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December 22, 2014 #81

December 22, 2014, Issue 81

georgia European Parliament Ratifies Associated Membership Agreement with Georgia

lso on December 18 the European Parliament adopted an accompanying nonlegislative resolution with 491 votes to 84; 63 MEPs abstained. Pg. 2

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Georgia Improves Position in Rating of Best Countries for Business

Fitch: Further Weakening of the Lari Exchange Rate May Have Effect on Financial Stability

s a result of today’s trades, the national currency has experienced a drop towards all other currencies excluding the Russian Ruble. Pg. 5

Georgia’s Perspectives for 40 Years by 5.1% Economic Growth

ccording to the 2013 IMF indicators, Georgia ranks 114th in terms of GDP per capital. Pg. 5

The state cannot interfere in relations between individuals, debtors and banks

eople for various reasons found themselves in a difficult situation, and the state cannot interfere in relations between individuals, Pg. 8 debtors and banks

neighborhood Azerbaijani citizens not to feel oil price decrease on world market

zerbaijani President Ilham Aliyev said during the opening ceremony of the first All-Republican Forum of ASAN Volunteers in the Heydar Aliyev Center in the SabiraPg. 13 bad district.

WORLD NEWS Microsoft, Google, Adobe Leave Russia Due to Putin’s New Laws

ech companies Microsoft, Google, and Adobe are all giving up on their Russian operations amid a new law requested by President Vladimir Putin. Pg. 13

Currency

orbes published annual rating. Georgia ranked 47th among 146 countries. In the same ratings of 2011-2013 Georgia ranked 50th among 145 countries. This year Georgia is placed between Croatia and Montenegro. Forbes considered various criteria in the rating: Georgia ranks 5th according to Red Tape, trade freedom - 6, property rights - 105, innovations -

120, monetary freedom - 52, technologies - 66, investor protection - 42, corruption - 46, personal freedom - 67. In the rating Best Countries Denmark is a leader. Hong-Kong ranks second, New Zealand - 3. Top-5 list includes Ireland and Sweden. As for our neighbors, Turkey ranks 50th, Azerbaijan - 60, Armenia - 56, Russia - 91. In the rating 3 last positions belong to Libya, Chad and Guinea.

Global price on fuel declines considerably by 48%, while Georgian prices decrease by 13%

In Georgia, Fuel is Sold at a Profit of GEL 0.82

Pg. 5

Wine Market in Georgia Pg. 10

Keti Bochorishvili Georgia Going to Become an International Center for Gambling Business Pg. 4

Yermukhamet Yertysbayev: The opportunities of Kazakhstan are huge and should be used well by the Georgian government Pg. 6 Giorgi Amashukeli: The government had a very successful year at starting and accomplishing new infrastructural projects Pg. 13

Pg. 12

Exchange Rate Monitoring GEL Exchange Rate Strengthens after Sharp Downturn

FOMC To Determine NearTerm US Dollar Direction

George Chogovadze: It is Necessary to Focus on Solvent Tourists Pg. 4

Research

Georgian Population’s Perception of the Country’s Economic Condition

Curious how much New Year’s dishes will cost this year?

Pg. 7

Pg. 7 USAID Launches “Governing for Growth in Georgia” to Support Economic development Pg. 6

Exports-Imports Suggestive Highlights

Pg. 6

2 main events US welcomes European Parliament’s ratification of Georgia-EU deal

government news caucasian business week

European Parliament Ratifies Associated Membership Agreement with Georgia

he United States (US) State Department believes the ratification of the European Union (EU)-Georgia Association Agreement (AA) by European Parliament was “another important milestone” in Georgia’s Euro-Atlantic integration.

Georgian Central Bank Keeps Key Rate at 4%

nnual inflation stood at 2.8% in November. Central bank’s monetary policy committee said on December 17 that no significant inflationary pressures are expected and the annual inflation may only reach the revised target level of 5% in the second half of 2015.

EU Monitoring Mission in Georgia offered 2-year extension

he European Council has extended the mandate of the European Union Monitoring Mission in Georgia (EUMM Georgia) by two years, until December 14, 2016.

Latvian FM: EU might grant Georgia visa-free travel in 2015

eorgians might be able to travel to the European Union’s (EU) Schengen zone with no visa required next year, says Latvia’s Foreign Minister, vowing his country will do “its best” to help Georgia reach its European aspirations.

More Georgian soldiers leave for Afghanistan

he next wave of soldiers from the Georgian Armed Forces has left Georgia and are on their way to Afghanistan to serve as a part of NATO-led new mission Resolute Support

Late-PM Zhvania’s security guard released on bail

ne of the two security guards tending to Georgia’s late Prime Minister Zurab Zhvania has been released on bail after being charged with negligence, which led to the PM’s death in 2005.

Georgia, Turkmenistan deepen economic ties

uring Georgian President Giorgi Margvelashvili’s official visit to Turkmenistan last week, the leaders of the two countries signed three documents that will see Georgia and Turkmenistan work harder on tightening bilateral economic relations

US Gov’t pledges support for Georgia’s economic development

he Government of the United States (US) has launched a new five-year project named ‘Governing for Growth (G4G) in Georgia’ to support Georgia as it progresses along the economic reform process

uropean Parliament gave its consent to ratification of EU-Georgia Association Agreement, also including deep and comprehensive free trade treaty, on December 18 in Strasbourg. MEPs backed the agreement by 490 votes to 76, with 57 abstentions. Georgia’s incumbent and former presidents Giorgi Margvelashvili and Mikheil Saakashvili, respectively, were present, seating not too far from each other, in the chamber during the vote in the European Parliament. Also on December 18 the European Parliament adopted an accompanying non-legislative resolution with 491 votes to 84; 63 MEPs abstained. The vote came a day after the European parliamentarians debated on Georgia in Strasbourg on December 17. EU signed Association Agreements with Moldova, Georgia and Ukraine on June 27. The Georgian Parliament ratified the agreement on July 18. MEPs ratified agreements with Ukraine and Moldova in September and November, respectively. Although it has yet to be ratified by all the EUmember states, large part of the agreement already came into force provisionally starting from September 1, 2014. So far the Association Agreement has been ratified by eleven EU-member states: Romania, Bulgaria, Lithuania, Latvia, Malta, Slovakia, Estonia, Hungary, Sweden, Croatia and Denmark; the latter ratified the agreement on December 18. In the accompanying non-legislative resolution, also passed on December 18, the European Parliament says that the Association Agreement “is not an end in itself, but part of a broader process to bring the country into the European mainstream legally, economically, politically and socially.”

he Japanese government will grant 100 million Japanese Yen (1.5 million GEL) to Georgia to buy equipment and techniques necessary for identifying the risks of natural disasters in the country.

Georgia looks to launch e-visa scheme with 102 countries

eorgia is preparing to launch an electronic visa (e-visa) facility in the near future, allowing tourists from 102 countries the possibility to apply for a Georgian visa in simple steps, say official Tbilisi.

The resolution also says that Georgia “has a European perspective and may apply to become a member of the Union provided that it adheres to the principles of democracy, respects fundamental freedoms and human and minority rights, and ensures the rule of law.” In the resolution the European Parliament also expresses its full support to visa liberalisation for Georgia “as an immediate sign of closer EU-Georgia relations and a direct benefit for the population.” The resolution was prepared based on a report by a Latvian MEP Andrejs Mamikins from the group of the Progressive Alliance of Socialists and Democrats, who is a rapporteur on Georgia. The original draft, however, was amended when it was discussed by the European Parliament’s foreign affairs committee in November with many of the changes introduced by the EPP group to reflect in the text their concern over “selective justice” and prosecution of former government officials. Few changes were also introduced into the draft just before the vote on December 18. While the resolution welcomes Georgian authorities’ “recent reforms” to “strengthen” democratic institutions, it also expresses concern about “the lack of accountability of the prosecutor’s office” and about numerous former government officials and current opposition figures being charged and imprisoned. The resolution also “expresses concern” over “the potential use of the judicial system to fight against political opponents, which could undermine Georgia’s European course and the efforts of the Georgian authorities in the area of democratic reform.” In an amendment introduced just before the vote upon the initiative of Romanian MEP from EPP group, Cristian Dan Preda, the European Parlia-

ment also called on the Georgian authorities to address shortcomings identified in OSCE’s trial monitoring report. The report in question was compiled by OSCE’s democracy and rights arm ODIHR as a result of monitoring of 14 trials of former government officials. The mission, which was invited by the Georgian authorities, said in its report that while “many of the shortcomings identified in individual hearings may not alone amount to a violation of the right to a fair trial, it is the combination of these individual shortcomings, certain shortcomings in national legislation, as well as generally problematic court practices that overall jeopardized the full respect of fair trial rights.” The report lists over 80 recommendations, mostly addressed to the Parliament to introduce relevant legislative amendments, to the judiciary, as well as to prosecutor’s office, executive government and defense counsel, that have to be taken into consideration in order to tackle shortcomings identified in the report. In the resolution the European Parliament expresses support to “the positive steps taken by the Georgian government towards the improvement of relations with Russia.” It calls on Moscow “to engage constructively in finding a peaceful resolution to the conflicts and particularly with the Geneva talks,” which were launched after the August 2018 war. The draft says that the European Parliament “finds regrettable… the lack of substantial progress in the Geneva talks despite the efforts of the Georgian authorities to engage constructively to address all security and humanitarian concerns in the conflict areas” and calls “for a more effective role for the EU in the process.” It calls on Moscow “to reverse its recognition” Abkhazia and South Ossetia and “to end its occupation” of these regions. The resolution “condemns” treaty on “alliance and strategic partnership” signed between Moscow and Sokhumi in November and says that it’s “a step taken by Russia to conclude the full annexation of Abkhazia.” In one of the amendments introduced by the group of Progressive Alliance of Socialists and Democrats, the resolution says that the European Parliament “takes note of the steps taken by Georgia against Islamophobia and homophobia” – the amendment softened initial wording of the text, which read: “Deplores the violent outbreaks of Islamophobia and homophobia that have taken place in the country.” The adopted resolution “stresses, however, the need to bring perpetrators of violent acts of Islamophobia and homophobia to justice in an effective way. Civil.ge

PM Instructs Government to Reform Prosecutor’s Office

Japan grants 1.5m GEL for environmental projects in Georgia

December 22, 2014 #81

M Irakli Garibashvili said on December 18 that government should consider “institutional reform” of the prosecutor’s office to increase its “independence” and “accountability.” “I want to ask [the Justice Minister] Tea Tsulukiani to establish a working group that will work over this reform,” he said at a government session on Thursday morning. “Working process will show us which model we will opt for. It would be premature now to speak any specific models. The most important is to

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establish institutionally balanced model, where prosecutors’ neutrality will be institutionally guaranteed and the principle of accountability protected,” he said. “Prosecutor should be even more independent, but the issue of accountability should be clearly defined,” the PM said, adding that non-governmental organizations should be involved in the process of elaboration of reform. He also told the Justice Minister to cooperate with former chief prosecutor Archil Kbilashvili, whose “non-governmental organization is working very actively over this issue.” Garibashvili also said: “Our main goal is to establish prosecutor’s office as an efficient mechanism for fighting against crime, to strengthen it, and at the same time [prosecutor’s office] should serve the principle of rule of law.” Draft of resolution on Georgia, which the European Parliament plans to pass on December 18 together with the ratification of the Association Agreement, expresses concern, among other issues, over “the

lack of accountability of the prosecutor’s office.” In late November, parliament speaker Davit Usupashvili, criticized lack of accountability of prosecutor’s office and said that mistakes have been made in this regard. Although under the constitution prosecutor’s office is part of the Justice Ministry, with legislative amendments last year the Justice Minister was actually completely sidelined from overseeing prosecutor’s office. “Let’s acknowledge that we have made some mistakes in this regard,” Usupashvili said on November 28. “We have actually cut all the links between the [justice] minister and the prosecutor’s office and received serious problems, because no one has been left who might be politically accountable about what is going on in that structure [prosecutor’s office].” PM Garibashvili said on December 10 that the government would also consider reforming of the Interior Ministry with the view of possible separation of security and intelligences agencies from the ministry.

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Editor-in-Chief: Nino Gojiashvili Reporters: Nutsa Galumashvili; Tamar Kakabadze, Lazare Gvimradze

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December 22, 2014 #81

According to the GOEuroâ&#x20AC;&#x2122;s 2014 research, Georgia ranks second worldwide in terms of cheapest train tickets. Only South Africa is recorded ahead of Georgia. GOEuro is one of the major multifunctional research companies in the travel sector. The company compares and calculates prices for travel by train, bus and airplanes. GOEuro published the report in August 2014.

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4 Headlines Mining resumes at controversial Sakdrisi Gold Mine

stablishing the historical importance of Sakdrisi Gold Mine in southern Georgia is in doubt after the Government approved RMG Gold to resume mining at the controversial site.

Interview caucasian business week

Georgian National Tourism Administration: It is Necessary to Focus on Solvent Tourists An interview with the Head of the Georgian National Tourism Administration George Chogovadze

Austria, Georgia to build hydroelectric power station together

eorgia and Austria signed a memorandum on the construction of Mestia Chaladidi HPS with a capacity of 30 megawatts Dec.17. The document was signed by Georgian Energy Minister Kakha Kaladze, representatives of the Austrian company RP Global and the Georgian company Svaneti Hydro.

Lari depreciation continuesFitch Estimates Georgian Lari’s even more Weakening may Affect the Country’s Financial Stability

n today’s trade the Georgian national currency fell against all major currencies expect for the ruble. In particular, Gel traded at 1.8593 against the dollar instead of 1.9114. While Euro traded at GEL 2.3225 instead of 2.3791. Recall that a drop in the GEL exchange rate against the US dollar started in the second half of November and fell to minimum of 1.9527 on December 8. But began to strengthen on Friday after the National Bank President’s speech.

of our department. In addition, we are already working on a tourism development which will be ready by spring. At this stage, we already have a preliminary document on which we are now actively working with the support of the World Bank. The strategy will be the main document that defines the main directions for tourism development and will give us the opportunity to carry out deliberate and consistent steps. It is also important that with the support of the state and the World Bank infrastructure and utility rehabilitation has already begun in the two regions of eastern Georgia which have great prospects in terms of tourism development. - Do you have the priorities – which countries may be the most beneficial in terms of attracting tourists? - Georgia should become a tourist center in the region. It is very important to develop cultural tourism based on the authenticity of culture, preserving the traditions and legends that will help attract tourists. We should not rely solely on mass tourism, we must also strive to attract solvent tourists’ attention. One of the main tasks is to improve the quality of services, and we are actively working on this issue – in particular, we provide training for those working in the tourism sector. We also intend to introduce traditions associated with winemaking, which are one of the main priorities in terms of attracting tourists. We should also increase the interest in Georgia in terms of medical tourism and for this a correct positioning of this trend both within the country and abroad is needed. Due to various factors, Georgia has a great potential in business tourism, in particular, in holding various conferences and certain steps are planned in this direction in 2015. We are well aware of the current problems – for example such as high prices of tickets, so the

In November 2014 Exports Fell by 35%, Imports - by 7%

- The budget of your department in 2015 is virtually identical to the budget in 2014. What new projects do you intend to implement in the coming year? - We cannot say that it is identical. In 2015, our department’s budget will be GEL 17.1 million that is 4 million more than in 2014. In terms of innovation, the most important steps will be aimed at studying the resort potential of various regions of the country. Both state structures of Georgia and foreign experts will be actively involved in it. We are going to interest both local and foreign investors to invest in the construction of hotels. In general, support for the private sector is very important for the development of tourism and resorts. This will be one of the priorities in the work

China offers Georgia 9 million GEL financial aid

Georgia Going to Become an International Center for Gambling Business

n November 2014 Exports Fell by 35%, According to preliminary data of Statistics Service, in November exports from Georgia decreased by 35% and amounted to USD 203 million, imports decreased by 7% and amounted to USD 725 million. A decline in exports began in August, while imports increased in SeptemberOctober. In January-November 2014, the foreign trade turnover of Georgia amounted to USD 10, 4 billion, which is 7% more than in the same period of 2013. - by 7%.

hina has pledged to offer almost $5 million USD (about 9 million GEL) financial aid to Georgia to implement economic and technical projects. The $4.8 million USD aid will be allocated to priority economic and technical projects of Georgia, which will be selected through consultations between the Georgian and Chinese sides.

Russia Allowed Georgian Products into the Market in Response to Georgia’s Good Gesture

f the government of Georgia deems possible, we will be glad to see any representative of its government in Moscow, be it the Premier or President. Russian President Vladimir Putin said at the annual press conference. According to the President of the Russian Federation, domestic political controversy doesn’t cease in Georgia.

Germany to allocate preferential loan to Georgia

ermany decided to allocate to Georgia a preferential loan of 20 million euros, the ministry of finance of Georgia said. The loan will be used to finance a new project “The program of safe infrastructure for climate”.

Georgia ready for launching test train on BTK

eorgian section of Baku-Tbilisi-Kars (BTK) railway is ready to launch the test train, Georgian Ambassador to Azerbaijan Teimuraz Sharashenidze said at a press conference at Trend news agency on Dec.19. The ambassador added that the work on constructing the Georgian section of BTK has been basically completed. A test train is expected to run on the Baku-Tbilisi-Kars railway by late 2014 and it is planned to complete the implementation of the project in 2015.

December 22, 2014 #81

etails about a new gambling company interested in entering the market are expected to be known in January. The company about which “Commersant” writes for several weeks is currently in talks with the Ministry of Economy, although its identity will not be disclosed until a contract is concluded. According to Keti Bochorishvili, Deputy Economy, during the course of the negotiating process too many details will be discussed , and therefore, it is difficult to made any decision in the short term. In her words, the company’s entry into the domestic market will move the Georgian casino business to a different, higher segment. “This is

major challenge is to continue to attract low-cost airlines that will help to increase the flow of tourists. - Tour operators say that the number of tourists in comparison with previous years has decreased and explain this by the introduction of visa regulations. Whether they will be reviewed? - It should be noted that the new visa regulations did not affect the countries supplying the largest number of tourists – it’s basically the neighboring and the EU countries. According to data for 11 months in 2014, neighboring countries accounted for 88% of revenues derived from tourists, and the EU citizens- 4%. Overall, 92% of tourists are from the countries with which visa-free travel is maintained even after the introduction of regulations. However, visa regulations undoubtedly affected the flow of tourists from certain countries. On this basis, the Ministry of Foreign Affairs is currently working on the introduction of electronic visas, which will give the opportunity to fill the application and get a visa in electronic form. In addition, it is possible that the visa regulations will be further simplified. - What actions are planned in terms of advertising Georgia’s tourism potential ? - We intend to promote Georgia’s tourism potential on existing and new markets. In 2015 it is planned to carry out a marketing campaign in Armenia, Azerbaijan, Turkey, and Russia, which are our main tourist partners as well as in Hungary, Israel, the Baltic States, Belarus, Ukraine, Poland, and Kazahastane. Apart from that, in 2015 we will take part in several major tourism fairs – in Hungerexpo 2015 that will be held in Hungary, Top Resa 2015- in France, TT Warsaw 2015- in Poland . We also intend to intensify the ad campaign in social networks – this is very important considering the role of the Internet in our time.

a very important and large-scale project and will highlight Georgia on the map as an international destination in terms of entertainment,” - Bochorishvili says. In her words, the international company successfully operates both in Asia and in the United States. “It will offer an integrated service which combines a hotel, an entertainment center, a shopping center, dining facilities and other recreational places. All this will be integrated with the casino of another class and level that didn’t exist in Georgia,”- Deputy Minister of Economy adds. She notes if everything goes according to plan, the company will held an official presentation in February 2015 and will start operating in the market next year.

State expenditure policy will not be reflected on the future dynamic of USD/GEL rate

tate expenditure policy will not be reflected on the future dynamic of USD/GEL rate. Former vice president of NBG stated on Maestro that parallels with the GEL analogues of Last year fed negative expectations, which determined sharp drop of GEL rate in addition to other factors. Merab Kakulia explained that strengthening of the national currency last week was caused by fiscal effect - December 15 was taxation period of individuals and legal entities. GEL maintained position during 10 days. Then its rate devaluated again. In addition to main provoking factors, negative expectations also

impacted it. Last year’s analogue and external shocks, among them devaluation of Russian Ruble fed expectations. Kakulia excludes possible negative impact of the fiscal effect in the coming period, as expenditure policy is consistent. Besides, Merab Kakulia talked about impact of main trade partner countries. He mentioned that currencies of all countries of the region weakened except Azerbaijan. Kakulia also focused on reduction of investments and transfers, due to which balancing of negative trade balance could not be managed - in October-November these incomes were not enough to cover currency deficits. It became possible in August and then GEL rate strengthened.

December 22, 2014 #81

economy

caucasian business week

Fitch: Further Weakening of the Lari Exchange Rate May Have Effect on Financial Stability

s a result of today’s trades, the national currency has experienced a drop towards all other currencies excluding the Russian Ruble. This includes the US Dollar - by December 18th Lari’s currency in relation to the Dollar stood at the 1.9114 index instead of 1.8593. One Euro costs 2.3791 Lari instead of 2.3225. After the president of the national bank made a statement, the Lari course continued to strengthen for a few days. However its drop towards the Dollar begun mid-November this year and has been carrying on till today. The International Ratings Agency “Fitch” foresees that further weakening of Lari’s course might influence financial stability. A representative from “Fitch” tells “Financial” that the overall index of GDP growth, as well as direct foreign investments, allude to a strong economic activity in the country, although Vincent Forest says that

the external factor might make a dent in Georgia’s rating. According to him, a prolonged period of an unstable exchange rate will similarly impact the investment and business climates, which will, in turn, put the medium-term growth prospects under threat. Vincent Forest also states that the Georgian Lari’s fluctuations after several years of stability are primarily caused by external factors, although the national bank’s response did manage to calm the situation down. The “Fitch” representative says that the worsening of the current account deficit might cause an accumulation of external debts in the future, which represents Georgia’s weakness either way in light of the ratings. Apart from this, he also considers a high dollarization rate to be a notable weakness, and despite the financial sector being well-capitalized and liquidated, further weakening of the exchange rate might impact the financial stability.

Georgia’s Perspectives for 40 Years by 5.1% Economic Growth

eorgia’s real economic growth is expected to hit 5.1% this year. According to the 2013 IMF indicators, Georgia ranks 114th in terms of GDP per capital. How long will it take to reach the current indicators of these? If Georgia maintains a 5.1% growth, in 2015 we will catch up Ukraine’s current economic level in 2015 (It should be also noted Ukraine’s econ-

omy is falling because of current military and political unrest). By 2020 Georgia will reach Macedonia’s indicators. Georgia will overtake China in 2027, Azerbaijan in 2029, Turkey in 2035, Russian in 2042, Lithuania in 2043, Czech Republic in 2046 and Estonia, Greece in 2050 Greece, South Korea in 0253. Georgia will repeat the average EU indicator in 2059, that is, in 45 years.

Global price on fuel declines considerably by 48%, while Georgian prices decrease by 13%

In Georgia, Fuel is Sold at a Profit of GEL 0.82 The lower 2015 price forecast reflects significantly looser global oil market balances over the first half of 2015 compared with last month’s forecast. Decline in global fuel prices has not yet affected Georgian prices and this subject has become a matter of avid political discussions in the society. The Consumer Protection Association of Georgia and the social movement “Protest Against High Fuel Prices” will hold a protest on December 26. According to the head of the Consumer Protection Association Beka Kemularia, protests in the country have long matured as the price of motor fuel is inadequate to a situation on the world oil markets. Just for this reason it was decided to hold a protest, he said. They intend to put before the Competition Agency the issue on the need to study the activities of oil companies operating in Georgia. “As of December 11, 2014, the international price of gasoline amounts to USD 547, this is GEL 1 056 at the rate of GEL 1.84 per US dollar plus an excise tax in the amount of GEL 250 thus we get GEL 1 306. One ton of gasoline is equal to 1 330 liters. It turns out that the cost of 1 liter of gasoline including an excise tax makes GEL 0.98. To this we must add the cost of transportation and sale. According to the company’s financial statements, transport, selling, administrative and fiscal costs per a liter of gasoline amount to GEL 0.10. Plus VAT – 18%, or about GEL 0.19,5. Ultimately, 1 liter of Premium petrol on the territory of Georgia costs GEL 1.27 and the retail price – an average of GEL 2.09, that is GEL 0.82 or 64%. Such a high percentage of profit does not exist anywhere in the world. This happens only in Georgia,”- Kemularia notes. According to him, the prices should be regulated by the market, and the companies should decide for themselves what should the value of their products be, but this should be done within the law. “In developed countries the practice is just the opposite to ours – profit margin on products sold quickly is very low there due to the high turnover of the company, in any case, they enjoy a very high profit. We have claims to local companies, but we have no leverage in order to prevent ar-

bitrariness on the part of the oil business. The 30th article of the Constitution of Georgia states that the citizens of the country are protected from monopolists, cartel deals and redistribution of the market. The Competition Agency should directly deal with this issue. If it finds that the company enjoys a dominant position in the market, they must be fined in the amount equal to 5% of annual turnover. Such sanctions are provided by law,”- Beka Kemularia notes. Participants of the rally also plan to file a claim in the Competition Agency about rising prices of autogas. Georgian PM backed the Competition Agency’s position at the Cabinet meeting on December 18th. “I instructed the Competition Agency to work on this issue and held responsible for the lack of study and control over petrol prices in Georgia. Fuel prices fell several tens of percent in the world market. To our surprise, it is not adequately reflected in our market. So, I want the CA in ten days to familiarize the public with what we are dealing. I know that the price of gasoline went down in Georgia today, but it should be adequate and appropriate to the global market “, - Garibashvili said. CBW talked with leading Georgian oil companies regarding this issue. Gulf’s head of the public relations department Nino Jibladz said the company has already decreased oil prices for the 7th time by 25-28 tetris this past quarter. She stressed that the Georgian market is free and such talks are absurd. Deputy director of Lukoil Shavleg Mishveladze said fuel prices decreased twice in December and offered the Competition Agency to hold negotiations and said he would answer all question posed by them. General Director of Wissol Petrolium Vasil Khorava said the company reduces fuel prices consecutivly in accordance with the global prices. He said in response to PM’s statement that it takes time for fuel prices to become adequte against the the world prices. Wissol prices reduced by 10 tetris and this trend will continue, according to Mr Khorava. One liter of gasoline in Georgia is in the range of 1.98 to 2.18 lari ($ 1 = 1.91 lari) depending on the quality.

Opinion

caucasian business week

December 22, 2014 #81

Exports-Imports Suggestive Highlights

ccording to preliminary data of Statistics Service, in November exports from Georgia decreased by 35% and amounted to USD 203 million, imports decreased by 7% and amounted to USD 725 million, which means that Georgia has the negative trade balance. Georgia buys goods worth more than it sells. A decline in exports began in August, while imports increased in September-October. In January-November 2014, the foreign trade turnover of Georgia amounted to USD 10, 4 billion, which is 7% more than in the same period of 2013. Export accounts for USD 2.6 billion, which is 7% higher than last year, imports – 7.7 billion that is 9% higher. During this period, the negative balance

Levan Kalandadze Economic Analyst, Chairman of Georgian Infrastructure Projects Initiative

eostat’s report on Georgia’s January to November exports-imports indicators gives a reason for contemplation. In January-November 2014,

Georgia’s foreign trade turnover amounted to 10.4 billion USD, up 7% year on year. Exports marked 2.6 billion USD, up 0.5%; imports constituted 7.7 billion USD, up 9%. The negative trade balance amounted to 5.1 billion USD, up 12.7% year on year. Year on year growth in trade turnover marked 7%, but a high pace (about 13%) of growth in negative trade balance is an alarming sign. At the same time, considerable difference is recorded between exports and imports growth indicators. For example, exports growth is 18 times lower compared to the imports growth indicator. The current situation is mostly preconditioned by the Russian economic crisis. Amid catastrophic depreciation of Ruble, Russia is facing absolute transformation of consumer conduct norms and rules. All these changes will make significant negative affect on Georgia’s business sector in medium-term and long-term perspectives/. Today Georgian exports are bearing certain losses on the Russian market. Exports-Imports negative balance growth tendency poses threats and risks to GEL. Currently,

amounted to USD 5.1 billion and made 49% of trade turnover. Details of the November data will be released on December 24, but it is already clear that a decline in exports is mainly due to the deteriorating economic situation in Russia and Ukraine, as well as a 40% decline in re-exports of cars to Azerbaijan in comparison with 2013 - in April imports of cars manufactured before 2005 was banned in the country. The largest trading goods are export and re-export of cars, which volume in October was less than the previous year, compared to 113 million. The reasons for this are regulations about for the vehicles produced in Azerbaijan in until 2006. sharp misbalance is registered in Georgia between demands for GEL and USD and the demand for USD is reported to be growing, while the GEL value keeps declining. Hence, Georgia will have to draw as much foreign direct investments (FDI) as possible to ensure and protect monetary balance as one of the main challenges in 2015. Zurab Japaridze: Executive Secretary of the United National Movement, Zurab Japaridze held a press conference on the problems of foreign trade. Japaridze said the decline in exports over the past months was the first. He focuses on the Export Market. Japaridze says the country’s export growth in Russia is risky. Export of goods to Russia in 2013 increased by 209% in 9 month, and in 9 month of 2014 increased by 103%. Export growth in other countries is only 1%. This means that the Georgian economic is depending on the Russia. According to the executive secretary of UNM, Georgian government is no more trying to diversify of export potential. He considers that Geor-

Zurab Japaridze Executive Secretary of the United National Movement, Member of Parliament gia is still dependent on the major trading partner - one Russian Federation and this is a threat to its national security. Zurab Japaridze said the government was working badly extra funds from the new export markets.

Foodpanda Offers Customer Comfort – Order from Over 60 Restaurants from One App!

rdering food online keeps growing in demand. The German brand “foodpanda” stepped in Georgia the past spring with great am-

bitions. Foodpanda is a customer needs-oriented company using advanced technological novelties, like its smartphone app, to make food ordering simpler and more fun, ensuring user comfort. After updating the app to a new version in summer, the company has significantly increased focus on e-commerce. According to newest data, foodpanda’s application downloads have exceeded the 5 million mark globally. Georgia’s in a unique position since over half of all orders are made through the app. The application by itself is even more comfortable to use than the desktop website, since it offers all the same features in the palm of your hand: favorite dishes with their photos and ratings, various deals and offers from restaurants, and custom tweaks based on each

restaurant’s menu. “Today people spend more time with their phone screen then they do with TVs or even computers. The future of food ordering is in smartphones, and we’re positioning ourselves ideally for this,” – notes the foodpanda staff. “Our mobile application is currently experiencing high popularity and over 50% of all orders are coming through it exclusively. We think that the app’s popularity is also the result of it being a much more comfortable and simple tool to use: ordering from it is already possible form any place. You could save time by ordering food while in public transport, for instance, or just from the street in order to have your meal waiting for you once you reach your destination. Since the app is one of the company’s main priorities, we’re planning even more benefits and deals for our customers and will have exciting rewards for them,” – notes foodpanda CEO in Georgia, Giga Kerkadze.

news

caucasian business week

December 22, 2014 #81

Curious how much New Year’s dishes will cost this year?

top story

The menu is based on the New Year’s “staple products” which are considered a standard in the Georgian society

ew Year’s count down has begun – one week before the merriest and busiest of all holidays. Georgians are stocking up on products to fill their holiday dinner tables and let the celebration begin. Amid this preparatory celebration frenzy CBW continues its rubric of New Year’s food prices. Previously we compared the prices in the hypermarket Goodwill and the “Deserter’s Market.” As of today, the prices on these products remain the same. The main rise in the prices is expected to take place this week, as we approach December 31st. This will be the subject of our next issue. In this article we decided to calculate costs of separate New Year’s dishes: Satsivi is a classic on a Georgian New Year’s supra. Satsivi’s sauce is made from a mix of Turkey stock and walnuts. Turkey costs 60 laris on the market this year.

Khachapuri is Georgian cheese bread that is a staple dish at any supra. There are many different types of khachapuri, but the ingredients for most widespread variety imeruli khachapuri made with Imerian cheese are presented here: Flour – 0,5 kg - 0,90 GEL Yeast – 0,1 kg - 0,95 GEL Milk – 500 ml - 1,95 GEL Butter – 0,2 kg - 3,67 GEL Imerian cheese – 1 kg - 11 GEL Eggs – 2 - 0,70 GEL Total Cost: 19,17 GEL We estimated the cost of herbs and spices, such

as utskho suneli, dried coriander, saffron, pepper and clove as 3.00 laris and used this amount as a fixed cost in our dish prices. Especially since these products are usually always present in a Georgian household. As far as desserts on the Georgian New Year’s supra go, gozinakhi, is the defining element. Gozinakhi is made of slightly roasted walnuts caramelized in honey. This signature dish made with 1 kg of walnuts and 0,8 kg of honey will cost the following this year: Walnuts – 1 kg - 28 GEL Honey – 0, 7 kg - 13,86 GEL Total Cost: 41.86 GEL

Turkey – 2-3kg - 60 GEL Walnuts – 0,5 kg - 14 GEL Garlic – 7 cloves - 0,3 GEL Onion – 1 - 0,20 GEL Total Cost: 74,5 GEL

USAID Launches “Governing for Growth in Georgia” to Support Economic development

Roasted piglet is one of the more heavy dishes of the New Year’s supra and its price is relatively easy to estimate since it does not require much extra ingredients. However, the main ingredient, piglet, has become somewhat of a luxury on the Georgian New Year’s dinner table, since it costs 70 laris – a price not every family can afford. One way to cook piglet is just salting it and putting it in the oven. Another way is putting ajika on it, a hot spicy paste made with red peppers, garlic, herbs and spices. Ajika is not a pricey ingredient and many ready-made products are available in super markets as well as in the local markets. Roasted piglet will cost the following this year: Piglet 5-6 kg - 70 GEL Total Cost: 70 GEL Eggplant with walnuts is one of the more traditional dishes that appears on the Georgian supra throughout the year. Since the New Year’s dinner takes place during fasting this non-meat dish is very crucial to have on the dinner table, in order to satisfy every guest’s individual preference. Making eggplants with walnuts will cost you the following: Eggplants – 2 kg - 5 GEL Walnuts – 0,5 kg - 14 GEL Garlic – 3 cloves - 0,15 GEL Onion – 1-2 - 0,40 GEL Total Cost: 19,55 GEL

Foodpanda Gains Popularity in Batumi

rdering online on the fast food market from www.foodpanda. ge is gaining more and more demand. The service is universally acclaimed by people of all ages and professions, from both men and women. This is especially true when the weather inconveniences us – during rains, winds, and snow, when going outside is too much of a hassle and you need a tasty and pleasant meal you can enjoy with your friends and family. Foodpanda has begun operating in regions outside of Tbilisi. Starting November 17th, 2014, foodpanda has extended to Batumi, as well. Despite the short span of time the service has already become popular in the seaside city. Foodpanda has already actively spread through restaurants, and the food ordering service is working with dining spots like “Porto Franco”, “Batumi Pizza”, “Khinklis Sakhli #1”, and “Marco Polo.” Foodpanda offers a large, convenient and wide range of choices to

its customers, and delivers food to your doorstep without issues and raising e-commerce to new heights. Foodpanda’s business model has no alternative here at Georgia, and the company is planning on extending its services to more regions in the country. “I really like the service, especially when the weather’s not particularly forthcoming, and friends decide to all of a sudden come over. Foodpanda’s fast and available, and my favorite meal is with me in 30 minutes. There’s nothing like it,” say the Batumi costumers. “We’re in this business for the long run, so whenever we see the possibility, we extend. This is our first step in Western Georgia and we can already say that the start in Batumi was a success. We are already planning on further broadening the restaurants list there. At this point, we are considering going for Kutaisi next as a viable prospect, but current focus is set on developing Tbilisi and Batumi,” stated foodpanda’s director at Georgia, Giga Kerkadze.

n December 11, 2014 the U.S. Agency for International Development (USAID) officially launched the new 5-year $19.3 million project: Governing for Growth (G4G) in Georgia. The G4G launch event brought together representatives from the Georgian Government, non-governmental organizations, business and international communities. USAID Mission Director, Stephen Haykin, made welcoming remarks emphasizing the US Government’s strong support for Georgia’s economic development. G4G is designed to enhance governance in select business enabling areas: tax and customs administration, trade facilitation, land registration, electricity trading policy, and water resource management. G4G starts where other USAID projects have left off: EPI (Economic Prosperity Initiative), HIPP (Hydropower Investment Promotion Project), and HPEP (Hydro Power and Energy Planning) made solid gains by increasing Georgia’s competitiveness in key sectors, such as, energy, agriculture, trading, and manufacturing, as well as improving Georgia’s business enabling environment. Upon the gains from these initiatives, G4G plans to intensify support for Georgian-led reform efforts. The project will work to build a culture of collaborative consultation, where policies and laws have the benefit of constructive public input. “We believe that a quality, inclusive dialogue – and especially well-informed evidence-based policy making – will lead to laws that work more effectively, with better compliance”, stated G4G Chief of Party, Milo Stevanovich. The G4G was designed to enhance governance in specific business areas: tax and customs administration, trade facilitation, land registration, electricity trading policy and water resource management. “We believe that a quality, inclusive dialogue – and especially well-informed evidencebased policy making – will lead to laws that work more effectively, with better compliance”, said Milo Stevanovich, G4G Chief of Party. With the gains from these initiatives, the G4G planned to intensify support for Georgianled reform efforts. The project will work to build a culture of collaborative consultation where policies and laws have the benefit of constructive public input.

Econo-mix

caucasian business week

Quotes

“No connection between the situation in Russia and the slowdown in the economy of Georgia” ANDREY ILLARIONOV, Russian economist and former economic policy advisor to the President of Russia, Vladimir Putin. “I don’t see any connection between the situation in Russia and the slowdown in the economy of Georgia. In recent years, Georgia’s economy grew faster than in Russia, so it’s mistakenly to assume that the Georgian economy is so dependent on Russia. A fact that in the last two years Russian market has been open for Georgian products says nothing. Prior to 2006, Russia was the largest economic partner of Georgia, but in the following years, Georgia has managed to get away from this dependence, and Russia has become the 5th or 6th trading partner. This is especially true in such sectors as oil, gas and energy. It is obvious that the Georgian business should always remember that Russia is using the economy as a lever of political influence.”

December 22, 2014 #81

Office Rental Market of EMEA Countries and the Georgian Picture

EMEA Office Snapshot Rental growth remains uneven across Europe, but overall the tone of rental data appears to have improved in H1 2014, along with the economic outlook. Of the 54 office markets monitored, the majority (29) exhibited no change in rents (32 last year), while 17 reported increases (9 last year). In contrast, 8 cities (13 last year) saw reductions. A number of trends were apparent: • Even if only marginally, prime rents moved ahead in a number of Southern European markets like Madrid and Lisbon, ending a correction which in Madrid’s case had lasted since 2009. • The upward trajectory of rents over the last 18 months underscores the recovery of Amsterdam’s prime office district, amid an increasing gap between primary and secondary markets in the Netherlands. • The German office market continued to show strength, against expectations of rental growth moderating. Stuttgart registered the largest jump (+25%) in prime CBD rents, while Munich saw the seventh consecu-

“The opportunities of Kazakhstan are huge and should be used well by the Georgian government” YERMUKHAMET YERTYSBAYEV, Ambassador of the Republic of Kazakhstan to Georgia. “There are some investment risks and losses being experienced by Kazakh businessmen in Georgia, the Georgian Government should provide a 100% guarantee of private business protection.” “We have 110 billion in the country’s National Fund. We really can afford to issue investments for the development of a gas distribution pipeline of KazTransGas. The opportunities of Kazakhstan are huge and should be used well. At present I do not see any aligned and effective cooperation,” Ertisbaev said.

“The state cannot interfere in relations between individuals, debtors and banks” MANANA KOBAKHIDZE, Vice-Speaker of the Parliament of Georgia. “People for various reasons found themselves in a difficult situation, and the state cannot interfere in relations between individuals, debtors and banks. This problem cannot be resolved through the budget, because the state cannot repay the interest and the debts of citizens. During the election campaign we did not promise citizens to solve their problems. It was a different story; our words are interpreted incorrectly today. We promised to ask the bankers to restructure debts, but we cannot directly intervene in their activities, “- she notes. “Georgian Dream” has been in power for more than 2 years, but the mechanisms of legal solutions to this problem have not been yet developed. Citizens hold permanent protests outside the Parliament building and demand the government to help them solve problems, but to no avail.

“The government had a very successful year at starting and accomplishing new infrastructural projects” Giorgi Amashukeli, Deputy to the Minister of Infrastructure “At this point we can evaluate the results of the Ministry’s work over 11 months. According to the data from November, this period of time sees infrastructural projects carried out with a combined worth of 755 million Lari, which makes up 81% of the entire budget. Till the end of the month, through the remaining period, various other infrastructural projects will come to an end and the Ministry will ultimately pass the 90% mark in fulfilling the budget. A large resource was appropriated to dealing with natural disasters, as well. A bulk of the country’s construction vehicles were mobilized in Dariali, which caused halts in other infrastructural projects. On the flipside, the government had a very successful year and starting and accomplishing new infrastructural projects. Works on the highway are actively underway; we opened a 32-kilometer roundabout section of the Kutaisi road, and a new section altogether on the Ruisi-Agara high-speed highway.”

tive increase since H2 2010, on a half-yearly basis. • London is expected to continue to lead the rental upturn. While prime rents were unchanged in H1 2014, dwindling supply and growing occupier confidence is set to feed into an increase in rental levels in the coming months. As the UK economy continues to power-forward, rental growth is also filtering through to regional office markets, with increases in Manchester and Leeds. • Reflecting the healthier state of the office market, Dubai prime rents continued to rally and are now almost 20% up on their cyclical trough; though still some way off their pre-crisis peak (-40%). Tbilisi Office Market Total office space in Tbilisi is 912,367 m2, of which 36% (328,598 m2) is modern office stock. 54% of modern stock is leasable. Traditional stock is distributed equally between leasable and owner-occupied offices. Supply of office space has been growing since 2008 and further growth is expected, because several business centres will open in nearest future and some organizations are going to build office buildings for themselves.

The share of office spaces located in A class business centres in total rented space is 7% (29,035m2), A-, B+ and B class offices occupy 7%, 23% and 1% respectively. The biggest share (42%, 200,000 m2) is D class offices, under which offices in apartments and old Soviet buildings are considered. The office market is not well developed in Georgia. The least prime office stock is in Tbilisi among CEE cities. The biggest stock is in Warsaw (4,304,930 sqm). Average modern office stock per 1,000 inhabitants in CEE cities is 1,436 and in Tbilisi it is only 293. By comparison Bratislava has almost 3,500 sqm available per 1,000 inhabitants. The office real estate investment market in Tbilisi is in an early stage of development. Institutional real estate investors are not active in the country and accordingly, large investment transactions were not recorded on the retail real estate market. The estimated prime retail yield in Tbilisi is minimum 12%, which exceeds average CEE figures significantly. The highest rents in 2014 are achieved in A class business centres ($22), next come A- and B+ with average rent of $15 and $14 respectively. The prime office rent in Tbilisi is around USD 21 per sqm. The figure is the same as CEE average. Along with the development of GDP and the number of registered companies, demand for office space has increased. With the number of new international brand entries in recent years, demand for modern office stock has increased and new modern office centres with total space of about 62,000 sqm are under construction. www.colliers.com/georgia

December 22, 2014 #81

Banking & investment caucasian business week

MestiaChala HPP Construction TBC Bank and PayPal launch Project’s Investment Value partnership in Georgia BC Bank, innovative Georgian next-generation financial institution Hits 45 million USD launches its cooperation with global

inistry of Energy of Georgia, the Austrian investment company Galt & Taggart and the Austrian company RP Global signed a joint Memorandum. According to theMemorandum, the state will support private companies in theimplementation of energy projects aimed at development of the country’s energy sector. JSC Svaneti Hydro will carry out the 30-megawatt power plant construction project on the Mestiachala River. The HPP will generate on average more than 100 million kW/ h per year. Construction of the plant is important for the local population as additional jobs will be created. It should be noted that the electricity generated by MestiachalaHPP will be sold both locally and for export. Upper Svaneti region has a great potential in terms of small hydro power plants, and apart from Mestiachala, another similar projects may be carried out. No less important is the fact that Mestiachala HPP is carried out within the so-called Green Energy Development Project (Green Field Project) and will have a positive impact on environment.

A feasibility study and design of the HPP entered the final stage. The construction is scheduled for late spring 2015, in total USD 45 million will be invested for this purpose. RP Global is an IPP (Independent Power Producer) with over twenty-five years of experience in the renewable energy sector. As a developer, investor and operator, RP Global’s focus lies in hydro and wind energy projects. More than thirty-five power plants, both wind and hydro, have been developed and constructed so far. RP Global is engaged in several successful partnerships with institutions such as the Marguerite Fund and the Bank of Georgia, and has worked successfully with the EBRD, the IFC, PKO, UniCredit, BES and other multilateral/international banks. Croatia, France and Poland (wind), as well as Portugal, Chile, Peru and Georgia (hydro) are the countries RP Global currently operates in, while the company’s headquarters are based in Madrid, Spain, as well as Vienna, Austria. RP Global has an interest in Georgia’s energy sector and plans to implement projects in the future as well.

payment provider PayPal in order to offer TBC Bank customers an easy and quick way to create PayPal accounts. Due to PayPal, all TBC Bank customers will be able to create PayPal account directly from their TBC Bank online banking page. After creation of PayPal accounts, TBC Bank customers will gain full access to PayPal global online payment functionality and will be able to easily and safely pay anytime and anywhere. This way, the cooperation will bring together the strengths of both companies – PayPal’s global online and mobile payment solutions with 157 million active accounts in 203 markets, along with the TBC Bank‘s extensive local market knowledge and a total of one million consumers in Georgia. As a result of PayPal and TBC Bank integration, the PayPal account creation procedure will be streamlined for TBC Bank customers. Pre-filled personal information forms will allow TBC customers to create their PayPal accounts within minutes directly in TBC online banking accounts. “PayPal has made paying online and mobile a way of life for its customers around the world.

We make it safer and quicker to pay and send money. We are delighted to help TBC Bank develop its customer experience by making it even easier and quicker to create your PayPal account now on TBC Bank platform” - says Ganna Yevtushenko, Head of Business Development of PayPal in Central & Eastern Europe.

Hualing Group has invested $500 January to November Profits million in Georgia since 2007 he Chinese group informs that in the 5-star hotel Hotels & Preference Hualing Tbilisi of TBC Bank Mark 106 mln GEL

future investments will increase and, considering favorable business environment of Georgia, investments will be made in the Agricultural sphere. Hualing group implements 5 investment projects in different directions in Georgia. In particular, the largest scale development project is New City on Tbilisi Sea, which unites residential and commercial areas of 4 million square meters equipped with modern infrastructure. Construction of the Olympic village will be completed on this territory in several months. It will host 3800 sportsmen during Tbilisi-2015 Olympic festival. Next year the largest and most diverse trade complex in the Caucasus “Hualing – Tbilisi Sea Plaza” and

will be opened next year. Since 2012 Hualing Group owns 90% of Basis Bank shares. The investor company, which is in top-20 list, carries out projects in various regions of Georgia. Among them Free Industrial Zone of Hualing in Kutaisi can be mentioned. Infrastructure actively develops there and about 10 enterprises operate. Reminding that in the Q3 2014 China is a leader in direct foreign investments. According to the same data, Hualing Group takes first place as the largest investment company. In the Q3 of the current year direct foreign investments of $508 million has been made in Georgia. Among them 149 million was made from China.

Collaboration between Businessman Lasha Papashvili and the Co-investment Fund Failed

ccording to Papashvili, he intended to build a hotel in Telavi jointly with the GCF but in the end started the project independently and is going to invest GEL 9 million in Telavi. Last year the businessman said that the cost of the project would be USD 25

-30 million. “We have been working intensively with the Co-investment Fund on several projects, but ultimately could not agree and the agreement was not signed. One of the projects was a hotel in Telavi. A final decision is still pending as their interests and our requirements differ,’’- the businessman Lasha Papashvili adds.

BC Bank completed 11 months with 106 million GEL (01/12/13 -56,2 million). By December 1 credit portfolio of the bank equals to 3,144 billion GEL (01/12/13 -2,467 billion), deposits - 3,187 billion GEL (01/12/13– 2,528 billion), overall obligations – 4 billion GEL. Bank’s actives equal to 4,826 billion GEL (01/12/13 -3,806 billion), market share - 24,2% (01/12/13 –23%).

Actives have increased by 27% since the same period of last year. Annual growth of the loans is 27%, deposit portfolio – by 26%. The bank operates 22 years on the market and its shares are listed on London Stock Exchange. Beneficiary shareholders of the banks are EBRD (12,5%), IFC (6,2%), Mamuka Khazaradze (15%), Badri Japaridze (7,45). Stock capital of the bank is 433 million GEL.

Central Bank’s Monetary Policy Rate Remained Unchanged

eorgian central bank’s monetary policy rate has remained unchanged at 4%. According to the National Bank, a trend of significant deterioration of the situation in the countries that are Georgia’s major trading partners has been recently observed which has a negative impact on the economy. In particular, in November 2014 exports and remittances from abroad have significantly reduced. However, despite the recent depreciation of the national currency against the dollar, the Georgian lari has become stronger in recent days. A general

decline in international prices of essential imported goods is also recorded, respectively, great inflationary pressure is not expected. According to the forecast, a 5% projected rate of inflation will be achieved in the second half of 2015, based on that the National Bank is considering a gradual tightening of monetary policy. However, proceeding from the situation in the region, which has a negative impact on economic growth, it was decided to maintain the monetary policy rate at 4%. In 2014, the annual inflation rate totaled 2.8%. The next meeting of the Monetary Policy Committee will be held on February 11, 2015.

Georgian Emigrants Going to Invest in the Country in ProCredit Bank goes green Response to the Premier’s Offer with new hybrid vehicles

eorgian emigrants accept the Prime Minister’s proposal and plan to invest in Georgia. Many Georgian emigrants are interested in investing in Georgia. According to the President of the Diaspora Investment Support Association George Svanidze, the main interest is expressed in the agriculture and real estate sectors. In the words of Svanidze, a great interest comes from the US and European countries, as well as Turkey and Russia. A simplification of the visa regime plays a very important role in this process, which will facilitate the entry of more tourists as well as the procedures for investments for investors. Prime Minister of Georgia has initiated to impose financial benefits for representatives of Georgian Diaspora investing in Georgia. Prime Minister instructed the economic team to work on this issue in May of the current year. In Garibashvili’s opinion, the Diaspora represents Georgia’s enormous potential.

As head of the government said, Georgians living abroad can contribute to in the country’s development by sharing their skills, experience in business or the public sector. According to the Premier, the Diaspora should always feel the support of the state and the government is working in this direction. “We have created a new strategy towards the Diaspora. For greater communication a global network of compatriots was started with the use of modern technologies which will allow to more efficiently collect accurate data about the Diaspora. We created online school within the network as well. Our compatriots will be able to learn the Georgian language and literature, history, geography, ethnography through online classes. Thus, we’ll made one more step to preserve the national self-consciousness and native language in the Georgian Diaspora , “- said the Prime Minister. He says that the government continues to support diaspora organizations abroad, for this purpose GEL 400 000 were allocated from the reserve fund last year.

roCredit Bank stands for environmental leadership in its operations. In line with this commitment, the bank upgraded its vehicle fleet by purchasing new 10 hybrid Toyota Hybrid cars have improved fuel efficiency and caused lower

CO2 emissions, especially in cities. If the speed is not more than 60 km/h, the gasoline engine switches off and the car runs on its electric motor. The new hybrids have already been distributed among three strategic cities of ProCredit bank Tbilisi, Kutaisi and Batumi.

January to November Profits of Basisbank Mark 13 million GEL

SC Basis Bank completed 11 months with 13 million GEL profit (01/12/13 – 8,7 million). By December 1 portfolio of Basis Ban km (without banks’ deposits) equals to 343,6 million GEL (01/12/13 – 217,5 million), loans - 265.5 million GEL (01/12/13 -179 million), overall obligations 412,07 million (01/12/13 – 284,3 million).

Bank’s actives stand at 541,6 million GEL (01/12/14 – 395 million). Compared to the same period of last year, they have increased by 37%. Annual growth of the loans is 47%, for the deposits - 59%. Majoritarian shareholder of Basis Bank (95,6%) is Chinese Hualing Group. Stock capital equals to 129,5 million GEL.

Wine Market caucasian business week

December 22, 2014 #81

Wine Market in Georgia International Comparisons

Russia As reported, Russia emerges as Georgia’s main trade partner in wines foreign trade with 43.2% ratio in Georgia’s 2013 wine exports. In 2013 about 50 countries exported wines to Russia, including Lithuania ranked first in wine exports to Russia with an 18% ratio. Ukraine (14%), Italy (10%), South Africa (9%), Spain (7%), Moldova (6%), Chile (4%) and Argentina (3.6%) were also recorded as Russia’s majin wine supplier countries.

Production

Rating of Georgian Wines Exports Markets:

The winemaking trade is driven by seasonal factors. Over 50% of the produced wines are recorded in the fourth quarter. Hence, it is not expedient to analyze quarter indicators. According to the 2013 declared indicators, Georgia produced 183381 tons of wine (including households wines), up 12.6% compared to the 2012 indicators. The ratio of household wines made up 71.2% in 2013. The figure stood at 74.3% in 2012/. In 2013 about 170 winemaking companies used to operate in Georgia. JSC Telavi Wine Cellar ranked first in terms of turnover, JSC TbilVino was second and other companies ranked as follows: Ten Top Winemaking Companies due to the 2013 Annual Turnover

In 2013 Georgia ranked 21st worldwide in terms of wine exports volume and emerged behind 20th Moldova. As to imports, Georgia imported 273.7 tons of wines worth 2 million USD from 18 countries, up 49.3% in value and up 7.6% in volume compared to the 2012 indicators. Russia, France and Italy recorded 77.4% in Georgia’s total wines imports. The rating of Ten Top Wine Imports Countries for Georgia: In 2013 LLC Megvineoba Khareba and LLC Badagoni were leaders in terms of number of employed individuals. In 2013 JSC Telavi Wine Cellar ranked first in terms of turnover, but third in terms of number of employed individuals:

The reports show Georgia’s 2013 wine exports exceed the imports about 131 times. Consequently, Georgia’s wines foreign trade balance is positive (active).

According to GeoState, the National Statistics Office of Georgia, in 2013 household bodies consumed 79.8 thousands tons of wine, down 6.8% year on year. In 2013 annual wine consumption per household unit marked 78.1 liters and per capita – 21.7 liters. The figures are down compared to the 2012 indicators. Foreign Trade (Exports/Imports) Georgian wines exports saw significant downturn in 2006 after the Russian Federation introduced economic embargo against Georgia. In 2005 to 2012, unfortunately, Georgia could not diversity international wine markets. Considerably failure was registered in 2007 to 2010, while in 2012 Georgian wine exports constituted only 2/3 of the 2005 exports. In 2013 Georgia exported 35 906 tons of wines worth 128 million USD to 47 countries after the Russia embargo removal, up twice in value and up 77.6% in volume. Russia and Ukraine recorded 70.7% in Georgia’s total wine exports.

Kazakhstan Georgia exports 9.8% of wines to Kazakhstan that is reported to be ranking third among Georgian wines exports markets. In 2013 about 28 countries exported wines to Kazakhstan, including Moldova was reported as a major supplier with a 56% ratio. Georgian ranked second with a 28% ratio. The price of Georgia-exported wines to Kazakhstan marked 4 USD per liter, while Moldova exports a liter of wine at about 2 USD. Germany In 2013 Georgia exported 257.2 tons of wines to Germany that is 0.7% in Georgia’s total wine exports. In 2013 about 60 counties exported wines to Germany, including Italy, Spain and France shared the first three places respectively and their ratio in Germany’s total wine imports marked about 76%. Georgia ranks only 33rd. Belarus The ratio of Belarus in Georgia’s total wine exports marked 6.4%. The country ranks fourth among Georgia’s wine exports markets. In 2013 about 25 countries exported wines to Belarus. Moldova was reported as a major supplier with 61.8% ratio in Belarus’ total wine imports. Georgia ranked second with 10.2% in Belarus wine imports. Georgia exported one liter of wine at 2.9 USD to Belarus, while Moldova exports price marked about 0.9 USD. Georgian exports wines prices for Belarus are higher by 0.8 USD compared to Germany, by 1 USD compared to Italy, by 1,6 USD compared to Spain. At the same time, Georgian exports wines are cheaper in Belarus compared to Lithuania, Latvia, France and Argentinean wines.

Ten Top Winemaking Companies due to Average Annual Number of the Employed in 2013:

Consumption

Ukraine According to the 2013 declared indicators, Ukraine ranks second in Georgia’s wine exports with a 27.8% ratio. Georgia is reported to be Ukraine’s major wine importer country with about 29% ratio in Ukraine’s total wine imports. In 2013 about 36 countries exported wines to Ukraine, including Moldova ranked second after Georgia with 25% ratio and Italy was third with 14% ratio. Chile was recorded fourth with 7% ratio, France is fifth with 6%, Spain is sixth with 4%, Poland is seventh with 4% and Germany is eighth with 3%. Germany and France supply wines to Ukraine at comparatively higher prices. The lowest prices are reported from Moldova among the eight main wine supplier countries to Ukraine. It should be also noted Georgia wines prices exported to Ukraine is lower by about 14% compared to the wines exported to Russia.

Average Prices and Indexes According to GeoStat, in September 2014 an average retail market price per liter of tap wine marked 2.88 GEL, while the average price of bottled wines in 0.75 liter containers constituted 10.5 GEL. The average price of tap wine has increased by 0.08 GEL month on month and by 0.22 GEL year on year, while the average retail market price of bottled wines declined by 0.18 GEL month on month and rose by 0.89 GEL year on year. Indexes of Georgia’s wine consumer prices:

Poland The ratio of Poland in Georgia’s total wine exports accounts for 2.7%. Consequently, Poland ranks fifth among Georgia’s wine exports markets. In 2013 about 45 countries exported wines to Poland and Germany ranked first with 23.3% ratio. Italy (13.9%), France (13.2%), Spain (9.8%), the USA (6.6%) and Portugal (6.5%) are also recorded as leaders in wine exports to Poland. Georgia ranks only 14th with 1.1% ratio. Georgia exports one liter of wine at 3.3 USD to Poland, while other countries exports wine to Poland at lower prices, including Germany – 3 USD on average, Italy – 2.9 USD, Spain – 2.3 USD, the USA – 2.3 USD, Hungary – 1.9 USD, Moldova – 1.7 USD. The highest exports price is registered from the Netherlands – 4.7 USD. Latvia Georgia exports 1.7% of wines to Latvia. Consequently, Latvia ranks 7th among Georgia’s wine exports markets. In 2013 about 35 counties exported wines to Latvia, including France and Italy as major suppliers recorded 53.65 ratio in total wines exports to Latvia. Spain recorded 11.3% ratio and Germany 5.6% ratio in wine exports to Latvia. Georgia ranks 12th with a 1.7% ratio.

December 22, 2014 #81

events

caucasian business week

Georgian Consulate Holds First Filipino Art Exhibit in Tbilisi

rom November 27 – December 4, 2014, the Consulate of Georgia in the Philippines led by Consul (a.h.) Thelmo Cunanan Jr., in cooperation with Professor Davit Lortkipanidze and Dr. Lela Tsitsuashvili of the Georgian National Museum and Philippines Consul General (a.h.) Teimuraz Chichinadze, held the first Filipino art exhibit in Georgia, at the Shota Amiranashvili Museum of Fine Arts at Pushkin Park in Tbilisi. The formal opening of the exhibit was on November 27, 2014 and was attended by various government officials, members of the diplomatic and consular corps, artists, media, friends of the Georgian National Museum, and the public. “This is a historic occasion. Mr. Piano is the first Filipino to exhibit here in Georgia. We Filipinos are a happy people and we have hope even in the face of adversity. It is this message that we wish to share with our Georgian brothers and sisters through the expression of art,” said Consul Cunanan. “This exhibition marks the start of cultural cooperation and exchanges between the Philippines and Georgia. We would like to thank

everyone who helped make this event successful,” said Consul General Chichinadze. The event, which was entitled “The Colors of Hope”, featured the work of Filipino master painter and visual artist Pancho Piano and included paintings of Philippine religious festivals and celebrations, as well as his own unique interpretation of famous and historical Georgian landmarks, with the themes of love and care for the environment. Also on display was a special stained-glass and resin sculpture created by Mr. Piano, which the Philippine delegation presented to Tbilisi Mayor David Narmania, as a symbol of Philippines – Georgia friendship. A native of Naga City, Philippines, Mr. Piano has exhibited all over the world, including Vienna, Berlin, Tokyo, New York, Rome, Paris, Brunei, and Singapore. He is the FIRST FILIPINO ARTIST to officially present his work in Georgia and the entire Caucasus Region. The Philippine cultural delegation to Georgia was sponsored by Qatar Airways, which generously provided cargo transportation for the numerous artworks that went on display.

Philippine Delegation Presents Tbilisi Mayor with Symbolic Gift

onsul (a.h.) of Georgia in the Philippines Thelmo Cunanan Jr, together with master painter and visual artist Pancho Piano, presented a sculpture, created by the latter, to Mayor David Narmania of Tbilisi. Present was Levan Akhvlediani, co-Chairman of the Philippines – Georgia Business and Friendship Association, Inc. The stained-glass and resin artwork is designed with the coat-of-arms of Georgia and is a symbol of Philippines – Georgia friendship as the officials work to bring the peoples closer together. Consul Cunanan and Mayor Narmania discussed different projects aimed at improving ties between Tbilisi and counterpart cities in the Philippines. These include the exchange of cultural exhibits and artists and the improvement of socio-economic ties. Consul Cunanan also vowed to help Tbilisi with its initiatives to build closer relations to the Asian Development Bank, which is based in Manila. “We are ready to help the City of Tbilisi and we commit all our resources in the Philippines to this objective,” said Consul Cunanan. For his part, Mayor Narmania thanked the delegation for the formal visit and for the special

gift of friendship and vowed to work with the Consulate of Georgia, led by Consul Cunanan, to build closer Philippine – Georgian relations. “I am very happy to make this connection with the Philippines. We want to reach out to our friends in other countries. I think this visit by the Philippine delegation, led by Consul Cunanan, is a step in the right direction,” said Mayor Narmania. “We are deeply touched by this gift of friendship from the Philippines.” Consul Cunanan was recently in Georgia for the holding of Mr. Piano’s “Colors of Hope” exhibition, which his office organized at the Shota Amaranashvili Museum of Fine Arts, in cooperation with Dr. Lela Tsitsuashvili. Mr. Piano is the first Filipino artist to formally display his work in Georgia and the Caucasus. The sculpture, which was given to Mayor Narmania, formed part of the exhibit, along with many of Mr. Piano’s oil, acrylic, and mixed-media paintings. The event was a resounding success and culminated in a live poetry and mural painting demonstration (press release to follow). QATAR AIRWAYS helped transport all the artworks from the Philippines to Georgia for this HISTORIC event.

currency

caucasian business week

December 22, 2014 #81

Exchange Rate Monitoring 12.01.2014-12.12.2014

GEL Fluctuation Continues

he last changes in the GEL exchange rate have no economic grounds and logics. After sharp downturn and then fast upturn, the GEL exchange rate started falling again. From December15 to December 19 the GEL exchange rate against USD shrank by about 5% from 1.8315 point to 1.9166 point. In the reporting period GEL fell against EUR by 3.7% from 2.2771 point to 2.3636 point. The national currency also depreciated against GBP from 2.8764 point to 3.0001 point. GEL strengthened against Ruble by about 4% and today 100 Rubles cost 3.2156 GEL instead of initial 3.3426 GEL. At the same time, GEL exchange rate against USD has fallen by 10% YTD, shrunk by 1% against EUR and by 5% against GBP, but strengthened by 40% against Ruble. As to the same reporting week for the last 10 years, the highest GEL exchange rate against USD was fixed at 1.5945 point in 2007 and the lowest rate of 1.7909 was registered on December 19, 2004. The highest GEL exchange rate against EUR of 2.1356 was recorded on December 19, 2005 and the lowest of 2.4246 was marked in December 2009. The highest GEL exchange rate of 2.5747 against GBP was fixed on December 19, 2011 and the lowest of 3.4788 was recorded on December 19, 2004. The GEL exchange rate changes against various currencies YTD are as follows:

ast week, with lesser releases scheduled for publication, the US Dollar registered heavy losses against majority of its counterparts as market players remained cautious about the FOMC outcome, scheduled during the current week. However, the consumer centric details, Retail Sales and the Preliminary reading of UoM Consumer Sentiment, remained upbeat and minimized some of the losses piled during the early week days. Concerns over the re-election in Greece again fuelled speculations relating to the economic health of the troubled region and continued hurting the regional currency, Euro, while snap elections in Japan, that matched forecast of current PM’s victory with great majority, provided some strength to the Japanese currency ahead of the snap elections during last weekend. Moreover, weaker Chinese numbers and the plunge in oil prices continued hurting commodity currencies, like AUD, NZD and CAD. Looking forward, forex market is set to witness magnified volatility fueled by the active economic calendar where in almost every part of the globe is expected to see something that is really important to determine near-term market movement. However, the FOMC meeting, scheduled for Wednesday, is likely to take the center stage wherein everybody is looking for the indication as to when the central bank of US can alter the current interest rate to the upwards. Moreover, PMI releases from the Europe and the China coupled with the BoJ meeting, UK Retail Sales and the labor market numbers are some other details that are likely to be observed carefully. Even if the greenback started liquidating some of its gains off-late, FOMC meeting, scheduled for Wednesday, becomes crucial to determine near-term USD moves as recently released labor market numbers fuelled speculations that the Fed can remove the word “considerable time” while discussing the when they would hike the benchmark interest rate. Further, the press conference by the Fed Chair, Janet Yellen, after the meeting, can provide some of the links as to where the US economy is heading towards and what would be the role of Fed in near future. Moreover, the quarterly release of Economic projection by the FOMC also become an important point of information as it conveys the FOMC members’ view of the economy and when they see a change into current monetary policy. Although, consensus support no change into the current monetary policy of the Federal Reserve, recent labor market numbers, that

FOMC To Determine NearTerm US Dollar Direction signaled overall improvement with payrolls, average earnings and hours worked all improving, continue pressing the central bank to stop being too dovish. However, deflationary pressure in global economy may help the Fed Chair to avoid being too optimist while addressing the media after the meeting. The economic projection by the FOMC members can provide meaning information of the future moves of the Fed as higher the number of members supporting the earlier rate hike, more will be chances of it. Moreover, the GDP, Unemployment rate and the inflation forecast also signals the FOMC view of the future economic scenario of US. Should the changes into the GDP and the Inflation forecasts signal more of the optimism for the US economy, it can become safe to say that the Federal Reserve is going for the interest rate hike during early 2015. Economic Projection details published in September 2014 Should the Fed Chair starts being optimist and discusses the timing of the interest rate hike, the US Dollar can witness considerable strength. Moreover, should the FOMC economic projection favor the strength of the US economy, the greenback can have a reason to reimburse some of its losses and continue its rally. Alternatively, continued dovish tone of the Fed Chair, concerning the global deflationary pressure, can become strong negative for the US Dollar. Also, pessimistic forecast of the FOMC members into the economic projection report can become additional drag for the greenback. In addition to the FOMC, the Empire State Manufacturing and the Industrial Production, scheduled for Monday, housing Market numbers, on Tuesday, the CPI, scheduled for Wednesday and the Philly Fed Manufacturing Index, scheduled for Thursday release are also expected to provide considerable movement into the forex market. While Empire State Manufacturing and Industrial Production support an increase into the industrial activity, forecast concerning Philly index shows slightly weaker manufacturing during last month. Should these numbers remain well ahead of their consensus, the US Dollar can have a reason to celebrate. The Housing Market numbers, Building Permits & Housing Starts, are likely to continue remain mixed with no major changes as compared to their previous releases; however, the overall housing market sentiment remains positive and only a drastic decline into the actual numbers can only pose US Dollar for negative sessions. The CPI, is expected to plunge into

negative territory to -0.1% against 0.0% registered in its previous release and can become a drag for the US Dollar ahead of the FOMC as well as provide support to the Fed Chair in being dovish. Alike US, rest of the global economy is also scheduled for publishing important economic numbers during the current week. Let’s discuss each of them in detail. Manufacturing PMIs for France, Germany and the Euro-zone as a whole, scheduled for Tuesday, and the Final version of CPI, scheduled for Wednesday release, becomes the corner stone of the European economic calendar during the current week. Also, the German ZEW Economic Sentiment, German Ifo Business Climate and the GfK German Consumer Climate, scheduled for Tuesday, Thursday and Friday, are important for determining the strength of the European growth engine which is currently going through tough time. Even if the French PMI is expected to continue its plunge below 50 level, the German PMI is expected to reverse its early decline and return to above 50 by testing 50.4 level while the EU PMI is also expected to rise from its previous release of 50.1 to 50.5. Further, the Final version of CPI isn’t expected to change from its Flash reading of 0.3%. Moreover, German indices signaling the expectations of the Economy, Consumer and Business Climate are all expected to surpass their previous readings. With the Euro-zone Manufacturing PMI near to the contraction phase and the German PMI already into the below 50 level, additional decline into the manufacturing PMIs coupled with weaker German numbers and softer inflation reading can provide strong negatives to the regional currency by forcing the ECB President for additional QE who recently asked for some time to analyze the economy. The UK CPI, BOE Financial Stability Report and Speech by the BoE Governor, scheduled for Tuesday, labor market details and the BoE meeting minutes, scheduled for Wednesday release, and the UK Retail Sales, scheduled for release on Thursday become important point of information for determining the near-term GBP moves. Considering the current deflationary pressure, UK CPI can become important in signaling whether the UK is going to continue the downward trajectory in Inflation numbers seen since the 3.7% peak in 2011. The number is expected to decline to 1.2% from the previous release of 1.3%. The labor market numbers, namely Claimant Count Change and Average Earnings Index, are expected to show mixed readings as the Claimant count

is likely to increase to -19.8K against the previous release of -20.4K while the Average Earning’s Index is expected to rise by 1.3% against the previous hike of 1.0%. Moreover, the voting numbers by the MPC members are likely to maintain their current state where 2 of the 9 members support bank rate change while none of them is in favor of change in asset purchase facility. The Retail Sales number, which become important for determining the UK GDP as it contributes heavily to the national product, is also expected to register a decline to 0.3% increase after rising 0.8% in its previous reading. Weaker labor market numbers and lower than the previous reading of Retail Sales could become a drag for the UK currency. Moreover, should the Financial Stability report conveys the threat from global markets and the inflation number declines further, the GBP can become vulnerable to witness additional downside. From the rest of the globe, the Chinese HSBC

PMI, scheduled during early Tuesday and the Bank of Japan monetary policy meeting, scheduled for Friday release, are some of the important details to take care of. Should the Chinese number plunge below 50 level, as it is expected to test 49.8 level, after maintaining nearly five readings of expansion state, the commodity currencies, like AUD and the NZD, can become vulnerable to witness additional downside. Moreover, monetary policy decision by the Bank of Japan is important for the JPY even if the forecasts aren’t favoring a change into current BoJ monetary policy as the BoJ Governor, in a speech after the meeting, can convey future actions of the BoJ after the recent victory of PM who supports lose monetary policy. Should the tone of the BoJ Governor continue to be dovish, the JPY can lose its recent gain and is likely to plunge again. Anil Panchal Market Analyst Admiral Markets

December 22, 2014 #81

Research

Georgian Population’s Perception of the Country’s Economic Condition

RC annually conducts a survey of the population about the country’s economic condition. The key goal of the survey is to ascertain the perception about the country’s economic development in the society. The charts provide the results for past two years. The survey is conducted each December and 1800 respondents are interviewed1. According to the data for 2014, slightly over one half of respondents think that Georgia’s economic condition has not changed for past 12 months. In the opinion of one third (33%), the situation has worsened. Only 16% think that the country’s economic condition has improved.

neighborhood

Microsoft, Google, Adobe Leave Russia Due to Putin’s New Laws

urkmen President Gurbanguly Berdimuhamedov and his Georgian counterpart Giorgi Margvelashvili have discussed the bilateral cooperation issues, Turkmen Dovlet Khabarlary (TDH) state news service reported. Georgian president is on an official visit to Ashgabat. The Georgian delegation included Economy Minister Giorgi Kvirikashvili, Deputy Foreign Minister David Jalagania, head of the Chamber of Commerce and Industry Kakha Baindurashvili and Secretary of the National Security Council of Georgia Irina Imerlishvili, press service of Georgian Presidential Administration said.

ech companies Microsoft, Google, and Adobe are all giving up on their Russian operations amid a new law requested by President Vladimir Putin and which requires companies to store collected user data on local servers which would obviously become accessible to authorities. The retreat was started by Microsoft last month, when the company decided to move its Skype development team from Moscow to Prague. Adobe, on the other hand, ceased its Russian operations entirely, explaining that it doesn’t actually need a local headquarters because everything can be performed through the power of cloud. Now Google is doing the same thing, ITWire writes, so the Mountain View-based search giant is giving up on its Russian R&D center and relocating all engineers based in the country. And these aren’t the only companies that might be forced to leave Russia, as both Facebook and Twitter are expected to follow the same trend, but neither has made any decision on this. As the aforementioned source notes, these two social networks would need millions of dollars every year to set up servers in Russia that would be used to store data in the country.

V The data were quite different in 2013 – 23.4% of respondents think that the economic condition in the country has improved during past 12 months, i.e. from December 2012 to December 2013; 28.4% noted that it has worsened. Like in 2013, forecasts for the future are more optimistic in 2014, although slightly more respondents expect worsening of the economic situation in the country (15.8%) in 2014 than in 2013 (11.6%). It should also be noted that number of respondents, who believe that the situation will improve, has sharply decreased, while number of respondents, who believe that the situation will remain unchanged for the next 12 months, has increased.

ladimir Putin said that Russia’s economy would recover within two years. He did not identify concrete measures but referred to the world’s need for energy increasing again as the global economy recovered and diversification of the economy in the interim. He blamed “external factors” for problems with the economy and the ruble. Putin described sanctions against Russia as “illegitimate” and said that Saudi Arabia and the US “might” have conspired to lower oil prices to harm Russia (and Iran). The Russian President said that it was illogical to blame him for current frosty relations with the west. Referring to the number of US military bases around the world and its deployment of antiballistic missiles in Europe, he asked how Russia could possibly be seen as the aggressor. He also compared Nato expansion to the Berlin wall. He repeatedly said that he wanted a diplomatic solution to the crisis in Ukraine. Putin said it must be solved by political means in line with fundamental international principles, including the right of self-determination.

SOCAR to increase investments to joint venture of Azerbaijan, Poland

It is interesting to compare two figures, particularly number of those respondents, who expected economic growth last year and of those, who believe that economy has grown in 2014. As shown on the chart, there is a great difference between expectations for economic development and assessment of current economic situation.

zerbaijan’s State Oil Company (SOCAR) delivered over 750,000 metric tons of crude oil to Poland in 2014, Energy Minister of Azerbaijan Natig Aliyev said. He made the remarks Dec. 15 at the AzerbaijanPoland business forum held in Baku. “Azerbaijani and Polish companies are successfully cooperating in energy, oil and gas, industrial, agricultural, transport and other spheres,” the minister said. He said SOCAR, which now owns 27.24 percent stake in the ‘Sarmatia’ project, expressed readiness to invest extra funds in the joint venture’s capital, in order to support its operation in 2015-2016. The minister said that SOCAR delivered 485,000 metric tons of crude oil to Poland in 2012, 523,000 metric tons – in 2013, and over 750,000 metric tons – in 2014.

Azerbaijani citizens not to feel oil price decrease on world market – Ilham Aliyev

sampling error +/-2,8%

WORLD NEWS

Turkmenistan, Georgia mull Afghanistan-TurkmenistanAzerbaijan-Georgia project

Vlafimir Putin: Economy will Rebound within Two Years

caucasian business week

zerbaijani citizens will not feel the oil price decrease on the world market, Azerbaijani President Ilham Aliyev said during the opening ceremony of the first All-Republican Forum of ASAN Volunteers in the Heydar Aliyev Center in the Sabirabad district. “The oil prices have sharply decreased,” the president said. “Has anyone felt this in Azerbaijan? No, and no one will feel this because we have a powerful economic basis.” President Aliyev went on to add that AZN rate is stable. “This testifies to the fact that Azerbaijan also has economic power, a well thought-out policy and a social policy,” the president said. “Perhaps, stable AZN rate is not a very positive factor for our export potential,” President Aliyev said. “But this is a social issue. And this must be this way.”

Apple Stops Online Sales in Russia Over Ruble Fluctuations

pple Inc. has halted online sales in Russia due to “extreme” ruble fluctuations, the company said. “Our online store in Russia is currently unavailable while we review pricing,” Alan Hely, a spokesman for the Cupertino, California-based company, said today in an e-mailed statement. “We apologize to customers for any inconvenience.” Apple has been working to deal with the ruble swings in other ways. Last month, the company increased the price of the iPhone 6 by 25 percent in Russia. Russia’s currency lost as much as 19 percent today, with a surprise interest-rate increase failing to stem the run on the currency. The ruble sank beyond 80 per dollar, and bonds and stocks also tumbled, with the RTS equity gauge dropping the most since 2008. The selloff in Moscow is spreading across the globe, prompting nervous investors to pull money from other developing nations amid concern that Russia’s financial struggles and the tumble in oil signal a global economic slowdown.

60% of the world is still without internet

n the relatively short amount of time since its invention, the internet has become a dominant force in our lives, and be it through our smartphones, tablets, laptops, PCs, speaker systems watches or other devices we make use of it in some cases for more hours of the day than we don’t. But while it may seem omnipresent thanks to hi-tech cities, Isis tweets and tech outsourcing to Asia, many people in the world still do not have access to the internet – the majority in fact. A McKinsey report points out that about 60% of the world’s population is still offline – that’s over four billion people. Central Africa, South East Asia and the Middle East have the lowest number of internet users per 100 people, which may not be surprising, though the fact that one in five Americans still don’t use the internet might be. Poverty, digital illiteracy and poor infrastructure are the main barriers to internet access around the world, with 50% of those offline living below the poverty line of their respective countries amd 64% living in rural areas. At the current trajectory however, The Brookings Institution says that an extra billion people could be online by 2017.

publicity

caucasian business week

December 22, 2014 #81

Apartment

Every Saturday At 21:00

On GDS TV

Full of humor Anchors â&#x20AC;&#x201C; Temo Mzhavia, Levan Gogoreliani will offier refined humor, provide good mood and invite interesting guests for the program audience. The program consists of three parts: the first block offers humor and apolitical monologue with funny video clips, pictures and so on. The second and third blocks are dedicated to famous public figures that will be invited as guests. The show will start Wednesdays at 21 oâ&#x20AC;&#x2122;clock and it will cover all interesting issues excluding politics to guarantee good mood for the audience.

December 22, 2014 #81

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

caucasian business week

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 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 PICASSO Tbilisi , 4 Miminoshvili St. , Tel: 98 90 86 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

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 THEATRE OF PANTOMIME Tbilisi. 37 Rustaveli Ave. Tel: 99 63 14, (77) 41 41 50 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

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

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,

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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December 22, 2014 #81