered Georgia. Visa payWave is a contactless payment solution based on EMV chip technology where users hold their card up to a special terminal and money is automatically deducted from their account.

INTERVIEW caucasus business week

GEORGIA IS THE WORLD’S ONLY COUNTRY WITHOUT MANDATORY INSURANCE SERVICE Devi Khechinashvili, the president of the Georgian Insurance Association, talks about the June 13 natural disaster losses, significance of the insurance component and the Georgian insurance sector development issues.

GEORGIA REVEALS PROGRESS IN ADOPTING EU REGULATIONS

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he Government of Georgia is sharing details with its international partners of the country’s progress and ongoing efforts to assimilate with the European Union (EU) – something it is obligated to do under the Georgia-EU Association Agreement (AA). Local and international officials gathered in Georgia’s capital Tbilisi last week for the annual Georgia-EU Subcommittee Meeting on Transport, Energy, Climate Action & Environment. The July 2-3 meeting focused on the Georgian Government’s progress in adopting EU rules and standards. Keeping the EU up-to-date about Georgia’s reforms and efforts to ensure local regulations met EU standards was necessary under the AA, said EU Delegation to Georgia.

TBILISI TO HOST FIRST ASIAN INFRASTRUCTURE INVESTMENT BANK MEETING

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op officials from 57 countries will visit Georgia’s capital next month for the first round of negotiations of the China-led Asian Infrastructure Investment Bank (AIIB).

The AIIB is newly created bank that is expected to be established by the end of this year for the purpose of providing loans for infrastructure projects in developing countries in Asia.

The first ministerial, which will be held in Tbilisi on August 24-25, will see founder banks introduce the candidates they wish to nominate for the AIIB presidential role.

-What is the experience the country has obtained for the insurance sector development after the natural disaster?

-Today the government and experts assert total losses have exceeded 100 million GEL. Some of them names even 150 million GEL, while insured losses, including insured real estate and vehicles, made up about 4.5 million GEL. The number of sacrifices has aggravated the situation. But what will the country do in case of earthquakes, when losses may constitute several billions of GEL? The world experience suggests the Government should develop special programs to minimize the

number of sacrifices and to valuably remunerate all losses, because similar losses directly hit GDP and make negative effect on the life of each of us.

The insurance instrument will work less in the countries with frequent natural disasters. For example, floods represent a part of everyday life in the Netherlands. Therefore, the country has developed other mechanisms of state responsibility. At the same time, the insurance sector is an efficient instrument in the countries, where natural disasters take place rarely, but their results are heavier.

We should handle these issues with full professionalism in Georgia, where there is high-risky zones of earthquakes, landslips, conflagrations and so on. In this situation we should introduce the insurance system that will change the correlation between the guaranteed remunerated losses and the money inflows from charity, state budgets and other sources. In all normal countries a certain part of losses remains uninsured anyway, but the uninsured portion in total losses makes up 10%-15%, not 97% like Georgia.

-What should the Government and the insurance sector make to upgrade the insurance culture in Georgia?

- It is famous insured losses represent the best advertisement. Therefore, the more citizens are involved in the insurance relations, the higher insurance culture will be in Georgia. Mandatory

Interview with Nino Zambakhidze, a head of the Georgian Farmers Association

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total of 24,550,076 million GEL has been donated to a special account opened by the Government of Georgia so people in Georgia and around the globe can donate to the Tbilisi flood relief fund. Officials said the loss inflicted by the disaster exceeded 100 million GEL. Georgia’s Finance Ministry announced all donations totalled 24,225,238 million GEL, $733,649 USD and €64,762 since the June 13 disaster.

ISRAELI INVESTORS INTERESTED IN INVESTING IN TOURISM AND AGRICULTURE sraeli investors interested in investing in tourism and agriculture in the region of Adjara. It was said at the meeting of the Extraordinary and Plenipotentiary Ambassador of Israel to Georgia and the Chairman of the Government of Adjara.

Archil Khabadze and Yuval Fuchs discussed the relations between the two countries. Ckhabadze informed the guest of the current and completed projects and focused on the areas of Israeli investors’ interest.

BUSINESS SECTOR INCREASED BY 11.9%

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ccording to PMCG, In the first quarter of 2015, the production in business sector increased by 11.9%. In comparison with the first quarter of 2014. In this period the average monthly remuneration of employed individuals increased by 72.6 GEL and the number of employees in the business sector increased by 49 661 unit. In the first quarter of 2015, construction has the largest contribution (4.1 percentage point) in the total production growth in business sector.

insurance is the most efficient instrument on this way. This product represents a real leverage for risks management in the developed countries, including for natural disasters or responsibility before the third party. Insurance of vehicles, refueling stations, chemical plants, professional responsibility of doctors, lawyers and so on are classic samples for that. The government introduces mandatory insurance of reasonability before the third party in the countries, where there are high risks. This instrument is to upgrade economic and social stability and prognosis. Georgia is an entirely different country among the developing countries without any mandatory insurance product. This signifies the government abstains to use this instrument for risks management. We should overcome this barrier without fear. Indeed, we understand that Georgia is a poor country and we should take into account this circumstance. At the same time, we should realize that high risks may weaken the economy, decrease the economic growth and we will have to pay all the costs anyway. For example, the Racha earthquake 150 kilometers closer to Tbilisi would heavier damage economy and the losses would affect the country till now, the growth would be far lower. These issues are very important, but they may be resolved simply. There are approbated ways and we should choose the ways that will best fit our social and economic needs.

NINO ZAMBAKHIDZE: GOVERNMENT SHOULD GRADUALLY WITHDRAW FROM AGRICULTURE PROGRAMS

TBILISI FLOOD: DONATIONS EXCEED 24M GEL

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July 13, 2015 #107

- After the GEL exchange rate depreciation, the government started working on restructuring loans to the farmers involved in the state programs. How does the process proceed?

-The process proceeds successfully. The farmers are able to visit commercial banks and banks will develop individual schemes. Some of them want to transfer their loans into GEL, other part rejects restructuring schemes. Each commercial bank should act with individual schemes. Previously the farmers used to take only USD-denominated loans. Now they can continue working in GEL. -Will the state program participant farmers receive only GEL-denominated loans in the future?

-This is a relevant issue. Beneficiaries are able to take loans in both USD and GEL. The farmers who produce and sell products in GEL, consequently, they will take the loans in GEL. There are many farmers, who want to import products and they prefer to take USD denominated loans to avoid double conversions. Farmers are able to

use both alternatives.

- How would you appraise the government’s coparticipation in the agriculture programs and has the co-financing programs justified?

- Many projects have been implemented in the agriculture sector. These projects have considerably advanced the field. The GEL exchange rate depreciation has brought certain problems, but not for only farmlands, but for the whole country.

Cheap agro loans have considerably promoted the sector. A grant component of the competition agency has also significantly promoted farmers. Many amateurs have set up enterprises and enlarged the existing ones. There are many individuals in Georgia who have genuinely made use of these projects and developed their private businesses.

- What will be the next stage and when will be the agriculture sector able to make advancements without state assistance?

- The state sector should gradually withdraw from the mentioned programs. Nevertheless, this

step would be still untimely and early, because the agriculture sector in Georgia had been abandoned for 20 years and it is impossible to revive it in 3 years, especially the primary production. The state programs provide guarantees to organize the production chain. The government should make focus on upgrading skills and knowledge in farmers, as well as on ensuring valuable technical support. Production process must meet the international standards. Small farmers face difficulties separately in this process, because this process is related to financial aspects.

I believe the state assistance should be carried out a bit differently. Infrastructure should be developed, as well as irrigation systems. The country should introduce a flexible insurance system to offer a full package to beneficiaries, not only packages adjusted to one direction. The country should provide cheap loans. Commercial banks should not consider the field to be a high-risky direction. On the contrary, the agriculture sector must become the most attractive direction for the bank sector. In 2020 a 500 million market will open for Georgia and our agriculture sector should meet this time prepared.

- You have said commercial banks consider the agriculture sector a high risky direction for issuing loans. What should change that private investors’ interest in the agriculture sector increase?

-The agriculture sector is a very attractive direction. There are fruitful land plots and 22 climate zones in Georgia. It is very attractive for investors to receive harvest. But they have faced certain problems with moratorium over sales of land plots and visa regime regulations. There were many investors wishing to make investments in the agriculture sector, but certain bureaucracy hampered these people. These relations may be renewed after removing the barriers. We will face significant difficulties with a reasonable use of our land plots without introducing modern technologies and European standard skills and knowledge. ipress.ge

July 13, 2015 #107

THE 10 POWERFUL HPP’S IN GEORGIA

Georgia has immense untapped hydro resources – it is assumed that only 20% of total hydro potential is utilized

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he Georgian electricity sector has been deregulated over the last decade. meaning they can choose their market and the price in which they are willing to sell. The state electricity company has been unbundled into generation, transmission and distribution companies, and the generation and distribution sector is mostly privately owned. An independent regulator, GNEWRC, regulates the sector, while the Ministry of Energy sets policies and is responsible for facilitating large investment projects.

Generation is dominated by hydro power, The 1300-MW Enguri HPP with an annual generation of 3,1-3,3 TWh is the most important generation asset in Georgia, providing 35-40% of total generation in the system in a normal year. There are 13 licensees and 25 low- capacity power plants in Georgia. Among them, only “Engurhesi” and “Vardnilhesi” have been remained in state ownership.

The total installed capacity of the country is around 3300 MW and the average annual output equals to 10 bln KWh. 90 % of the domestic demand for electricity is satisfied with the existing hydro power plants. After the launch of the new HPPs this figure will increase to 100%.

HPPs have been developed with limited reservoir storage capacity. Approximately 10% of annual generation can be placed in storage compared with, e.g., 70% in Norway, which also has a hydro-based electricity system.

Hydropower plants, apart from being cost-effective and the main prospective domestic energy producers in Georgia, are recognized as environmentally friendly renewable energy sources.

Hydropower is among the most profitable industries in Georgia. With over 26,000 rivers, the country has the estimated potential of generating 32 TWh per year, if 80% of Georgia’s untapped hydro-resources are harnessed, according to the United States Agency for International Development (USAID).

With this big potential in mind, the Georgian government has initiated efforts to attract investments in the energy sector in order to build up to 50 new small and medium size hydropower stations, together with large-scale plants and develop the necessary infrastructure for its proper exploitation. Determined to position the country as a future regional renewable energy hub, the government’s long-term plan, as per the Ministry of Energy and Natural Resources, is to export hydropower to Turkey, Armenia, Azerbaijan, Iran, and Russia.

Electricity transmission and transit are carried out by the two transmission licensees: 1. Listed in the fixed assets of “Georgian State Electrosystem” are 35–110–220 kV transmission. GSE is owned 100 % by the state.

2. JSC “Sakrusenergo” manages the 220/330/500 kV transmission lines.

Georgian electricity system is connected to the four neighbouring countries’ power grids through the transmission lines.

CBW put together a list of the 10 most powerful HPPs in the country, See our infographics.

ECONOMIX

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TOP STORY

TEA INDUSTRY MAKING VITAL STEPS IN GEORGIA

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eorgia, with support of the European Neighbourhood Programme for Agriculture and Rural Development (ENPARD), is tackling the challenges and encouraging development of tea production in the country.

To revive tea production in Georgia, the Agriculture Ministry will establish a Commission to research the local tea industry. The Commission aimed to complete in-depth research and thorough analysis of the current situation of Georgian tea production as well to create a state program in the field. Last week ENPARD and its implementing partners ISET-PI, CARE International in the Caucasus, Regional Development Agency, and Georgian Farmers’ Association, hosted the first Stakeholders’ Regional Forum on the tea sector.

The regional meeting was believed to be the first step in the development of the tea industry in Georgia.

In the framework of the forum a discussion was held between representatives of tea cooperatives and successful industry businessmen. All participants highlighted the importance of featuring in the local market but also the need to search for and feature in new markets. Industry insiders said to increase tea sales it was necessary to renew tea plantations with young plants and modernise the local tea production industry.

Statistics showed in 2014, Georgia’s black tea exports amounted to $1,377,000 USD, while the country imported $8,008,000 USD worth of black tea in the same year.

“Program Will initiate important changes in the development of Tea industry in Georgia”

CBW spoke with General director of “Geo Plant”, MIKHEIL CHKUASELI, regarding topic of reviving Georgia’s producing industry. e are actively participating in facilitating the tea development program, which is being carried out with direct involvement and leadership of Georgia’s Ministry of Agriculture. Given program covers the accounting and logging of existing tea plantations in Georgia, as well as specifying their consistency and defining the agro-technical processing they are to be subjected to. This will allow the country to fully rehabilitate current tea plantations and increase their fertility. This is also important from the standpoint of defining specific tea type traits, consistency and points of origin throughout the country, and Georgia already has the same kind of experience in the wine area.

The second rather important aspect is that there’s a lot of encouragement from our foreign partners’ direct involvement along with various donor organizations to develop the practice of cooperatives in villages that will allow the unification of tea plantation owners on countryside plots of land. This will allow more effective control of their expenses and, accordingly, produce quality tea leaves.

I believe that we are at a place right now that and I’d like to especially emphasize the stance of the Ministry of Agriculture – we’ll finish our program very soon, in a matter of one or two months, which will initiate important changes in the development of this field.

It’s very important that the tea production association is participating in the process, since they have been holding a very active stance in terms of protecting local tea producers. It was granted the utmost importance and the tea production association was propagating quality improvements in this area.

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ECONOMY

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USD STREAM Current Statistics Includes no Grounds for GEL’s further Deprecation

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ast week the National Bank of Georgia (NBG) published the foreign sector’s statistics for the first quarter of 2015. The report includes information about the balance of payments, external debts and Georgia’s investment positions. The Banks&Finances provides a detailed description of this important macroeconomic statistics.

BALANCE OF PAYMENTS – CURRENT ACCOUNT WORSENS, CAPITAL AND FINANCIAL ACCOUNT IMPROVES The balance of payments represents an important statistical report that describes economic operations between Georgia and the remaining world.

This report reflects currency inflows and outflows.

CURRENT ACCOUNT The current account deficit in the balance of payments made up 464.752 million GEL in the first quarter of 2015, up 14% compared to the 1Q15 GDP and down 27% compared to the first quarter of 2014.

FOREIGN TRADE – PRESSURE ON GEL DISMISSED The foreign trade’s deficit has increased and this

indicator has worsened. Namely, the foreign trade deficit was 849 million USD in the first quarter of 2014 (the imports marked 1.83 billion USD, the exports was 982 million USD). The deficit in the first quarter increased by 121million USD to 970 million USD. The main reason for contraction in exports is related to the existing economic situation in the partner trade countries, experts and international organizations assert. As a result, the exports have declined by 26%. The imports have also shrunk by 8% and this is an important factor for prevention of the GEL depreciation.

SERVICE SECTOR –12 MILLION USD CONTRACTION Revenues from the service sector made up 214 million USD in the first quarter of 2015 and this factor has played a significant role in neutralizing the negative trade balance. It should be also noted the revenues from the service sector have shrunk by 5.4% year on year.

Revenues from the transportation sector have also declined, while a 16% upturn is reported in the railage revenues.

Revenues from the tourism sector has decreased by 3.9% and marked 241 million USD in the first quarter of 2015, down from 250 million USD of

the first quarter of 2014.

Transfers climbed down by 7% to 329 million USD from 354 million USD. CAPITAL AND FINANCIAL ACCOUNT Capital and financial Account that is another part of the balance of payments, is an important source for financing the current account deficit. Foreign currency outflow, as a result of high imports and low exports, is covered by direct investments and other sources of the financial account.

The capital and financial account has improved by 18% year on year and increased to 458 million USD from 387 million USD. The reporting period has registered a decline in inflow of foreign direct investments (FDI). The portfolio’s negative balance marked 38.4 million USD. The balance of other investments marked 175.4 million USD in the first quarter of 2015. As a result, the capital and financial account has almost completely covered the current account deficit.

FOREIGN DEBTS – THE YEAR OF 2015 STARTED WITH CONTRACTION IN FOREIGN DEBTS Georgia’s total external debts rose by 1.5% year on year and marked 13.424 billion USD in the first quarter of 2015.

The statistics of total external debts includes foreign debts of the state (government sector, state enterprises and the NBG) and private sectors (commercial banks and other sectors).

Georgia’s total external debts marked 13.4 billion USD (29.9 billion GEL) as of March 31, 2015.

The figure constitutes 82.8% of the GDP of the last 4 quarters; Including, the state sector’s foreign debts marked 5.1 billion USD (11.5 billion GEL), that is 31.7% of GDP, in which the government’s debts made up 4.1 billion USD (9.1 billion GEL – 25.1% in GDP). The NBG’s liabilities equaled 232 million USD (516.9 million GEL – 1.4% in GDP), while bonds and loans of state enterprises constituted 837.1 million USD (1.9 billion GEL – 5.2 % in GDP) and 588.1 million USD (1.3 billion GEL – 3.6% in GDP). Foreign debts of commercial banks equaled 2.8 billion USD (6.1 billion GEL – 17% in GDP), foreign debts of other sectors marked 3.6 billion USD (7.9 billion GEL – 22% in GDP); Intercompany

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debts constituted 2.8 billion USD (6.3 billion GEL – 17.3% in GDP). 94.2% in total foreign debts is denominated in foreign currencies.

In the reporting period the government’s foreign liabilities declined by 177 million USD (366.9 million GEL). As a result of exchange rate and operation changes, the debts decreased by 172.3 million USD (357.2 million GEL) and 33.9 million USD (70.2 million GEL) respectively. As a result of changes in prices, the debts rose by 29.2 million USD (60.5 million GEL). Georgia’s external debts statistics for the last 15 years is indicated in the below diagram. It should be noted in 2013 the country moved to an active regime of covering the external debts. As a result, the foreign debts growth pace considerably fell and almost zeroed.

INVESTMENTS POSITION – ASSETS GROW FASTER THAN LIABILITIES International investments position reflects the rests of foreign financial assets and liabilities in a certain moment of the time.

Georgia’s gross international investments position made up 16.8 billion USD (-37.5 billion GEL – 103.8% in GDP) as of March 31, 2015. This indicator has increased by 338.4 million USD year on year (753.8 million GEL), but declined by 417.4 million USD (865.3 million GEL) quarter on quarter.

ASSETS In the reporting quarter Georgia’s total international assets marked 5.7 billion USD (12.8 billion GEL) as of March 31, 2015, including reserve assets constituted 42.7%, other investments marked 31.6%, FDI – 24.6%, portfolio investments – 1.1%.

LIABILITIES Total liabilities constituted 22.6 billion USD (50.3 billion GEL), up 318.4 million USD (709.3 million GEL) year on year and down 801.3 million USD (1.8 billion GEL) quarter on quarter.

The foreign statistics shows amid a decline in currency inflows, money inflows have increased from other sources. Currency outflows have also diminished. The current statistics contains no signs of GEL’s further depreciation. The GEL has showed no essential fluctuations since the first quarter, in practice.

MINISTRY OF AGRICULTURE CONDUCTS MEDIA TOUR IN SEMEGRELOZEMO SVANETI REGION WITH THE SUPPORT OF THE INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT (IFAD)

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media tour was organized by the Ministry of Agriculture on July 3 to July 5th, inviting central and regional media representatives in the Semegrelo-Zemo Svaneti region.

Otar Danelia, the Minister of Agriculture, personally introduced the journalists to completed and ongoing projects in the Semegrelo-Zemo Svaneti area in the directions of agricultural crediting, agricultural insurance, safety of goods, agricultural cooperation, ministry laboratory and helping the matters of the scientific-research center.

In order to service the agricultural production development goal, various projects (beneficial agricultural crediting project, processing plans’

co-financing project, the “Produce in Georgia” program) are being carried out under the initiative of the Ministry of Agriculture. In their frames, 136 new plants have been financed. From these, 20 have been built in the Samegrelo region, which were financed by $24.5 million and created jobs 1000 people. 30 plants were expanded and re-equipped, which was financed by $4 529 000 and created 1272 jobs.

In frames of the media tour the journalists observed two new plants – the “Produce Georgia” financed “Stimor Representation in Georgia” (greenhouse construction) and the “Georgian Products Renaissance” (nuts processing) which was financed in frames of the

co-financing project. Other activities the journalists participated in included: observation of the Zugdidi-based laboratory of the Ministry of Agriculture; Nosiri-based greenhouse farm; Mechanization center in the Abasha city where the journalists were presented with the Georgian plough.

The journalists were given the ability to observe the new greenhouse farm in Samtredia, “Imereti Greenery”, Ltd, which is a subsidiary of the Dutch company “Foodventures”.

Greenhouse farms were built in November, 2014 in Samtredia, on thermal water deposits. The company realizes 800 000 lettuces annually on

the local market. The greenhouse garming received financial aid from both beneficial agricultural crediting and the International Fund for Agricultural Development (IFAD).

The media tour was carried out under the financial support of one of the largest donors in the agriculture sector, the International Fund for Agricultural Development (IFAD).

During the media tour, the project lead for IFAD, Lali Durmishidze, briefly talked about the activities of IFAD in Georgia, as well as their ongoing and future projects. She also presented journalists with the finished activities in frames of the “Agriculture Support Project (ASP)”.

ECONOMIX

7 PARADOX ON GEORGIAN INTERNET MARKET

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Number of Subscribers Shrinks, Profits Grow Anyway

he Banks&Finances newspaper has published a lot of articles about the current situation on the Georgian internet market. These articles have submitted specific figures in relation to the market realities and inflated tariffs. Experts, journalists and various nongovernmental organizations have expressed their considerations there is a bipolar monopoly on the market. Ordinary citizens have also expressed their discontent against Caucasus Online and Silknet because of inflated tariffs and continuous growth in service prices. Under the hothouse conditions, these two major companies operate with almost the same tariffs and in practice, no other companies have the chance for development to find a niche on the market. The Georgian National Communications Commission (GNCC) keeps silent on the price policy of these two companies.

GNCC asserts the current situation on the internet market is quite normal and acceptable. Several NGOs have submitted official statements with specific proofs to the Competition Agency and the GNCC, but no official reaction has followed and these attempts have brought no results.

Georgia is reported to have one of the most expensive internet service tariffs worldwide. Moreover, two major providers Caucasus Online and Silknet increased service prices again in March 2015. The companies have referred to various arguments, including consumer interests, global market realities and the current economic situation in Georgia. But all these arguments remain ungrounded. The fact is these two companies cannot curb their appetite and they have been trying to receive more and more profits through ignoring the consumer rights and interests.

The January to April report proves the above-mentioned assertions again. The report shows the companies have lost many subscribers, but their profits are growing anyway.

First of all, we will talk about Silknet. The company increased service tariffs in March 2015. As a result, the provider lost many subscribers. Despite this fact, the company profits have further increased and these profits continue rising every month.

The below indicators prove Silknet has lost 338 subscribers since February as of May, but the company profits have increased by 818 897 GEL.

Caucasus Online Subscribers and Revenues before and after Growth in Tariffs: The indicators prove our assertions that the companies have been growing their profits continuously and their appetita does not decrease. The interent market remains disbalanced. GNCC continues silence policy, while the subscribes have no options and the have to pay the tariffs that are being increased permanemtly.

Silknet Subscribers and Revenues before and after Growth in Service Tariffs

The situation with Caucasus Online is also very interesting. The company has drawn more subscribers, but the company profits have increased in huge figures. Since February the company drew 2 731 new subscribers as of May 2015 and the company revenues increased by 648 408.45 GEL. We should also take into account the company increased prices in April and the profits growth may be impressive in the coming months.

The indicators prove our assertions that the companies have been growing their profits continuously and their appetite does not decrease. The interent market remains imbalanced. GNCC continues silence policy, while the subscribers have no option and the have to pay the tariffs that are being permanently increased.

EXPECTED DECLINE IN 2015 REMITTANCES TO CUT NOMINAL GDP BY ABOUT 1%

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GEORGIAN RAILWAY CONTINUES MODERNIZATION

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eorgian Railway” opened new tunnel of 962 m length near railways station “Dzirula” within the modernization frame.

Construction of double-track railway line is carried out on 22 km road section of Khashuri-Moliti within the frame of the same project. Full reconstruction of 23 km railway section of Kharagauli - Zestaponi is planned as well.

However, totally construction of 6 railway tun-

nels are scheduled. As a result, the capacity of cargo throughput will be increased up to 65 million t. Whereas, travel time by train from Tbilisi to Batumi will be reduced over 1 hour. According to “Georgian Railway”, if signaling, centralization and blocking systems are arranged, the total capacity of cargo throughput should be grown up to 123 million t. The Railway’s budget for modernization amounts to 700 million GEL. It should be finished in November, 2019.

NEW RAILWAY STATION OPENS IN BATUMI

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he Station is placed at the building of “Batumi-Central” and occupies 750 square m. Service centers of the railway with box-offices are already arranged in the building. Passengers’ waiting halls are also well-furnished.

Four-story business centre also includes businessobjects, entertainment centers and parking area.

Company “Batumi Central” carried out investment of 8 million USD in order to open the new

business centre. However, “Georgian Railway” has allocated 3 million GEL for arrangement the railway infrastructure. Over 300 persons should be employed after the implementation of the project. According to “Georgian Railways”, railway ticket price will remain the same and moreover, passengers can arrive in the sea-side city in the same time. Therefore, railway station locating in Makhinjauri does not suspend to work and trains will be stopped at this station as well.

ccording to the data provided by the consulting company PMCG, an expected decline in remittances in 2015 will not decrease nominal GDP by more than 1%.

According to the analysis of the company, a 330 milliondollars decrease in the remittances is expected by the end of the year.

It is noted in the PMCG survey that remittances are an important source of household consumption, which in turn is the largest component of the Gross Domestic Product (72% in the I quarter 2015).

“Money transfers structure by countries does not give grounds for optimism, as the top five includes countries such as: Russia (37%), Greece (16%), Italy (10%), the US (9%) and Ukraine (7%). Greece, Russia and Ukraine are suffering the economic crisis, while Italy‘s economy has recorded small economic growth “, - the survey says.

They say in January - May 2015 the volume of remittances from abroad has significantly reduced, namely by 23.2% compared with the same period of 2014.

Money transfers from Russia decreased by 42.4% or $ 119.8 mln), Greece (-18.1%; -$ 15.3 ml.) and Italy (-11.6%; - $ 5.8 mln), who have the highest share in the total money transfers.

“By conservative estimates, if a trend recorded in

January - May period maintains, in 2015 remittances from Greece will reduce by $ 40 million, while from Russia by $ 290 million as compared to 2014”, - say in the organization.

They also report that in 2015 January - May period, the largest share of remittances come from Russia, although its share has decreased by 13%, as a result, Greece’s share has increased by 1%, Italy’s- by 1% , USA’s share – by 4%, and Ukraine’s- by 3% in the total remittances.

However, the situation in Greece gives grounds to say that the reduction in remittances will have a lasting effect. In January - May 2015, monthly transfers from Greece lagged behind the previous year’s corresponding period, in January – by $ 2.6 million, in February – by $ 2.5 million, in March - by $ 3.6 million, in April – by $ 4.1 million and in May – by $ 2.4 million. Given the recent developments in Greece, we have to assume that money transfers will further fall in the coming months.

Against this background, it is also noteworthy that in 2015 January - May period remittances from the US increased (by 26.2%; $ 8.0 million) as well as from Ukraine ( by 21.9%; $ 5.3 million). The abovementioned growth can’t balance a decline of remittances from Russia, Greece and Italy, but the trend is still positive”, - the report states.

GEORGIAN INVESTMENTS AGENCY DRAWS 827 MILLION USD INVESTMENTS

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eorgian National Investment Agency (GNIA) in 2014-2015 attracted $ 827 million of large and medium investment. “Commersant” was told at the Agency.

However, the Agency refrains from unveiling the details. We have no right to disclose the details of investor’s activity and identity without the

investor’s consent during investment and subsequent period”, - say in the Agency. A middleclass hotel network plans to build a total of 4 hotels worth $ 100 million before 2018 in Tbilisi, Mestia and Adjara. The construction of a 5-star hotel on the territory of the former Mikhailov Hospital with an estimated investment of $ 80 million should be completed in 2017.

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ANALITYCS

QUOTES

REGIONAL BUSINESS CENTRES OFFICE MARKET

“Nothing Will Cause Harm to the Central Bank of Georgia”

DAVID USUPASHVILI Speaker of the Parliament According to David Usupashvili, all matters relating to the National Bank of Georgia will be discussed in detail

and finally adopted in the Parliament.

“I want to make a clarification regarding the National Bank. I have said this, and I say it once again that the Parliament is not going to stop until a mutual understanding in all matters is reached. I want to reassure businessmen that nothing is going to happen that could harm anyone and the National Bank, in particular.

Therefore, the work on the issue will continue until an understanding with the international institutions is reached. I am glad that the Parliament continues to work on this topic. I do not rule out that next week we will consider the National Bank issue in the second reading. The process continues and there is no reason for concern,” Usupashvili said at the bureau session.

George Baramidze, a representative of the parliamentary minority, responded to the statement of the Parliament’s Chairman. He said that representatives of international institutions confirm that the draft law on the National Bank is not acceptable and will create a serious problem for the central bank. “International institutions, such as IMF and World Bank have sent a letter to the Georgian Parliament in this regard,” Baramidze said.

“Georgia is China’s Priority Country within New Silk Road Project”

NODAR KHADURI Finance Minister of Georgia The Chinese government has confirmed that Georgia

represents a country of priority for them, the Minister of Finance Nodar Khaduri stated at the government meeting on July 9. “On June 28-29 Asian Infrastructure Investment Bank (AIIB) founding document was signed in Beijing. 57 countries signed the document. Among them there is practically every EU country. This Bank aims at developing infrastructure projects; it will have very significant funds for this. Around USD 500 billion will be invested in this Bank. This amount will only increase in the future.”

Apart from this, I had bilateral meetings. I met with China’s Finance Minister. During this meeting the Chinese side confirmed that Georgia is one of the priority countries for them. The Chinese government is ready to use the Bank’s resources as well as other means to help infrastructure projects develop in Georgia. First and foremost this is true for the New Silk Road project’s development. We also held a meeting with the President of China. He as well confirmed that the New Silk Road is the priority for China today,” Nodar Khaduri stated.

“We will not Allow Suspension of Social Programs”

GEORGE KAKAURIDZE Deputy Minister of Finance Some experts may want us to cut pensions or suspend social programs, but we will not allow this, George Kakauridze, Deputy Finance Minister, said in response to statements from some experts claiming that the costs were not substantially reduced in the adjusted state budget.

As Kakauridze told journalists before a governmental session, costs were reduced by 160 million, which is adequate to the current needs.

“When the economic growth rate is reduced, this leads to a drop in tax revenue; therefore, we had to find alternatives to fill this gap. These are fourth-generation licenses, additional grants and other sources.

As for the experts’ opinions, some may want us to cut pensions or suspend social programs, but, of course, we will not allow this. Reduction of expenditures by about 160 million, which we’ve already done, is sufficient enough to allow the budget to meet foreign obligations and also allocate money for disaster relief efforts,”Kakauridze said.

As for the question of whether the budget’s new fiscal parameters were approved by the International Monetary Fund (IMF), the Deputy Finance Minister explained that the budget was adjusted in accordance with IMF recommendations.

“We have taken the IMF recommendations into account. The main recommendation was not only to reduce expenditures, but also to deal with the deficit,” the Deputy Minister of Finance said.

“Electricity Tariffs will be Revised Due to Lari Devaluation”

IRINA MILORAVA Head of the Georgian National Energy Regulatory Commission Lari’s devaluation will be reflected on the electricity tariffs generated by thermal power plants - Irina Milorava, the head of the Georgian National Energy Regulatory Commission (GNERC), states. As for the general consumer electricity tariff, it is impossible to make any predictions in this direction, she adds.

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“The Commission received a request to review fixed tariffs for thermal power plants, which are scheduled to be discussed in the near future. The basis for the request was the depreciation of the national currency, since imported natural gas account for nearly 99% of the total costs of energy production by thermal power plants.

Naturally, this means that the devaluation of the Lari will necessarily be reflected on the tariffs for thermal power plants. With regard to the consumer tariffs – the request for its revision was submitted by the electric power distribution company Energo-Pro in April. We will consider this request within 150 days. We cannot make any speculations before then,” Mirolava said.

“We must understand that the energy companies are in a difficult position, as the depreciation of the national currency has had a very strong negative impact in this field. This applies particularly to power plants that operate on natural gas imported from Azerbaijan and Russia. They appealed to the Commission with a request for the revision of the tariff. It is possible that the increase may be inevitable, but the government will take a series of measures to mitigate the impact of the rising tariffs and the introduction of targeted subsidies for certain layers of the population,”- the Minister said.

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atumi, Kutaisi, Rustavi and Poti can be considered as regional business cities in Georgia, but these regional office markets are largely undeveloped. No modern leasable offices exists in the mentioned cities, except Poti, where there is only one modern business centre. Majority of offices In regional business cities located in retail spaces and apartments. Leader by supplied leasable office space is Batumi (40,000 sqm), then comes Kutaisi with 20,000 sqm, the last are Poti and Rustavi with 10,000 sqm each.

Batumi is administrative centre of Adjara region, the most south-western part of the country, located near the border with Turkey. Batumi seaport is Georgia’s important sea gateway. Today Batumi is a fast-growing tourist region. Batumi has undergone serious changes and reforms, significantly improving its worldwide image and making its investment climate more attractive to foreign investors. The hospitality market in Batumi is developing as the inflow of foreign visitors, businessmen and delegations increases at a fast pace, which is attracting well-known international hotel chains. So tourism related businesses are likely to have some demand for business spaces. The total amount of supplied office space in Batumi is 53,000 sqm, out of which 75% is leasable. The average rent in Batumi is around USD 14.3 per sqm.

Kutaisi is Georgia’s second largest city, legislative capital and the capital of the western region of Imereti. It is 221 kilometres (137 miles) west of Tbilisi. Recently opened international airport and bypass highway may be mentioned among major infrastructure developments

in the city. Kutaisi as the legislative centre of Georgia, political, lobby groups and international government might have demand for office space. By the end of 2014 the estimated office stock in Kutaisi is 58,000 sqm, out of which only 34% is leasable. The average office rent is USD 14.5 per sqm.

Rustavi is a city in the southeast of Georgia, in the region of Kvemo Kartli, situated just 25 km southeast of the capital Tbilisi. It has a population of 122,900 as of the 1st January of 2014. The economy of the city is mainly dominated by Rustavi metallurgical and nitrogen factories. Several years ago, the country’s main car market was transferred from Tbilisi to Rustavi and several administration buildings were constructed at the same place. Rustavi became the only location for Tbilisi and its catchment area to obtain a driving license. The total office space in Rustavi amounts 36,000 sqm, from which 72% is owner occupied and 28% is leasable. The average rent in Rustavi is USD 6 per sqm.

Poti is a port city in Georgia, located on the eastern Black Sea coast in the region of Samegrelo-Zemo Svaneti in the west of the country. Built near the site of the ancient Greek colony of Phasis and deriving its name from the same, the city has become a major port, city and industrial centre since the early 20th century. It is also home to a main naval base and the headquarters of the Georgian navy. Adjacent to the Poti port area is the Free Industrial Zone, inaugurated in April 2008. the growing port of Poti should support demand for office space in the medium to longer term. The total existing office space in Poti equals around 13,000 sqm out of which 77% is leasable.

July 13, 2015 #107

BANKING NEWS

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COMMERCIAL BANKS BEAR FIRST LOSSES IN JANUARYMARCH CURRENCY CONVERSION TRANSACTIONS

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o carry out a speculative attack against the GEL, a commercial bank should bear losses during the currency conversion operations. Namely, the commercial bank must purchase USD with an excessive amount of GEL and spoil the GEL rate so as to receive profits from other operations. In the first quarter of 2015 (January to March) commercial banks had losses from currency conversion operations for the first time since 1998. Is this fact a part of the speculative attack? Bank sector experts have expressed their considerations about this issue.

Bank expert Lia Eliava says the current report on conversion operations is incomplete and it is early to make some conclusions. Anyway, there are high risks of making speculative deals on the market and the Bloomberg’s floating system enables this, Eliava noted.

“Let’s start with the conversion losses. The report contains information of the 30th date, not monthly indicators. Monthly pluses and minuses, losses and profits systematically change at commercial banks. The report indicates losses and this signifies the conversion volume was huge and commercial banks have exchanged more in USD than in GEL. In case of equal and balanced conversions, the indicators show zero or plus, but when one currency exceeds another, the plus is marked and this only means commercial bank carry out intense money transfer, nothing more.

There are no proved facts and information commercial banks have carried out speculative operations.

We can only suppose that commercial banks could make speculative deals in their interests. Namely, they can convert money and direct this amount abroad to place on their on nostro accounts at foreign commercial banks. This consideration is proved if we explore financial reports of commercial banks. Namely, starting the third quarter the amount of money placed on correspondence accounts abroad and the dynamics are growing.

We will also notice commercial banks keep huge funds on their correspondence accounts. They have directed this money abroad and similar panic conversions may be a genuine reason for the GEL exchange rate depreciation.

Was the GEL exchange rate depreciation artificial? The National Bank of Georgia (NBG) cannot control similar speculations, because it has entitled commercial banks to make payments in

the Bloomberg System on spot deals, and make currency exchange directly with each other, that is, beyond the correspondence accounts at the NBG. They carry out all other operations through these correspondence accounts and the NBG always can supervise the money turnover and transfers, while the NBG cannot make the same in the Bloomberg System. Therefore, commercial banks are able to make currency exchange speculative deals and fictional deals and speculate with currency rates in this way. This a theoretical chance and six major commercial banks were punished in the USA because of this, but the NBG cannot control this process, because it has rejected this instrument itself”, Lia Eliava said.

The unstable and disordered market may bring any unexpected situation, expert Vakhtang Khomizurashvili asserts.

“In reality this situation is very simple. A commercial bank may have excessive funds in the component of assets or liabilities. If a commercial bank has got excessive currency in the component of assets and this currency depreciates, the bank bears losses. For example, every person has got demands and obligations. If there are 100100 USD on both sides, the situation is balanced, but if the demand is 150 USD and the obligation is 100USD, the difference is 50 USD and this is situation is called a sensible assets or a sensible obligation.

If the bank has excess currency in the component of assets and this currency depreciates, the bank bears losses, in the opposite situation, if the excessive currency depreciates in the component of liabilities, the bank makes profits. Therefore, the results depend on the currency positions in the specific situation.

As to the assertions as if commercial banks are able to specially speculate with deals, this is less expected, because the very supervisory body has introduced the open currency position that promotes the risks insurance. Namely, it is less expected that a commercial bank accept losses, affect the exchange rate to receive profits later, because if the commercial bank affects the currency exchange and the GEL exchange rate is depreciated, then the commercial bank will have to receive profits from other operations and this operation must be carried out in the future exchange rate and this is less expected. I do not believe commercial banks may take similar risks deliberately”, Khomizurashvili noted.

NIKOLOZ SHURGAIA APPOINTED AS A MEMBER OF GEORGIAN STOCK EXCHANGE SUPERVISORY BOARD

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ember of PASHA Bank Supervisory Board, Nikoloz Shurgaia, has been appointed as a member of Georgian Stock Exchange Supervisory Board by the General Meeting of Member-shareholders.

Georgian Stock Exchange (GSE) - is the only organised securities market in Georgia. Designed and established with the help of USAID and operating within the legal framework drafted with the assistance of American experts, GSE complies with global best practices in securities trading and offers an efficient investment facility to both local and foreign investors.

Automated trading system of GSE can accommodate thousands of securities that may be traded by brokers from the workstations at the GSE floor or remotely from their offices. As of June 1, 2015 129 companies were traded on GSE, with total market capitalization of USD 0.880 billion and the average daily turnover of USD 587.55 .

Nikoloz Shurgaia received his bachelor’s degree in Finance and Credit at Tbilisi State University in 1995. In 2004 he obtained his Master of Business Administration Degree at London

Business School.

Mr. Shurgaia began his career at United Georgian Bank working as a loan officer in 1994, and was later promoted to the following positions: Head of Mortgage Division; Deputy Director, Lending; Director, International Relations; Director, Corporate and Retail Lending.

In 2004, Mr. Shurgaia moved to Moscow and joined ABN AMRO BANK as Assistant Vice President, Integrated Energy Group.

From 2005, Shurgaia began working as a Principal Banker at EBRD, London. From 2008 to 2009 he worked for VTB Bank (Georgia) as the Chief Executive Officer. He continued his career at Belarusky Narodny Bank as Executive Chairman, while he simultaneously served Bank of Georgia as Deputy CEO. From 2012 to 2014, Mr. Shurgaia worked in Azerbaijan for Rabitabank as a Chairman of the Management Board.

Since 2011, Mr. Shurgaia has worked as an Independent Advisor and Entrepreneur in Azerbaijan, Georgia, Kazakhstan and Belarus.

Mr. Nikoloz Shurgaia was appointed a Member of the Supervisory Board of PASHA Bank on January 31, 2015.

NATIONAL BANK AND AUDIT OFFICE INTRODUCE REMARKS ON REVISED BUDGET BILL

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he state audit service has developed a conclusion on the 2015 budget amendments. The remarks cover several directions. Vano Shavdatuashvili, the audit service’s senior analyst for budget issues, told IPress, despite decline in economic indicators, financing of specific programs has not changed in the revised budget.

“Our remarks make focus on the fact target indicators in specific programs remain the same, while financial streams change within the program, they either increase or decrease.

According to the presented budget, the part of revenues will decrease by 200 million GEL,

while in the part of other incomes, in case of voluntary revenues, the fulfillment indicator for January-May exceeded the budget-indicated annual plan. The new budget bill has not revised this plan and it maintains the same indicators”, Shavdatuashvili said.

The audit service’s conclusion also makes focus on the state debt.

“The state debt’s forecast margin made up 11, 808 million GEL in the 2015 state budget, but the new bill raises the amount by 1,971 million GEL. As a result, at the end of the budget year the state debt amount must not be over 13,779 million GEL. The state debt’s ratio in relation to the expected indicator of GDP will increase by about 8% to 44.9%.

It should be noted this growth of state debt in relation to GDP exceeds by 40% the limit determined by the Georgia’s social-economy strategy “Georgia 2020”. It is worth noting the state budget rests will increase by 32.8% and this figure exceeds the expected nominal GDP growth pace (5.1%) 6 times”, the conclusion reads.

“The national currency has depreciated in relation to other foreign currencies. The state budget was planned at the exchange rate of 1.8 GEL against USD. The new bill lowers the exchange rate to 2.3 point. As a result, the state debt will increase by 900 GEL to 13 billion GEL”, Shavdatuashvili said.

The audit service has made focus on the profits tax too. The profits tax should be revised along with contraction in economic forecast. Namely, the revenues from the profits tax will increase to 951 million GEL from 900 million GEL, he added.

“The profits tax is mobilized to the state budget in a certain delay. The revenues from the profits tax that was mobilized to the state budget in the first half of 2015 reflect the operations of the end of 2014. The profits tax fulfillment indicators show – the January to May plan has been fulfilled in excess and it exceeds the six months’ plan by about 10%-11%”, Shavdatuashvili said.

In its report the NBG suggests the government to cut the expenditures. “Amid the existing shocks we should make focus on economic growth and ensure target resolution of social and other problems as part of the increased revenues. This policy is related to administrative and other problems. Therefore, we should also seek alternative policy. Namely, we should promote the exchange rate so as revenues of our citizens suffer from as less losses as possible in both current and coming years. This policy implies a considerable contraction in budget expenditures or/and employment of the existing taxation mechanisms in line with the International Monetary Fund’s consultations with the government. Expenditures should be cut through minimization of the current expen-

ditures. Namely, the consolidated budget deficit shrinks by only 48 million GEL, while the state budget deficit grows by 99 million GEL. The bill also calls for carrying out changes in the taxation component in order to cut the current account deficit and smooth the burden on the exchange rate. The current expenditures in the state budget bill increase by 15million GEL, while capital expenditures will decrease by 55million GEL. In the consolidated budget a contraction in capital expenditures considerably exceeds the decline in current expenditures. In 2015 Georgian MPs have expressed regrets concerning the GEL exchange rate depreciation. This process has inflicted serious losses to physical and legal bodies that had taken loans in USD. Consequently, if the parliament aims to alleviate the loans burden or neutralize the further depreciation pressure, due changes should be carried out, but these changes have not been included in the presented bill”, the NBG report reads.

According to the bill, the state budget inflows will increase by 25 million GEL to 9 900 million GEL. The tax incomes plan will be cut by 200 million GEL as a result of 2% GDP growth forecast. A growth in internal liabilities shrink by 100 million GEL, donors’ financial contribution to financing specific projects decreases by 70.9 million GEL because of unused funds as part of the project.

HEALTHCARE

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caucasus business week

July 13, 2015 #107

David Sergeenko: Implementation of Primary Healthcare Reform is Underway

M Yazdan Yazdanpanah: “In Georgia, 30% of drug users are diagnosed with C hepatitis. The ratio of other patients is about 20%

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he Georgian Health Ministry has introduced a wonderful initiative in the form of the C Hepatitis Elimination Program.

This burden of this disease is very high in Georgia and we should know this disease is a system curable disease. Naturally, these efficient medications will heal patients and in general, this program will be useful for the Georgia People.

Indeed, I would like to note this is the first stage and Georgia performs the function of the socalled excellent country, but in the future, this will be very important for the scientific society that has been supervising this process from the international level. This program is based on a political will and it will become a precondition for many other important opportunities”.

Stanislas Pol: “The C Hepatitis Elimination Program is based on a political will and very active involvement of the Georgian Government”

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would like to express my deep gratitude to the Health Ministry and Global Alliance for having organized this meeting. Naturally, this program is based on the political will and very active involvement of the Georgian government.

The C Hepatitis Elimination Program is a very important project that enables to reach genuinely good and positive results. It is really available to heal all patients, including, drugs injective users. But this process requires not only individual treatment, but also other preventive and intervention measures and strategies, for example, the program of syringes, therapy for replacing opioids and upgrading the screening level. These three strategies will enable to implement very important and ambitious plans in Georgia”.

inistry of Health, Labor, and Social Affairs plans to reform the Primary Health Care in the near future. David Sergeenko made this statement on Friday.

A statement in this regard was made, at the National Center for Disease Control and Public Health, that hosted a conference on C Hepatitis Elimination Program.

According to Sergeenko, together with Universal Healthcare and Hepatitis C elimination programs, the ministry plans to focus on improving Primary Health Care.

“Our first step was to develop the Universal Healthcare and C Hepatitis Elimination programs and for now we have launched both of them successfully. At this stage, I can tell you that one of the main goals is to improve the primary healthcare,” Sergeenko said. “We have been actively getting consultations with the international consulting group “Global Alliance,” he added.

The main focus of Georgian healthcare is creating a primary healthcare package.

It happened that during the last years or rather decades there was not paid enough attention to the primary healthcare and the whole focus was concentrated on the hospital sector. It is clear that such attitude consists several risks, as primary healthcare is not fullfilling its part, which in ideal situation is to manage 80% of medical needs and

only 20% should be given to the stationary treatment. Unfortunately our reality is that the patients are applying to the hospitals and they are themselves choosing the specialists and the institute of home doctor, and in general of primary healthcare is almost skipped out. I as a minister frankly to say don’t see the primary healthcare as a system yet in Georgia. Our main goal is to create it and to improve it.

The major entrance of the healthcare is thr primary heathcare. The powerful pyramid should be based on it. Unfortunately this is

not our case. Recent primary healthcare has diffusional structure, it is difficult to distinguish any system elements and the doctors are avoiding to discuss the case because its delicatness. But we should state thet for example the income of the primary doctors is far from adequate. It is obvious that all professions are special, but the doctors’ is unique. I’ll not count why. The doctors should not be left on the battlefield with their economic problems alone. In this case it will be impossible to talk about the quality of medical care”.

Jean-Elie Malkin: This Experience Will Be Unique Opportunity to Fight and Eradicate Hepatitis C

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n July 4, the National Center for Disease Control and Public Health hosted an event on behalf of the C Hepatitis Elimination Program. The name of the conference was “The Way to Move Forward”, and the event was attended by many international experts from France.

President of the “Global Alliance“, Jean Elie Malkin, talked about the importance of this event, and said it emphasized the elimination of C Hepatitis as one of the priorities for the government, because this epidemic reveals to be a huge public problem in a country.

“Government emphasizes this as a first step to improve the whole health system” -said Malkin.

Dr. Malkin assessed Hepatitis C elimination program as a key priority, to improve whole

health system in Georgian, for the benefit of population.

Jean Elie Malkin also stressed the fact that after elimination of C Hepatitis, the next step will be Primary Health Care reform and expressed his support to the government on this program.

“I would like to emphasize that after Hepatitis C, the primary health care reform will be the next priority for the government and us. “Global Alliance” will fully support the government in this process.”

The event was organized by the Ministry of Labor, Health and Social Affairs of Georgia, National Center of Disease Control and Public Health of Georgia with the collaboration of Global Alliance for Health and Social Compact.

July 13, 2015 #107

COMPANY NEWS

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caucasus business week

RUSTAVI AUTO-MARKET IS SOLD AT $30 MILLION

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ustavi Auto-Market AUTOPAPA Georgia” is brought at the auction.

The property complex includes: 100%-share of LLC “Micado Georgia” (holder of land plot and buildings), 100%-share of LLC “Rustavi Auto-Market” (jointly with commercial project, operating management of the auto-market), 100%-share of LLC “Rustavi Terminal Plus” (operating management of custom control zone, licensed entrepreneur, custom terminal manager); 100%-share of LLC “Rustav Comfort” (hotel operating management, jointly with fast-food objects); 100% management right on portal http://autopapa.ge (electronic auto-market, site, server, the right on development and service agreement); It should be noted, that the property does not required additional investment. Exploitation term totals to 25-50 years. Primary selling value of

the property is 30 million USD, while the bid amounts to 100 000 USD. The auction should be finished on July 31, 18.30 p.m.

According to the holder of the company, analysis on financial-economic activity of AUTOPAPA Group should be carried out by PricewaterhouseCoopers in June of this year and market value range of the business group has been defined from 41,7 to 54,1 million GEL. According to the experts of PricewaterhouseCoopers, “maximum” supposed cost of “AUTOPAPA Group” totals to 76,9 million GEL. “We are ready to submit “PWC’s” report and other financial documents after signing of confidential agreement”, - the company declares.

Rustavi Auto-Market is currently owned by CARTEX TRADING LIMITED, established in Belize. According to the disseminated information, the holder was Ukrainian Private Group.

GENETICALLY MODIFIED FOODS WITHOUT DUE INDICATION WILL BE ANNIHILATED

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new law came into force from July 1, 2015, all products that contain genetically modified components must have proper labels informing consumers and allowing them freedom of choice. The new law regulated the type of information that must be written on the label. Specifically, if genetically modified components are 0.9 percent more than the product’s total mass, a label stating “GM” must be clearly identified on the top left corner of the product.

Those who break the law will be fined 5,000 GEL. If the wrongdoing repeats the fine will increase to 10,000 GEL. “If food labelling is impossible [the product] must have supporting documents that must contain information about the genetic modification,” stated the law. The Georgian market is free from genetically modified products imported

from abroad, says a new report by the National Food Agency. Georgia’s National Food Agency spent the past two years verifying product labels to check whether imported food products were genetically modified and if they were, the products were removed from the Georgian market.

“We examined about 50 samples of products that are deemed to be high risk of being genetically modified. Such products are soy, corn, potato starch, rice, sugar and many other products.

Our research found those 50 samples were free from genetically modified elements,” Kakha Sokhadze, head of the Food Department at the National Food Agency, told Agenda.ge.

“According to a law that was launched last year it is forbidden to import genetically modified seeds.

So it is impossible to produce genetically modified food products in Georgia,” Sokhadze said.

TBILISI INTERNATIONAL FESTIVAL OF THEATRE 2015 24 SEPTEMBER-OCTOBER 8

Main Program 24 September –5 October Program New 24 September – 5 October Georgian Showcase 5 – 8 October

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bilisi international festival of theatre is one of the most important cultural events of autumn Tbilisi and not only - the festival has become one of the main performing arts events in Caucasia and Black Sea countries.

Since its first days until now Tbilisi International Festival of Theatre hosted outstanding leaders of the world’s stage - Giorgio Strehler, Eimuntas Nekrosius, Robert Lepage, Philipe Genty, Maya Klechevska, Oskaras Korsunovas, Silviu Purcarete, Slava Polunin, Pippo DelBono, John Malkovich - and their companies. Great artists and companies from Israel, Argentina, Germany, France, Russia, Ukraine, China, UK, Italy, Sweden, Lithuania, Estonia, Finland, USA, Austria,

Taiwan and etc.

We have wide press coverage and media in Georgia and Internationally.

We are young and ambitious. Our audience is great! Our guests are extraordinary!

Every festival has its own, unique style - together with audience and artists we want to uncover the world which will enhance our imagination and bring up different emotions.

We want to follow the path that the actors only dare to step first!

The Festival is somewhat a journey- a way that is leading us, alongside with the discoveries, to where our imagination’s stretching to vaguely; thus enhancing the hope, that happens to be eternal…

WHAT WOULD FOOD PAIRS BE LIKE IF THEY WERE ACTUAL COUPLES

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veryone likes coupling. Mornings go with coffee, cinema with popcorn, and football with beer. We mix and match, but ultimately some couples just work better together. This applies to many cases, the first being love relationships and a close second, foods. Still, there are pairings and pairings: Some are unpredictable, some eccentric, some odd, some explosive and some just perfect. Foodpanda (www.foodpanda. ge) loves pairing foods and analyzed their relationship as if they were actual couples.

1. THE SOCIALLY SILENT COUPLE: SPAGHETTI & MEATBALLS The socially silent couple is actually only silent about one topic – their relationship. These two are social media-active across multiple platforms, posting selfies, having brunch with friends on Instagram, etc. But this couple has no social media posts about each other. If you didn’t know they are in a relationship you might as well think they are single. My guess is either they’re both trying to play it cool (while being horrified by the idea of commitment), or they just want to keep their options open.

2. THE PDA (PUBLIC DISPLAY OF AFFECTION) COUPLE: BURGER & FRIES Ugh. Whether these two are fighting or are just going to the supermarket, they can’t stop talking

about each other. These oversharers’ posts are the most recurrent you see when scrolling through your news feed. They spend more time kissing than talking. They’re the type who will go to a party and will spend the whole time just the two of them, making out or just being ridiculously happy.

3. THE COUPLE WHERE ONE IS WAY MORE INTO IT: PANCAKES & MAPLE SYRUP It’s instantly obvious when you come across one of these couples. It’s a combination of the above two categories – one part oversharer, one part socially silent. She’s totally head over heels in love with him, becoming all syrupy and gooey, while he’s not all that bothered, really. He just sits there, without really putting any effort in this relationship. She’s totally in love daydreaming about their wedding day, meanwhile he’s on Tinder, keen on meeting different people and clearly not ready for a commitment.

4. THE AWKWARD COUPLE: PEANUT BUTTER & JELLY They are quite clearly not good for each other, and it’s a pretty unhealthy relationship, but somehow they just can’t keep away. No matter how many times you tell them that it’s not a clever idea to be with each other, they ignore all advice and invest on in a dysfunctional union, and acting all Romeo & Juliet about the situation.

5. THE ALWAYS-ARGUING COUPLE: CHOCOLATE & ORANGE It’s the couple you have long given up in trying to separate or reunite. They might even make you pick sides. These two love each other, but in such strange ways. Both are strong, opinionated and autonomous and don’t like to be told what to do.

None of them surrenders or admits defeat easily.

They act completely different when they are apart and hang out with dissimilar groups of people, and yet, when they are in truce they are such an invigorating duo.

6. THE SECRET AFFAIR COUPLE: CHOCOLATE & SALT Giveaway details: Paranoid glances around the room, secretive hand touching, giggling, and looking intensely in the eyes. This pairing can’t go unnoticed as they bring out each other’s flavors. They think people don’t know they love each other, but everybody knows really.

7. THE EFFORTLESSLY COOL COUPLE: CHEESE & WINE They look like best friends, fight like brother and sister and dance like a duet. The most astounding characteristic is the balance between independence and interdependence. They have clear boundaries; they are separate people with separate interests, and when they come together their qualities are amplified.

8. THE POWER COUPLE: STRAWBERRIES & CREAM She’s the most beautiful girl, he’s the most hansom boy. They are proficient in multiple sports, they have super white teeth and they wear matching clothes.

Oh, and they are usually blond and slightly posh.

9. THE COUPLE THAT NEVER GOES OUT. EVER. : COOKIES & MILK They are so wrapped up with each other that you forget if you’ve seen either of them the last month.

They always go for the stay-in option to cuddle on the couch, watching romantic comedies.

10. THE JEALOUS COUPLE: FISH & CHIPS They are so paranoid about the other cheating; they check each other’s phones and stalk the Facebook profiles. The are always asking about their ex, still worrying they are not over them.

You always feel their mistrustfulness and competitiveness when you are around them.

11. THE UNEXPECTED COUPLE: MELON & PROSCIUTTO You have no idea how these two work so well together, but they definitely do. They are diametrically opposed. She likes to read, he doesn’t even have a magazine at his place. He’s sporty, she can’t even be bothered to take the dog out for a chilled walk. She’s fiery and passionate, he’s calm and comforting. He’s really, really tall, she’s tiny.

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EUROPEAN INTEGRATION caucasus business week

July 13, 2015 #107

ONE YEAR SINCE EU ASSOCIATION AGREEMENT: POSITIVE EXPECTATIONS ARE MET

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hat are the benefits of Georgia’s European approximation? This question was raised most often in the Georgian media last year while discussing the Association Agreement and the Deep and Comprehensive Free Trade Agreement with the European Union (EU). If then only experts had the theoretical answers to this question, now, as one year on from the signature of the document, entrepreneurs and farmers are ready to provide some answers, after the first year of the implementation. .So what is the answer to the question ‘What are the benefits of Georgia’s European integration?’ The best way is to listen to what farmers have to say.

“I was already exporting hazelnuts to Europe but now export procedures are easier. Previously [farmers were issued] a temporary license but now it is a permanent EURO-1 certificate, which is issued in Georgia. Our biggest competitor Turkey is paying three percent export tax so they lose in terms of price policy competition. Now the most important thing for us is to increase the volume of production to become the leader country in the European market,” said Mamuka Beriashvili, 38, who owns several nut production plants, including one in Georgia’s Kakheti region.

The first nut plantations appeared in Kakheti only seven years ago when Russia enforced an embargo on Georgian wine and the Kakheti population had to find an alternative product to export. The plants generated their first income after three years and Beriashvili did not miss this opportunity. He opened his first nut processing plant ‘Nutex’ in Kvareli and began purchasing nuts from local farmers. Now he owns his second plant ‘Nuts’ and is also building a third manufacturing plant for traditional Georgian nuts in the Samegrelo region. The Georgian Government has supported this project by offering a preferential agricultural loan of 600,000 GEL. Beriashvili has more than 120 nut suppliers in Kakheti; 20 of them have large-scale plantations measuring more than 10Ha2. This means Georgia’s traditional wine making region Kakheti has started to become a nut producing region also. This has affected the country’s macro-economic parameters.

Last year the export volume of nuts exceeded the export volume of wine for the first time and nuts become Georgia’s main agricultural export product, according to data from Georgia’s Agricultural Ministry.

The sum of agricultural exports last year increased to 29 percent of the total of Georgia’s exports and for the first time agriculture products ranked third in Georgia’s export trade list. The volume of agricultural products increased by seven percent last year and brought the country $826 million USD in income.

“For the first export year in 2011 we managed to gather only 500 tonnes of shelled nuts. This year, four years later, this volume has increased six times and we transfer up to 3,000 tonnes of nuts to the EU. Our main partners are in the Czech Republic but we also sell our products in France and Germany. There are some requests from other countries but do not have enough volume of production yet.

The main problem is a lack of knowledge within farmers about how to care for the plans so they can yield three tonnes from one hectare of land. Now they manage only to harvest one or one and a half tonnes from one square hectare. That is why we organised time-to-time training for our suppliers to ensure they understand the new technologies and know how to double harvest volumes. We are already seeing good results,” underlined Bariashvili.

Georgia’s Minister of Agriculture Otar Danelia believes that hazelnuts had created a new perspective for Georgia’s agriculture sector. Nut producing has been supported by the Government, especially with VAT free taxation. This has allowed the price of Georgian nuts in the global market to become more competitive. The cost of nuts is increasing worldwide because of higher demand. In recent years the average price per kilogram of shelled nuts was four GEL while in 2014 this price had increased to eight-nine GEL as a result of international market trends. Last year Turkey, who is the world leading nut exporter, lost half of its harvest due to freezing weather so the global price of nuts increased and turned into a beneficial situation for Georgian entrepreneurs.

Farmers also clearly see a bright future of nut exports. The first farming cooperative of 500 members is soon to be established in Samegrelo and the Government promised to co-fund construction of

the nut driying plant. An agricultural cooperative has also started in Kakheti region where farmers are uniting to become more influential nut suppliers in the local and international market. This gives farmers more opportunity to sell their products for a higher price.

This is the main philosophy of ENPARD (European Neighborhood Program for Agriculture and Rural Development): 90 percent of Georgian farmers own only one hectare of land so production costs are high. ENPARD called on farmers to unite their forces or to develop cooperatives to decrease production costs and the final price as the result. With the low price they can be more competitive with imported products.

Two years ago, when ENPARD stated to promote this approach, the word ‘cooperative’ frightened farmers as it reminded them of the Soviet time Kolkhozs (collective farms). In those times ‘cooperation’ meant confiscation of land owners’ right and becoming part of a collective farm.

A group organized by ENPARD spent much time and effort explaining all the benefits of modern European agricultural cooperatives to local farmers who had grown up during the hard Soviet Kolkhoz times. A They are pioneers in the modernization of agriculture and should be regarded as role-models and influence others to achieve better results. ENPARD hosts an intensive agricultural business course for grant benefactors, shares its experience of business planning, effective distribution of labour

means that products produced by one group can be used by other members in the processing process, so they produce and sell the final product together. The income, in this case, is higher than if they act separately. There can be other reasons for cooperation in the second stage. Experts from the Cooperation Development Agency said the third stage of cooperation will start shortly and negotiations between members of the second stage has already started.

The new perspectives of Georgia’s agriculture has heavily influenced the country’s investment climate. According to data of Georgia’s Agriculture Ministry, this sector of the economy enjoyed direct investments worth $19 million USD in 2014, which was 61 percent more than the previous year. Agriculture was also largely funded by the Georgian Government – more than 27,000 farmers and farms utilised cheap agricultural loans worth 772 million GEL during the 2013-2014 years. The Agricultural Projects Management State Agency financed 105 new plants and an additional five were opened with the support of the Economy Ministry’s program ‘Produce in Georgia’.

New manufactures in agriculture meant creation of additional value and this can be seen in numbers.

Final products, worth 4.1 billion GEL, were created in the country as a direct result of processing initial products in 2014. This number was almost 10 percent growth compared with the previous year.

The share of agricultural products in the country’s total GDP also rose in 2014 and was now 16.5 per-

and costs, basic skills of marketing and developing the best sales strategy. The top dozen entrepreneurs were awarded grants. ENPARD will continue to monitor their activity to help these people in the future create the first Georgian generation of European-styled agricultural cooperative farms.

This process, supported by ENPARD, started with the aporuval of the new law on cooperatives, but it also required massive awareness and learning processes for the farmers. The new law increased the real motivation of farmers through establishing a maximum tax-free system for agriculture cooperatives. The Government’s support of programs that were tailored exclusively to support agriculture cooperatives also influenced the process positively.

Now farmers have an opportunity to use preferential agro-credits or utilise low costs of agricultural machinery use through these programs. A new Governmental organisation was established – Cooperation Development State Agency – which worked to improve conditions for cooperatives and support their progress. The result in numbers: more than 1,000 farming cooperatives were established while the most optimistic plans of ENPARD saw 100 such cooperatives establish in the past two years alone.

In parallel, all over the country the net of agricultural consulting centers were established under the umbrella of the Agricultural Ministry of Georgia.

These centers provide updated technologies , and advice.

Moreover, the second stage of cooperation has started in Georgia. Now there are more than 20 agricultural cooperatives involved in the second stage.

This means that the smaller cooperative groups have begun to unite to sell their products under one brand name. This will increase their role as suppliers in the market.

Cooperation in the second stage of the project

cent, according to latest figures. In previous years this figure peaked at 12 percent. DCFTA however does have a clear influence in this process effect – to grow investors’ interest and raise customers trust in the products – and this affects not only European export trends.

According to Geostat, Georgia’s state statistics service, exports to the EU increased by 109 percent in the past two years, compared to a growth rate of 46 percent for CIS countries. Meanwhile imports from Europe increased by 23 percent in the past two years, while there was a five percent drop in imports from CIS countries in the same period of time. As a result, a negative trade balance reduced by $260 million USD, which meant that less foreign currency went out of Georgia.

If you review media of the past year and still doubt the results of Georgia’s Association with the EU, this forecast will be quite popular: “The DCFTA will fulfill the Georgian market with EU products and at the same time Georgian farmers will lose their traditional export market in the CIS countries”.

In reality, 12 months on from signing the DCFTA shows Georgia’s imports from the EU grew by five times less than Georgia’s exports to EU countries.

Moreover, exports to CIS countries increased by 50 percent. So both arguments of the skeptical critics of the Agreements were eliminated.

“Exports to Russia is very dangerous now. There are a lot of cases when they took the products and did not pay for it. While Europeans, as the rule, fully pay for the products in advance,” said Giga Japava, 38, who owned a kiwifruit plantation.

He started his business in 2010 after buying 24 Ha of abandoned and wild tea plantations in Zugdidi.

He managed to clean the area and grow kiwifruit trees. He was oriented towards exporting his produce to the EU from the very beginning and was

fully prepared for the process. Last year he enjoyed his first harvest and by that time he already had a Global Gap certificate and partners in Germany through the supermarket network ‘Libly’.

The first harvest’s yield was 5.5 tonnes but this year he is ready to send 100 tonnes to his clients abroad.

‘Libly’ requested 6,000 tones this year while Japava’s expectations are around 500 tonnes. Japava said Germany only wanted the first sort products while the second sort also showed good sales in the local market. The difference in prices was not big – Europeans paid €1.25 per kilogram of first sorted kiwi, while Georgia bought middle-quality products for 3.2 GEL per kilogram. So Japava exported to the EU mostly because of the prestige of his business. The demand on his products was also high in Georgia too.

“There are only 21 kiwifruit plantations in Georgia now and five refrigeration enterprises are serving this harvest. If you unite the harvest from all of them is can be enough volume only for the one German supermarket’s network. While today we already have requests for more than 1,000 tonnes from the UK, so we have to start new a cooperation to sell the product under one brand name. We think this would work bette. Let’s see,” said Japava. He planned to add packaging workshop to his business with funding from a Governmental agricultural loan worth 300 000 GEL. Meanwhile an Imereti-based company named Herbia, which has grown herbs in greenhouses for the past 10 years, has more experience exporting its products to the EU. At the beginning the main target market for the company was Russia and Ukraine, but the Russian embargo forced the company to search for an alternative market.

The company started exporting its products to Europe – a small amount was transported by plane but the DCFTA has make export procedures easier.

Last year Herbia sold 24 tonnes in Bulgaria along; this was transported on land by vehicle. The company also has clients in Germany, the Netherlands and Baltic countries. The company also earned a Global GAP license, which gave the producer the right to export to the EU years before the DCFTA was signed.

Zurab Janelidze, 55 is the head of Herbia. He said: “Business is improving step by step. Now we sell fully packed and branded products which increases our income by 50 percent. We are supplying all local supermarkets and we are controlling almost the whole segment of the local market. The next step will be restaurants and hotels.”

“We plan to sell the fully packed products in the EU. This is why we are going to build a package workshop in Bulgaria. The transfer of fully packed product increases transport costs as the packages took a big space in the refrigerated trailer car,” explained Janelidze.

Now Herbia must look to diversify for the European market. Local demand is so high that the company has a lot of business to do in Georgia.

Exports to Bulgaria make up only five percent of all of Herbia’s sales, and this was the real picture. The main goal of EU integration for Georgia was not growth in export but harmonisation of the country’s laws with Europe, which was the base for progress and further development.

That is why the main aim of ENPARD is to improve Georgia’s agricultural legislation and strategy and modernize the Ministry of Agriculture. The EU has positively assessed the country’s progress in this field and has subsequently decided to prolong ENPARD’s Georgian mission for an extra three years.

The main goal is the right management of the whole field; this will further develop different directions.

Last year in Georgia there were 1.3 million cattle. This was an increase of six percent year-onyear. The number of pigs (units of pork) reached 210,000, which was an increase of 9.5 percent. A nine percent growth was also seen in poultry numbers, which reached 7.4 million.

The number of sheep and goats also increased last year by 1.2 percent and reached 867,000 units. The volume of meat production grew by one percent, reaching 49,000 tones, and milk production was 633 million litres in 2014, which was five percent higher than the previous year. As for egg production, this grew by five percent and reached 522 million in 2014.

All this happened within one year of Georgia signing the DCFTA and what an impact this has had on Georgia’s agriculture industry. Significant progress has been made but no doubt progress will continue in the coming years in a range of directions.

July 13, 2015 #107

RESEARCH

EXPECTED DECLINE IN 2015 REMITTANCES TO CUT NOMINAL GDP BY ABOUT 1%

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ccording to the data provided by the consulting company PMCG, an expected decline in remittances in 2015 will not decrease nominal GDP by more than 1%.

According to the analysis of the company, a 330 milliondollars decrease in the remittances is expected by the end of the year.

It is noted in the PMCG survey that remittances are an important source of household consumption, which in turn is the largest component of the Gross Domestic Product (72% in the I quarter 2015). “Money transfers structure by countries does not give grounds for optimism, as the top five includes countries such as: Russia (37%), Greece (16%), Italy (10%), the US (9%) and Ukraine (7%). Greece, Russia and Ukraine are suffering the economic crisis, while Italy‘s economy has recorded small economic growth “, - the survey says.

They say in January - May 2015 the volume

of remittances from abroad has significantly reduced, namely by 23.2% compared with the same period of 2014.

Money transfers from Russia decreased by 42.4% or $ 119.8 mln), Greece (-18.1%; -$ 15.3 ml.) and Italy (-11.6%; - $ 5.8 mln), who have the highest share in the total money transfers.

“By conservative estimates, if a trend recorded in January - May period maintains, in 2015 remittances from Greece will reduce by $ 40 million, while from Russia by $ 290 million as compared to 2014”, - say in the organization.

They also report that in 2015 January - May period, the largest share of remittances come from Russia, although its share has decreased by 13%, as a result, Greece’s share has increased by 1%, Italy’s- by 1% , USA’s share – by 4%, and Ukraine’s- by 3% in the total remittances.

However, the situation in Greece gives grounds to say that the reduction in remittances will have a lasting effect. In January - May 2015, monthly transfers from Greece lagged behind the previous year’s corresponding period, in January – by $ 2.6 million, in February – by $ 2.5 million, in March - by $ 3.6 million, in April – by $ 4.1 million and in May – by $ 2.4 million. Given the recent developments in Greece, we have to assume that money transfers will further fall in the coming months.

Against this background, it is also noteworthy that in 2015 January - May period remittances from the US increased (by 26.2%; $ 8.0 million) as well as from Ukraine ( by 21.9%; $ 5.3 million). The abovementioned growth can’t balance a decline of remittances from Russia, Greece and Italy, but the trend is still positive”, - the report states.

NEIGHBORHOOD

Azerbaijani banks increase reserves

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he expanded monetary base in Azerbaijan totaled 7.984 billion manat as of June 1, 2015, the report of the Central Bank of Azerbaijan as of January-May said. In annual terms, the monetary base in Azerbaijan decreased by 29.76 percent in 2014. For comparison, as of April 2014, this figure was 113.5 billion manat or by 1.44 percent.

As of June 1, 2015, the monetary base in manat amounted to 7.597 billion manat versus 11.272 billion manat as of June 1, 2014. In the mentioned period, the volume of money in circulation amounted to 7.129 billion manat, while this figure was 10.750 billion manat as of June 1, 2014.

The ratio of the mass of cash in circulation to the monetary base was 89.3 percent as of January 1, 2015, decreasing by 5.3 percent compared to the same figure as of June 1, 2014.

Ukrainian Inflation Slows Further in June as Hryvnia Stabilizes

U

krainian inflation, the fastest in Europe, slowed for a second month in June as the hryvnia stabilized. Consumer prices rose 57.5 percent from a year earlier after surging 58.4 percent in May, the statistics office in Kiev said Monday on its website. That matches the median estimate of three economists in a Bloomberg survey. Prices advanced 0.4 percent from the previous month.

Ukraine’s economy is in its second year of contraction as a pro-Russian insurgency in the nation’s east curbs industry and repels investment.

Grappling with this year’s second-worst-performing currency against the dollar and predicting 2015 inflation of 48 percent, the central bank kept its benchmark interest rate at 30 percent last month. Having plunged 33 percent in the first quarter, the hryvnia has since rebounded 9.7 percent, data compiled by Bloomberg show. It remains 28 percent lower this year, better only than the Belarusian ruble, and was 1.3 percent weaker Monday in Kiev.

Russian Tycoon Bids $200 mn for Control of Swedish CTC Media

64% OF RESPONDENTS BELIEVE THAT THERE IS NO COMPETITION IN GEORGIA

A

ccording to a survey conducted by the Competition Centre, 64% of respondents believe that in Georgia there is no competitive environment for businesses.

Center is the first organization that intends to conduct a survey on this issue. At this stage, an online survey has been conducted.

87% of survey participants believe that the competition has a big impact on the rights of consumers, but believe that the state is not enough involved in this issue and does not carry out all the necessary measures.

74% of respondents believe that the lack of a competitive environment hinders the development of the economy, 64% believe that there is no competition in the country.

57% of respondents believe that violations of the rules of competition are frequent, 47% believe that competition in the market should be ensured by the State, 40% bthink that everything should be regulated by the market.

The survey showed a low level of awareness of citizens about the reforms in this area - in particular, only 5% of respondents possess certain information about the reforms in the area of competition policy.

“The population knows practically nothing about how it should behave in a case of violation of competition rules. For example, 51% do not know where to apply in such a case, and only

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9% know about the Competition Agency. Most respondents say they would like to know more about the antitrust laws in Georgia, where to go if any company infringes on the interests of competitors, etc,”- says the head of the center Mariam Kuchuloria.

In her words, the Competition Centre intends to hold a more large-scale research in this area and to start work on informing the target audience.

“Violation of the rights of consumers, disproportionately high prices, ignoring the norms of quality and safety - these are just a small part of the issues on which the Georgian public expresses protest. Cartel deals, abuse of dominant position and corruption causes damage not only to specific users, but also the economy. To eliminate all these negative effects , the government should carry out regular anti-monopoly policy, “- she notes.

She says the Association Agreement with the European Union requires from Georgia the same – among the regulations Georgia must fulfill is bringing the country’s anti-monopoly legislation in line with European standards.

The Competition Agency has been recently created in the country, but as Mariam Kuchuloria explains, given that the past government pursued ultraliberal economic policies, almost completely abandoning the regulations, at this stage antitrust activity is something new and unknown for the country.

T

he UTV media holding of Russian tycoon Alisher Usmanov has bid $200m for 75% of CTC Media from Sweden’s Modern Times Group (MTG) before a new law limiting foreign ownership of Russian media comes into effect in January 2016.

The offer was confirmed in a statement on July 6 by CTC Media. Investors have been rushing to sell stock in the holding comprising several TV channels since it said in June that it had been unsuccessful in its search to find a buyer. CTC Media’s share value plummeted by 28% in the last week of the month and by 57% since January.

Turkey’s online retail market to double by 2020

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urkey’s online retail market is expected to double to 14 billion Turkish Liras ($5.2 billion) by 2020 from 7 billion liras ($2.6 billion) in 2015, according to a report from the Boston Consulting Group and Boomerang Commerce titled “Multichannel Pricing Strategy.”

“There is fierce competition in the retail sector in Turkey,” said BurakTansan, partner and managing director of BCG Turkey. “The conditions of competition have also changed. The rules of the game have been rewritten with the development of the digital world.”

Turkey’s Internet economy is expected to reach 2.6 percent of GDP by 2017. An increasing number of consumers go online, check prices from both online and bricks-and-mortar stores, and then choose where to buy, the report said, adding that this put great pressure on retailers both online and offline for pricing.

WORLD NEWS

Greece has a plan

O

n 8 july, Greece submitted its latest round of bailout proposal to its European creditors, ahead of a midnight deadline.

The Financial Times noted that this plan is part of a request for a new 3-year bailout.

Headlines from Bloomberg on Thursday evening characterized this plan as similar to the European Commission’s plan presented on June 26.

This plan prompted Greek prime minister Alexis Tsipras to call a surprise referendum on the issue.

Greece voted firmly against this plan.

Greece’s proposal on Thursday includes debt restructuring, a 35 billion euro growth package, a proposed primary budget surplus equal to 1% of GDP in 2015, followed by surpluses of 2%, 3%, and 3.5% from 2016-2018. This plan also has the same value-added-tax reform effective as of July 1, which targets a net revenue gain of 1% of GDP. This plan also proposes an increase on corporate taxes to a rate of 28% from 26%

Chinese stocks are soaring for the second day in a row

T

he heavy government intervention to support Chinese share prices is paying off, for now. For a second consecutive session stocks are soaring.

In early trade the benchmark Shanghai Composite index added 6.4%, taking its two-day increase to 11.7% which, if sustained, will mark the largest rally seen on the index since September 22, 2008. Large-cap stocks are outperforming with the SSE 50 index of the 50 largest firms listed in Shanghai, putting on 6.6%.

The moves seen in Shanghai are being replicated in other parts of the country. The Shenzhen Composite has added 4% with the tech-heavy ChiNext index up by a similar amount.

Unsurprisingly, the CSI 300 and 500 indices, comprising the 300 and 500 largest listed firms in Shanghai and Shenzhen, have put on 6.5% and 5% respectively.

The 10 most affordable cities in the world

O

f all the cities in the world, your dollar will go the furthest in Mumbai, India.

It’s currently the cheapest city to live in, according to the Economist’s World Cost of Living Index. The index, which is calculated every other year, compares countries based on the cost of things like food, drink, clothing, rent, transportation, and utility bills.

It’s designed to help companies figure out how much to compensate employees who are working overseas.

10. RIYADH, SAUDI ARABIA 9. JEDDAH, SAUDI ARABIA 8. PANAMA CITY, PANAMA 7. BUCHAREST, ROMANIA 5. KATHMANDU, NEPAL 4. DAMASCUS, SYRIA 3. NEW DELHI, INDIA 2. KARACHI, PAKISTAN 1. MUMBAI, INDIA

IMF Cuts World Growth Outlook

T

he IMF cut its forecast for global growth this year, citing a weaker first quarter in the U.S. and warning that financial-market turbulence from China to Greece clouds the outlook. The world economy will grow 3.3 percent in 2015, less than the 3.5 percent pace projected in April and slower than the 3.4 percent expansion last year, the International Monetary Fund said in revisions to its World Economic Outlook released Thursday in Washington. The fund left its forecast for growth next year unchanged at 3.8 percent.

While the IMF left its 2015 projections for China and the euro area unchanged from April, it singled out both economies as areas sources of potential risk. Chinese stocks have tumbled in recent weeks and Greece is struggling to reach a deal with European creditors to stay in the euro area.

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July 13, 2015 #107

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 16 Akhmeta Str., Avlabari, 0144 Tbilisi.

E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi ;Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: +995 32 2 75 21 11, Fax: +995 32 2 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str.

Batumi, Georgia; tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16 Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy

TBILISI GUIDE

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7 Kushitashvili St., Tbilisi Tel: 38-53-10; 25-00-98/97 E-mail: ambasada@caucasus.net Republic of Poland Embassy 19 Brothers Zubalashvili St., Tbilisi Tel: 292-03-98 Email:tbilisi.amb.sekretariat@msz.gov.pl Web-site: www.tbilisi.polemb.net Republic of Iraq Embassy Kobuleti str. 16, Tbilisi Tel: 291 35 96; 229 07 93 E-mail: iraqiageoemb@yahoo.com Federative Republic of Brazil Embassy Chanturia street 6/2, Tbilisi Tel.: +995-32-293-2419 Fax.: +995-32-293-2416 Islamic Republic of Iran Embassy 80, I.Chavchavadze St. Tbilisi, Tel: 291-36-56, 291-36-58, 291-36-59, 291-36-60; Fax: 291-36-28 E-mail: iranemb@geo.net.ge United Nations Office Address: 9 Eristavi St. Tbilisi Tel: 225-11-26/28, 225-11-29/31 Fax: 225-02-71/72 E-mail: registry.geo@undp.org Web-site: www.undp.org International Monetary Fund Office Address : 4 Freedom Sq., GMT Plaza, Tbilisi Tel: 292-04-32/33/34 E-mail: kdanelia@imf.org Web-site: www.imf.ge Asian Development Bank Georgian Resident Mission Address: 1, G. Tabidze Street

Freedom Square 0114 Tbilisi, Georgia Tel: +995 32 225 06 19 E-mail: adbgrm@adb.org; Web-site: www.adb.org World Bank Office Address : 5a Chavchavadze Av., lane-I, Tbilisi, Georgia ; Tel: 291-30-96, 291-26-89/59 Web-site: www.worldbank.org.ge Regional Office of European Bank for Reconstruction and Development Address: 6 Marjanishvili St. Tbilisi Tel: 244 74 00, 292 05 13, 292 05 14 Web-site: www.ebrd.com Representation of the Council of Europe in Georgia Address : 26 Br. Kakabadze, Tbilisi Tel: 995 32 291 38 70/71/72/73 Fax: 995 32 291 38 74 Web-site: www.coe.ge Embassy of the Slovak Republic Address: Chancery: 85 Irakli Abashidze St. Tbilisi, 0162 Georgia Consular Office: 38 Nino Chkheidze St. Tbilisi, 0102 Georgia Phone: 2 222 4437, 2 296 1913 e-mail: emb.tbilisi@mzv.sk

Hotels in Georgia TBILISI MARRIOTT Tbilisi , 13 Rustaveli Ave. Tel: 77 92 00, www.marriott.com COURTYARD MARRIOTT Tbilisi , 4 Freedom Sq. Tel: 77 91 00 www.marriott.com RADISSON BLU HOTEL, TBILISI Rose Revolution Square 1 0108, Tbilisi Tel: +995 32 402200 radissonblu.com/hotel-tbilisi RADISSON BLU HOTEL, BATUMI Ninoshvili Str. 1, 6000 Bat’umi, Georgia Tel: 8 422255555 http://radissonblu.com/hotel-batumi SHERATON METECHI PALACE Tbilisi , 20 Telavi St. Tel: 77 20 20, www.starwoodhotels.com SHERATON BATUMI 28 Rustaveli Street • Batumi Tel: (995)(422) 229000 www.sheratonbatumi.com HOLIDAY INN TBILISI Business hotel Addr: 1, 26 May Square Tel: +995 32 230 00 99 E-mail: info@hi-tbilisi.com Website: http://www.hi-tbilisi.com BETSY’S HOTEL With Marvellous Tbilisi Views Addr: 32/34 Makashvili St. Tbilisi Tel: +995 32 293 14 04; +995 32 292 39 96 Fax: +995 32 99 93 11 E-mail: info@betsyshotel.com Website: http://www.betsyshotel.com

Restaurants CORNER HOUSE Tbilisi, I. Chavchavadze ave. 10, Tel: 0322 47 00 49; Email: contact@cornerhouse.ge RESTAURANT BARAKONI Restaurant with healthy food.

Georgian-European Cuisine Agmashenebeli Alley 13th Phone: 555 77 33 77 www.barakoni.com CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CAFE 78 Best of the East and the West Lado Asatiani 33, SOLOLAKI 032 2305785; 574736290 BREAD HOUSE Tbilisi , 7 Gorgasali St. , Tel: 30 30 30 BUFETTI - ITALIAN RESTAURANT Tbilisi , 31 I. Abashidze St. , Tel: 22 49 61 DZVELI SAKHLI Tbilisi , 3 Right embankment , Tel: 92 34 97, 36 53 65, Fax: 98 27 81 IN THE SHADOW OF METEKHI Tbilisi , 29a Tsamebuli Ave. , Tel: 77 93 83, Fax: 77 93 83 SAKURA - JAPANESE RESTAURANT Tbilisi , 29 I. Abashidze St. , Tel: 29 31 08, Fax: 29 31 08 SIANGAN - CHINESE RESTAURANT Tbilisi , 41 Peking St , Tel: 37 96 88 VERA STEAK HOUSE Tbilisi , 37a Kostava St , Tel: 98 37 67 BELLE DE JOUR 29 I. Abashidze str, Tbilisi; Tel: (+995 32) 230 30 30 VONG 31 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 BRASSERIE L’EXPRESS 14 Chardin str, Tbilisi Tel: (+995 32) 230 30 30 TWO SIDE PARTY CLUB 7 Bambis Rigi, Tbilisi Tel: (+995 32) 230 30 30

Cinemas AKHMETELI Tbilisi. “Akhmeteli” Subway Station Tel: 58 66 69 AMIRANI Tbilisi. 36 Kostava St. Tel: 99 99 55, RUSTAVELI Tbilisi. 5 Rustaveli Ave. Tel: 92 03 57, 92 02 85, SAKARTVELO Tbilisi. 2/9 Guramishvili Ave. Tel: 8 322308080,

SH. RUSTAVELI STATE THEATRE Tbilisi. 17 Rustaveli Ave. Tel: 93 65 83, Fax: 99 63 73 TBILISI STATE MARIONETTE THEATRE Tbilisi. 26 Shavteli St. Tel: 98 65 89, Fax: 98 65 89 Z. PALIASHVILI TBILISI STATE THEATRE OF OPERA AND BALLET Tbilisi. 25 Rustaveli Ave. Tel: 98 32 49, Fax: 98 32 50

Galleries ART GALLERY LINE Tbilisi. 44 Leselidze St. BAIA GALLERY Tbilisi. 10 Chardin St. Tel: 75 45 10 GALLERY Tbilisi. 12 Erekle II St. Tel: 93 12 89

Real Estate International Real Estate Company (IREC) Tbilisi. 9 P. Aslanidi St. Tel: +995 32 238 058 Mob: 599 95 76 71 Email: Info@irec.ge www.irec.ge

GSS Car rental offers a convenient service for those who are interested in renting car in Georgia. Rental fleet mainly consist of Japanese made SUV’s, the company has various models of cars including sedans and minivans which are in good technical condition.

Contact information: Email: info@gsservices.ge.

Address: Shalva Dadiani 10

Akhvledianis Khevi N13, Tbilisi, GE. +995322958377; +995599265432

Theatres A. GRIBOEDOV RUSSIAN STATE DRAMA THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 93 58 11, Fax: 93 31 15 INDEPENDENT THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 98 58 21, Fax: 93 31 15 K. MARJANISHVILI STATE ACADEMIC THEATRE Tbilisi. 8 Marjanishvili St. Tel: 95 35 82, Fax: 95 40 01 M. TUMANISHVILI CINEMA ACTORS THEATRE Tbilisi. 164 Agmashenebeli Ave. Tel: 35 31 52, 34 28 99, Fax: 35 01 94 METEKHI – THEATRE OF GEORGIAN NATIONAL BALLET Tbilisi. 69 Balanchivadze St. Tel: (99) 20 22 10 MUSIC AND DRAMATIC STATE THEATRE Tbilisi. 182 Agmashenebeli Ave. Tel: 34 80 90, Fax: 34 80 90 NABADI - GEORGIAN FOLKLORE THEATRE Tbilisi. 19 Rustaveli Ave. Tel: 98 99 91 S. AKHMETELI STATE DRAMATIC THEATRE Tbilisi. 8 I. Vekua St. Tel: 62 59 73

THE BEST GEORGIAN HONEY OF CHESTNUTS,ACACIA AND LIME FLOWERS FROM THE VERY HART OF ADJARA MATCHAKHELA GORGE IN THE NETWORK OF GOODWILL, NIKORA AND SMART

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Two residential complexes include 464 apartments with parking, green area, outdoor swimming pool and playground for children. ”Metrocity” is unique with its special maintenance services.

“Metrocity” integrates two five star hotels, private school and residences with private swimming pool, panoramic terrace restaurants, casinos, Spa, shopping center including 100 brand stores, sport club, cinema, bowling center, playground for children, gold sand beach and the biggest conference hall in Transcaucasia for 1500 guests.”MetroCity” can be found just 2 km from Batumi International Airport and 500m from the city center. The complex with its location is harmoniously mixed with mountains and sea views.

The project implementation has begun in February 2015 and will be successfully completed in April 2017.

Residences from 38 m2 to 300 m2 are available.

10% Deposit 36 MONTH INTERNAL CREDIT 25% Deposit 60 MONTH INTERNAL CREDIT

STARTING PRICE IS FROM 1425 $ Address: Leh and Maria Kachinsky Str.1, Batumi Tel: +995 577 14 17 14 sales@metrocity.ge www.facebook.com/MetroCity.GE

www.metrocity.ge

July 13, 2015 #107