Issue no: 1224/217
• FEBRUARY 4 - 6, 2020 • PUBLISHED TWICE WEEKLY
PRICE: GEL 2.50
In this week’s issue... Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2
Coronavirus Updates BUSINESS PAGE 3
Georgia Achieves “Best Case Scenario” Growth Rate of 5.2% Predicted One Year Ago
FOCUS
ON ENTREPRENEURSHIP USAID works to boost youth and female entrepreneurship in Georgia
PAGE 6
ISET PAGE 4
Radisson Collection Hotel, Tsinandali Estate Chosen as Finalist of MIPIM 2020 Awards BUSINESS PAGE 5
USAID Program YESGeorgia to Support Youth & Women Entrepreneurship
The Impact of Coronavirus on Georgia-China Trade
BUSINESS PAGE 6
Electricity Market Watch
BY TEA MARIAMIDZE
BUSINESS PAGE 10
Ukrainian MP Oleksey Goncharenko on PACE & Russia
T
he coronavirus outbreak in China and beyond its borders is having an impact on the country’s foreign trade, including with Georgia. The dangerous virus that has now spread to at least 27 countries and territories outside mainland China, has left around 60 million people under lockdown in Chinese cities as international researchers race to develop a vaccine and halt its spread. The
POLITICS PAGE 11 Prepared for Georgia Today Business by
Markets As of 31ͲJanͲ2020
STOCKS
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Price
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Bank of Georgia (BGEO LN)
GBP 15.13
+0,3%
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Georgia Capital (CGEO LN)
GBP 8.04
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GBP 1.23
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GRAIL 07/22
GBP 12.40
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GEBGG 07/23
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GHG (GHG LN)
standstill prevents people from going to work, and thus the production of a number of Chinese products has been suspended for an unknown period of time. The economic impact of the virus is still impossible to determine, but economists think that China's growth rate could drop two percentage points this quarter. It is also predicted that such decline could mean $62 billion in lost growth. Within the framework of preventive measures for the spread of coronavirus in Georgia, direct flights to the People's Republic of China have been suspended until March 29. Continued on page 3
TBC Bank Group (TBCG LN)
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COMMODITIES
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Crude Oil, Brent (US$/bbl)
58,16
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1 589,16
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Gold Spot (US$/OZ)
INDICES
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104.42 (YTM 3.05%)
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105.55 (YTM 2.12%)
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110.02 (YTM 3.43%)
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2,8883
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3,2049
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3,8147
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GEL / CHF
2,9979
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GEL / EUR
GEL / RUB
0,0452
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21 143,49
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GEL / TRY
0,4829
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DAX
12 981,97
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GEL / AZN
1,6993
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DOW JONES
28 256,03
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GEL / AMD
0,0060
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9 150,94
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0,1161
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185,11
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NASDAQ MSCI EM EE MSCI EM
7 286,01
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FTSE 250
FTSE 100
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GEOROG 04/21 GEORG 04/21
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0,7572
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SP 500
3 225,52
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0,9634
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MSCI FM
2 664,21
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RUB / USD
63,9238
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GT Index (GEL)
1 582,68
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5,9829
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1 208,13
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1,6986
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NEWS
GEORGIA TODAY
FEBRUARY 4 - 6, 2020
@entrepreneur.ge Gamarjoba! I’m the Editor-in-Chief of the Georgian edition of Entrepreneur magazine and I’m here to share the top weekly Entrepreneurial news with you:
Georgian PM to Visit Washington in Spring BY BEKA ALEXISHVILI
Rio Beauty Box offers eye-catching colorful boxes combining a variety of sets, from decorative cosmetics and self-care products to advent calendars. Founder Ani Danelia has always wanted to offer consumers beauty boxes at reasonable prices, and do all this under the name of a Georgian brand with refined taste. Ani is working hard to minimize the supply costs so that Rio Beauty boxes can reach everyone.
P Liza Eliava and Salome Dumbadze founded Collier a year ago. They offer scarfs with prints of Georgian painters, seasonal hats, rings, bracelets, and different accessories. Having successfully and actively collaborated with various Georgian artists, Collier already has up to 20 different contemporary art compositions on their silk scarfs. Their scarfs were successfully presented in Prague in the frames of ‘An Evening of Georgian Culture’ exhibition.
On the market since summer 2017, Karavela is a Georgian start-up focused on giving children their own private adventure space, creating diverse “camps” decorated with designs of the customer’s choice. The brand, founded by Barbare Galdava, already offers selections of handmade swings, themed aprons, bags, decorative curtains, carpets, and toys, all made from natural materials and hypoallergenic. Easy to transport, the “camps” come with a soft mattress, pillows and colorful flags. Future plans include a line of children’s clothes. Follow the Entrepreneur Georgia Instagram page to get the latest updates from Georgian Entrepreneurs. For doing business with Georgian Entrepreneurs, write us on business@entrepreneur.ge
rime Minister Gakharia will make an official visit to Washington DC (USA) in spring, the governing administration reports. American news outlet The Hill also issued an article, highlighting Georgia’s strategic significance, and emphasizing US-Georgian relations. The article reads: “the visit to Washington by Prime Minister Giorgi Gakharia this spring will highlight Georgia’s significant contributions to US foreign policy.” The Speaker of the Georgian Parliament, Archil Talakvadze, also confirmed that from February a number of highlevel meetings are planned for the two countries. Specifically, in Congress, to address the issues that the Congressmen and Senators are concerned about. According to the Speaker, there is need for “intense communication” and the
political context must be “fully argumentized”. The top-level meetings were planned after the Georgian government received official disclosed letters from the US Foreign Relations Committee. The critical letters addressed the issue of the administration not switching the elec-
torate structure to the promised proportional system, as the appointment of the Supreme Judge, and the overpowering dispersal of peaceful demonstrations. The Georgian administration, as well as Georgian MPs, blamed the criticism on the congressmen’s “private interests” and “one-sided information”.
Georgian Citizens Evacuated as China Death Toll Exceeds 360
Georgian FM to Attend 'Advance Religious Freedom' Event & Visit Congress
T
BY BEKA ALEXISHVILI
G
eorgian Foreign Minister David Zalkaliani will attend a conference in Washington, USA. He will partake in the event of Annual Ministerial to Advance Religious Free-
dom which will initiate on February 4 and will last for three days. US Secretary of State Mike Pompeo personally requested Zalkaliani to attend the event, sending the FM an invitation. Aside from the main context of the visit, David Zalkaliani will also meet and confer with the representatives of the US State Department and Congress.
he outbreak of the flu-like coronavirus has prompted various countries to impose travel restrictions, suspending all flights to/from mainland China, increasingly isolating the country of more than 1.3 billion people. The World Health Organization (WHO) recommends introducing screening at border crossings, warning that travel bans are not as effective as they seem at hindering the spread of a virus and can make responding to an outbreak more challenging. "Travel restrictions can cause more harm than good by hindering info-sharing, medical supply chains, and harming economies," the head of WHO, Dr Tedros Adhanom Ghebreyesus, said on Friday. Georgia has likewise suspended direct flights with China to prevent the spread of the virus. Turkey evacuated three Georgian citizens from the epicenter of the outbreak; France evacuated two. Those
Georgian citizens will undergo a two-week quarantine before arriving in Georgia. Many of the world’s leading infectious disease experts fear the coronavirus may make its way across the globe and become a pandemic, defined as an ongoing epidemic on several continents. Unlike its slow-moving cousin SARS, for instance, the Wuhan virus spreads rapidly and is highly transmissible. Rapidly rising caseloads are alarming researchers, with the overall death toll rising to at least 360 in China, and more that 2,000 new cases reported in the past 24 hours. During the SARS outbreak, 349 people died in mainland China. Yet health experts say they are encouraged by the steady rise in the number of recoveries and effective treatments that show that the new virus does not appear to be as deadly as SARS. SARS had a mortality rate of 9.6 %, while only about 2% of those infected with the coronavirus have died.
The vast majority of the cases are inside China. Other countries that have confirmed cases are: Hong Kong, Singapore, Thailand, Japan, Macau, Russia, France, the United States, Taiwan, Australia, Malaysia, South Korea, Germany, the United Arab Emirates, Vietnam, Italy, India, the Philippines, Nepal, Cambodia, Sri Lanka, Finland, Sweden, Spain, Canada and Britain. Cases reported in Thailand, Taiwan, Vietnam, Germany, France, Japan and the United States involve patients who had not visited China. The Georgian National Disease Control Center announced yesterday that no cases of coronavirus have been detected in Georgia so far. “Georgia spares no efforts to prevent coronavirus. The health system of the country is in full readiness and is ready to provide the necessary treatment in compliance with modern standards even if the virus will spread,” the Center stated.
BUSINESS
GEORGIA TODAY FEBRUARY 4 - 6, 2020
3
Coronavirus Updates BY NINI DAKHUNDARIDZE
T
he death toll from the coronavirus, which f irst emerged in late December 2019 in Wuhan, China, has now exceeded that of the severe acute respiratory syndrome (SARS) outbreak in 2002 and 2003 in mainland China, and now stands at over 360 fatalities. The total number of those infected, at time of going to press, has
risen to 17,205. While the data is more alarming by the day, resulting in the World Health Organization (WHO) declaring the coronavirus outbreak a ‘global health emergency’ last Thursday, there is still some positive news: nationwide, the number of people who have recovered has risen in recent days, which suggests that the mortality rate of the virus is still relatively low. On Sunday came the first case of death from coronavirus outside China, in the Philippines. Continued on page 7
Image source: The New York Times
The Impact of Coronavirus on Georgia-China Trade Continued from page 1 Within the same precautionary measures, all airlines operating in Georgia have been informed about transit passengers whose journeys originated in the People's Republic of China, the Civil Aviation Agency reported. Georgian economists are expecting a decline in the flow of tourists due to air travel restrictions, and tens of thousands of dollars in losses in the sector. 48,071 visitors from China entered Georgia in 2019, which is 50.9% more than in the previous year. On average, Chinese citizens spent GEL 2253 ($778.24) on one visit to Georgia, which makes Chinese tourists the seventh highest-paid tourists for Georgia. If the flight restric-
tions continue due to the virus, Georgian tourism could face a real challenge. Health Minister Ekaterine Tikaradze advised Georgian citizens not to travel to China, noting that such recommendations came for the purpose of citizen safety, and that all possible prevention measures had been activated in Georgia to prevent the spread of coronavirus. A further measure saw imports of live animals from the People's Republic of China banned from entering the territory of Georgia. The Ministry of Environment and Agriculture reports that the ban was imposed after the World Health Organization (WHO) and the World Organization for Animal Health (OIE), called for the suspension of wild animal trade with China.
“The decision was made by the Main Division of Market Supervision of the Ministry of Agriculture and Forestry of the People's Republic of China on January 26, 2020, prohibiting the trade of live animals or wild animals in any form,” the statement said. The Ministry added that decorative tortoises and ornamental fish were often imported from China to Georgia, but both have now been prohibited for an undetermined period of time. The Ministry added that the import of other Chinese products will not be tightened as it does not carry any risks of virus transmission. National Statistics Office (Geostat) official data reads that Georgia exported $227.6 million worth of products to
China in 2019. In 2018, the figure was $198 million, and in 2017, before the Georgia-China free trade regime entered into force, exports to China totaled $201 million. In 2019, exports from Georgia to China increased by 12.4% to $3.8 billion, while imports decreased by 0.8% and amounted to $9.1 billion. China ranks 6th in Georgia's top 10 export markets, which clearly shows the possible impact the virus could bring to mutual trade between the two countries. The top 10 products exported to China from Georgia are: 1. Copper ores and concentrates: $172.2 million; 2. Natural grape wines: $18.8 million;
3. Equipment for use in medicine or veterinary medicine: $12.9 million; 4. Ores and concentrates: $5.7 million; 5. Spices: $3.6 million; 6. Nuts: $3.4 million; 7. Diagnostic or Laboratory Reagents: $2.7 million; 8. Orthopedic and Artificial Body Parts: $2.02 million; 9. Non-denatured ethyl alcohol, alcoholic beverages: $839.7 thousand; 10. Aluminum Crude: $779.1 thousand; As the virus continues to spread at high-speed, it is hard to estimate its real impact on Georgia-China trade; however, taken the current global situation in and outside China, it is obvious that negative consequences will be impossible to avoid.
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BUSINESS
GEORGIA TODAY
FEBRUARY 4 - 6, 2020
Georgia Achieves “Best Case Scenario” Growth Rate of 5.2% Predicted One Year Ago BY DAVIT KESHELAVA AND YASYA BABYCH
I
SET-PI has updated its forecast of Georgia’s real GDP growth rate for the fourth quarter of 2019 (the final update) and the first quarter of 2020. Here are the highlights of this month’s release:
HIGHLIGHTS • Geostat has published its rapid estimate of real GDP growth for the fourth quarter of 2019, and their estimated growth stands at 5.3%, which is 0.7 percentage points above ISET-PI’s most recent forecast. • The real GDP growth rate reached 3.8% year-on-year for December 2019. • Utilizing the latest data, annual real GDP growth in 2019 amounted to 5.2% (the first rapid estimate). By February of 2019 (the very first forecast), our model predicted 4.4% and 5.2% real growth in the “middle-of-the-road” and “best-case” scenarios respectively . Moreover, our annual GDP forecasts of 4.9% (since November) and 5% (in January, very last forecast), were revealed to be quite accurate. • According to the most recent (second vintage) forecast for 2020, the growth rate in the first quarter is predicted to be 4.3%. The Georgian statistics office, Geostat, has released its preliminary estimate of GDP growth for the fourth quarter of 2019. Its estimated growth figure is 5.3%, which is 0.7 percentage points higher than ISET-PI’s forecast. As a result, the first rapid estimate of the annual real GDP growth for 2019 amounted to 5.2%. It is worth noting that Geostat updated its methodology for estimating real GDP, which has resulted in an upward revision of quarterly growth rates for 2019. This explains our recent annual forecast’s (fairly small) deviation from the actual growth rates. Moreover, the second update of the growth rate in the first quarter of 2020 is predicted to be 4.3%, which is 0.1 percentage points higher than the previous update. In addition, a number of variables demonstrated significant monthly and yearly changes in November. In particular, increased volume of domestic and foreign currency deposits, improved external statistics, slightly depreciated real effective exchange rate and excessive inflation had a significant impact on the growth predictions.
DOMESTIC AND FOREIGN CURRENCY DEPOSITS The first set of variables that have had a significant positive effect on our forecast relate to national currency deposits in commercial banks. In November, all types of national currency deposits (except time deposits with a maturity of less than 3 months, which grew by 6.8% annually)—from the most liquid (currency in circulation (up by 40.1% yearly)) to the least liquid (time deposits with a maturity of more than 12 months (up by 73% yearly)) — experienced double-digit growth in annual terms. As a result, total national currency deposits increased by 20.4% year-over-year. Significant annual increases were observed in the amounts of foreign cur-
rency deposits, which experienced 18.1% growth in annual terms. These pronounced growth figures can be partially explained by the notable yearly depreciation of the lari against the currencies of major trading partners, but the growth rate remains positive even after excluding the exchange rate effect. Furthermore, total deposits (including national and foreign currency deposits) increased by 19.5% year-over-year. As a result, deposit dollarization, which had been on a declining trajectory for the first half of 2019, started gaining new momentum in the second half of the year reaching 64% in November (increased by 0.04 ppts monthly, but grew by 2.1 ppts compared to April 2019 (mainly due to exchange rate effect), the month with the lowest dollarization measure in all of 2019).
EXTERNAL STATISTICS The first month of the fourth quarter of 2019 shows strong growth in the wider region. According to the estimates for October, most countries in the region showed improvement compared to the same period in the previous year. The Armenian economy reached remarkable 7.7% annual growth. Furthermore, the economies of Russia and Kazakhstan advanced by 3.1% and 5.4% respectively. Meanwhile, Azerbaijan experienced 2.1% annual growth in the tenth month of 2019. Thus, improved economic conditions in the wider neighborhood stimulated the Georgian economy through the
channels of trade, remittances, and tourism. However, the effect of reduced tourism flows due to Russia’s prohibition of flights to Georgia has still not been reflected in the model’s database. As a result, Georgia’s external statistics continue to improve. Exports grew by 25.2% year-over-year in November of 2019 and were driven by significantly larger exports/re-exports of copper ores and concentrates to China and Belarus, together with increased exports of wine and mineral water to Russia, motor cars and trucks to Armenia and Ukraine, and cigarettes and cigars and motor cars to Azerbaijan. During the same period, imports increased by 4.2%. The trade deficit thus shrunk by 8% compared to the same month in 2018 and amounted to 436.8 million US dollars. In addition, both remittances and tourism showed significant yearly increases in November. Money transfers increased by 13.3%. These were driven by a rise in remittances from Kazakhstan (134.5%), Kyrgyzstan (167.2% with 2.1 ppts contribution in total growth), Italy (18.8%), Greece (8.3%), Germany (27.1%), and Turkey. However, remittances from Russia declined notably (1.3 ppts negative contribution to the total growth of money inflow). The number of international visitors to Georgia increased by 11.9% in November compared to the same month the previous year, while the number of tourists increased by 10.3% annually and
accounted for 62% of all international visitors. According to the model, both tourism and remittances made a significant positive contribution to the GDP growth forecast.
DEPRECIATED REAL EFFECTIVE EXCHANGE RATE In November, the Real Effective Exchange Rate (REER) remained the same relative to October 2019, and depreciated by 6% relative to the same month the previous year. Depreciation of the REER is typically associated with domestic export goods gaining competitiveness on foreign markets, but it also translates into increased prices on imported goods. Notably, the lari real exchange rate depreciated with respect to the national currencies of two major trading partners— Turkey and Russia—and appreciated with respect to the euro and dollar in monthly terms. While the lari depreciated with respect to the currencies of all major partners in annual terms. Over-
all, REER-related variables had a small negative contribution to the real GDP growth projections.
HIGH INFLATION At the same time, the cost of living, as measured by the Consumer Price Index (CPI) and the Khachapuri Index, increased notably in November compared to the same month of the previous year. Despite the fact that the National Bank of Georgia has already employed all of its instruments to control inflation (conducted contractionary monetary policy), annual inflation remained at a high level: 7% in November (while the inflation target is 3%). About 0.9 ppts of CPI inflation were due to higher tobacco prices, while food prices contributed 3.8 ppts with 14.1% annual growth. The measure of core inflation amounted to a relatively moderate 3.5%. Our forecasting model identifies the high inflation rate as a main negative contributor to future GDP growth.
Our forecasting model is based on the Leading Economic Indicator (LEI) methodology developed by the New Economic School, Moscow, Russia. We constructed a dynamic model of the Georgian economy, which assumes that all economic variables, including GDP itself, are driven by a small number of factors that can be extracted from the data well before the GDP growth estimates are published. For each quarter, ISET-PI produces five consecutive monthly forecasts (or “vintages”), which increase in precision as time goes on. Our first forecast (the 1st vintage) is available about five months before the end of the quarter in question. The last forecast (the 5th vintage) is published in the first month of the next quarter.
BUSINESS
GEORGIA TODAY FEBRUARY 4 - 6, 2020
5
Radisson Collection Hotel, Tsinandali Estate Chosen as Finalist of MIPIM 2020 Awards
T
he finalist of the world’s leading International property event were named on January 29 in Paris, France. The hotel, situated in Kakheti region, was nominated in the category of ‘Best Hotel & Tourism Award’. The 11-member jury has selected 45 projects from 19 countries that now go forward to the finals of the international real estate industry’s premier awards. The 2020 finalists reflect the global appeal of the MIPIM Awards. This year, the jury reviewed over 228 entries from 45 countries and shortlisted the finest projects in each of the 11 competition
categories. The winners will be announced at the MIPIM Awards ceremony on Thursday, 12 March at 6.30pm, in the Grand Auditorium of the Palais des Festivals in Cannes. The winners will be selected by both MIPIM delegates voting in Cannes for projects of their choice and by the jury. The winners will be selected on a 50:50 basis, combining delegates’ votes cast on-site and the jury’s own votes. The MIPIM 2020 will take place in Cannes 10-13 March and will gather the most influential international property industry players, including real estate
developers, investors and hospitality field representatives. The project of ‘Radisson Collection Hotel, Tsinandali Estate’ was developed by Silk Road Group with the financial support of Partnership Fund and TBC Bank.
They Have Always Said that Economic Growth is Good OP-ED BY NUGZAR B. RUHADZE
I
have several teachers of economics living in different parts of the world, although I have never met them in person. Some of my tutors died a long time ago. I would never have dared to embark on this series on economics if Georgia’s economy didn’t bother me so much, or if those geniuses hadn’t shared their ideas with me via their books and articles. I cannot quote all of them, but every single thought I draw on belongs to recognized authorities. There are numerous aspects that shape the overall national progress, and a couple of brilliant minds suggest that Georgia could be turned into a rich country through the correct use of the right ideas, accurate utilization of investable capital, practical involvement of citizens in the economic process, undelayed implementation of hi-tech achievements in industrial and agricultural operations, and a developed network of continuous education, all of which are critical essentials of advancement, bound together by viable demand and ultimate supply. In sum, this is all about growth! It is universally known that you have to ask for something to have any chance of getting it, and asking would not make any sense unless somebody was prepared to supply it to you. The supply potential, on its own, qualifies as our national productive ability, without which no eco-
Image source: theexchange.africa
nomic growth is feasible. In Georgia, the most devastating economic problem curbing growth in the long run seems to be our population, which suffers from an acute demographic drawback: low birthrate based on a general fear of rearing children, single-child families, an insufficient number of potential mothers, the reluctance of men to create a family, the growing number of women going to work instead of nursing children, the tendency of young people to
leave the country in search of a better life, an aging workforce, and practically nonexistent immigration to offset the loss. All this can be explained by the unattractiveness of the standard of living in the country, as well as the somewhat sensitive attitude of Georgians to the fact of bringing in foreigners and selling them land and property. The gist of the problem is that the country will not have a big enough workforce, hence enough productivity, in the
future unless our men and women are ready to do their utmost to multiply the nation. No country can have a bright economic future without new working generations to look ahead to. The correct demography alone is not enough to provide a final result, of course, as productivity is also vital, which depends on capital investment and healthy ideas. This is seen in abundance in Georgia. After all, ideas can be produced for free, but turning those ideas into workable
economic processes is a huge problem. Implementation of any good idea depends on the availability of appropriate funding, and also on the readiness of the country’s decision makers to promote healthy economic ideas. Putting together a qualified workforce and a new idea, we acquire the potential to create new products or to produce the same product at a lower price. If we lack good ideas, borrowing from other nations is not a problem if we do it legally. Nations adopt each other’s ideas and this is a worldwide practicable phenomenon. How about capital venture? Without timely and appropriate investment, nothing good will happen. Demography will fail to pick up, and no ideas will come to fruition no matter how perfect they are, saying nothing about indispensable infrastructural development or the overall micro-economic growth, and the expansion of the economy at the macro level. Acquiring considerable capital investments from other countries is also a commonplace thing, only to be done based on a mutually beneficial principle. Georgia does not have to take pains to reinvent the wheel. Thanks to contemporary global communications, all is universally known and practiced. Suffice to have a look at useful examples of good economy-making and transplant them to our fertile but permanently expectant soil. No rocket science is needed to manage the economy according to tested handbooks without too much aberration from them.
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BUSINESS
GEORGIA TODAY
FEBRUARY 4 - 6, 2020
USAID Program YES-Georgia to Support Youth & Women Entrepreneurship
The next generation of Georgian entrepreneurs supported through the YES-Georgia program
BY ANA DUMBADZE
O
n January 31, USAID/Georgia publicly announced its ‘Supporting Youth and Women Entrepreneurship in Georgia’ (YES-Georgia) program at Fabrika in Tbilisi. At the event, USAID announced the expansion of its YES-Georgia program to support more women entrepreneurs in the country. The program launch kicked off with an exhibition and sale of products and services produced by YES-Georgia beneficiaries, allowing them to present their products to a wider audience. The participants of the USAID program have said they have high expectations from this initiative, as in addition to supporting them financially, it helps them to increase public awareness about their products through participation in various exhibition-sales. It also gives them valuable knowledge and experience as to how to develop their business through various trainings and seminars. As a part of the event, young women entrepreneurs, the YES-Georgia beneficiaries, had an opportunity to talk about their journey into entrepreneurship and the benefits they received within the framework of the USAID initiative, and to present their success stories to the
attendees. The official part of the ceremony started with an introduction by USAID/Georgia Mission Director Peter Wiebler followed by opening remarks from H.E. Bonnie Glick, USAID Deputy Administrator; Archil Talakvadze, Chairman of the Parliament of Georgia; Natia Turnava, Minister of Economy and Sustainable Development of Georgia; and Archil Bakuradze, Chair of the Board of the Crystal Fund. While addressing the audience, the Georgian and foreign officials emphasized the importance of the program in terms of the country's economic development, seeing YES-Georgia significantly encouraging and motivating local youth and female entrepreneurs, and contributing to their successful activities in the future. The event was attended by international and local organizations, donors, government and business representatives, project beneficiaries, academia and youth and women entrepreneurs. The program is implemented in Georgia by the Crystal Fund, with financial support from the American people through USAID and the Women’s Global Development and Prosperity (W-GDP) initiative. Additional financial support is provided by JSC MFO Crystal. The program cooperates with the international organization Buzz Women and local consulting company Crystal Consulting LLC. Archil Bakuradze, Chair of the Board
of the Crystal Fund, told media that company representatives are glad and honored to be part of such an important project contributing to the country’s economic development. “We are happy to announce the beginning of the new phase of the program today, which is aimed at encouraging youth and women entrepreneurship in Georgia, and which is supported by the US government. It is a very important initiative, as entrepreneurship development and employment are essential fields for our country, as is youth involvement in this process. The program components include not only entrepreneurship training and mentorship to promote personal and professional development, but also financial services tailored to women entrepreneurs’ needs. We plan to create a business environment allowing them maximum access to finances, which will allow us to move to the next level of entrepreneurship development in the country,” Bakuradze said. H.E. Bonnie Glick, USAID Deputy Administrator, elaborated on the main goals and importance of the program, expressing satisfaction that the project, now launched in Georgia for the second time, has been successful and fruitful for its beneficiaries. She highlighted the success of the youngest local entrepreneur, Giorgi Shesahberidze, a 12-year-old teenager who owns the renowned homemade lollipop business ‘Dora’ and is
USAID Deputy Administrator Bonnie Glick with Giorgi Sheshaberidze, a young entrepreneur who has already built a successful confectioner business
among the beneficiaries of the YESGeorgia initiative. “I am fortunate to be here for the second launch of YES-Georgia, a program designed to promote entrepreneurship,” Glick said. “It kicks off for the second time to support young people and youth entrepreneurship, and it also highlights women entrepreneurship. Over the next four years, YES-Georgia will support entrepreneurs with an $840,000 investment from USAID and the White Houseled Women’s Global Development and Prosperity (W-GDP) initiative. Through the beginning of 2024, it will provide more than 2,500 women with business management training, access to legal and accounting services, and mentoring and networking opportunities. “It is wonderful to see the outcomes of the first program YES-Georgia, training young entrepreneurs, as well as offering another level of funding for them. I was fortunate to receive a lollipop with the USAID logo on it from Giorgi Sheshaberidze, the youngest participant of today’s exhibition-sale of products and services of YES-Georgia beneficiaries, who himself is supporting others, as well as his family, with his own business. “It is wonderful to see children’s programming, to see programming coming from the occupied regions of Georgia, all very important for encouraging entrepreneurship in the country. Yet another great thing with the next launch of the program is the focus on women entrepreneurs, which comes from the Wom-
initiative will be implemented by Crystal Fund”. The Minister of Economy and Sustainable Development, Natia Turnava, also highlighted the importance of the program for Georgia’s economy and noted that it represents yet another obvious example of successful strategic partnership between the two countries. “USAID assists Georgia in developing priority sectors. The US government has declared unprecedented support to Georgia, which has been confirmed by numerous acts. This program is yet another example of the successful partnership between the two countries. YESGeorgia will significantly contribute to development of new technologies in business and a knowledge-based economy. Most importantly, it will help us to increase the employment rate, create new jobs and will assist young and female entrepreneurs to implement their innovative ideas, which itself is of the utmost importance for the country’s economic growth,” she said. “YES-Georgia envisages supporting young and female entrepreneurs in the process of launching new initiatives and business projects,” Parliament Speaker Archil Talakvadze told media representatives. “More than 2500 people will have an opportunity to benefit from it and receive the necessary knowledge about how to start and implement their ideas. This in turn will strengthen our economy and promote the active involvement of young entrepreneurs in economic processes. This is a very important col-
USAID Deputy Administrator Bonnie Glick congratulating women entrepreneurs for their contribution to Georgian society
en’s Global Development and Prosperity Initiative championed by Ivanka Trump, a senior adviser of President Trump, who cares very deeply about developing women entrepreneurs around the world. We look forward to seeing success from such women throughout Georgia, many of them starting new businesses, having already raised their children and deciding it is the right time for them to promote their own interests and business ideas,” Glick concluded. The second part of the project presentation saw a panel session titled ‘Youth and Women Entrepreneurship – Way to Development, Challenges and Opportunities’, with the participation of a number of successful and highly experienced professionals in the field. Among them was Nino Zambakhidze, Head of the Georgian Farmer’s Association, who noted that the implementation of YESGeorgia will address the current challenges in terms of women entrepreneurship, such as access to education and finances, and encouraging their aspiration to start their own businesses. “The Project envisages women’s economic empowerment and prosperity, which itself will allow citizens living in rural areas of Georgia to be more actively involved in entrepreneurship, various educational activities, trainings, and economic processes,” she said. “This project started with the support of Ivanka Trump, and is now being implemented in 22 countries. It is to be welcomed that Georgia is the first country where the
laboration both in terms of economy and politics between Georgia and the US, which once again confirms that we have unprecedented support from the US government”. YES-Georgia supports economic growth and empowers Georgia’s youth and women by encouraging innovation, promoting entrepreneurship, and enhancing youth and women’s employability. The program provides emerging entrepreneurs and professionals with skills development, business training, mentoring, and access to finance. Supporting Youth and Women Entrepreneurship in Georgia is an extension of the previous USAID program Youth Entrepreneurial Skills for Advancing Employability and Income Generation in Georgia. Since 2016, YESGeorgia has supported more than 3,000 young entrepreneurs and professionals, the majority of whom are women. The White House launched the W-GDP initiative in February 2019 to advance women’s economic empowerment worldwide. Through the initiative, the US government aims to reach 50 million women in the developing world by 2025. W-GDP is a whole-of-government effort, with USAID managing the W-GDP Fund, a $27 million program, to source and scale the most innovative and impactful programs being implemented by the US government. The W-GDP fund will mobilize partnerships to leverage more than $260 million from private sources, bilateral and multilateral donors, NGOs, universities, and foreign governments.
BUSINESS
GEORGIA TODAY FEBRUARY 4 - 6, 2020
Geostat: Annual Inflation Rate Amounted to 6.4% in January 2020
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n January 2020, the Consumer Price Index increased by 0.7% compared to the previous month, while the annual inflation rate amounted to 6.4%, the latest data from the National Statistics Office of Georgia (Geostat) shows. In the same period, the inflation rate without tobacco amounted to 0.6% over the previous month, while the prices increased by 5.9% compared to the same month of the previous year. With regard to the annual core inflation, the prices increased by 4.4%, while the annual core inflation without tobacco amounted to 3.4%. The monthly inflation rate was mainly influenced by price changes for the following groups: Food and non-alcoholic beverages: the prices in the group increased by 2.3%, contributing 0.76 percentage points to the overall monthly inflation rate. Within the group, the prices were higher for the following subgroups: vegetables (8.6%), milk, cheese and eggs (6.1%), oils and fats (4.2%), fruit and grapes (3.0%), coffee, tea and cocoa (0.6%), meat (0.4%). In addition, the prices decreased for mineral waters, soft drinks, fruit and vegetable juices (-1.2%); Alcoholic beverages and tobacco: the prices went up by 1.8%, contributing 0.12 percentage points to the overall monthly inflation rate. The prices increased for tobacco (3.5%) and alcoholic beverages (0.6%); Recreation and culture: the prices decreased by
4.5%, contributing to -0.18 percentage points to the overall monthly inflation rate. The prices in the group were lower for tourist trips (-16.7%).
ANNUAL INFLATION RATE The annual inflation rate was mainly influenced by price changes for the following groups: Food and non-alcoholic beverages: the prices in the group increased by 11.3%, contributing 3.57 percentage points to the overall annual inflation rate. Within the group, the prices were higher for the following subgroups: fruit and grapes (28.3%), milk, cheese and eggs (15.0%), meat (14.2%), fish (12.4%), sugar, jam, honey, chocolate and confectionery (10.5%), oils and fats (8.1%), mineral waters, soft drinks, fruit and vegetable juices (7.8%), vegetables (7.0%), coffee, tea and cocoa (5.4%), bread and cereals (5.1%); Alcoholic beverages and tobacco: the prices increased by 11.2%, with a relevant contribution of 0.76 percentage points to the overall annual CPI growth. The prices increased for tobacco (20.3%) and alcoholic beverages (3.4%); Transport: the prices went up by 3.3%, which resulted in a 0.39 percentage point contribution to the overall annual inflation rate. The prices were higher for the purchase of vehicles (4.2%), operation of personal transport equipment (3.6%) and transport services (2.9%).
Coronavirus Updates Continued from page 3 Around 150 cases have been reported in other countries outside China so far: in Hong Kong, Singapore, Thailand, Japan, Macau, Russia, France, the United States, Taiwan, Australia, Malaysia, South Korea, Germany, the United Arab Emirates, Vietnam, Italy, India, the Philippines, Nepal, Cambodia, Sri Lanka, Finland, Sweden, Spain, Canada and Britain. Cases reported in Thailand, Taiwan, Vietnam, Germany, France, Japan and the United States involve patients who had not visited China, causing an increased level of global concern and affecting economies, seeing the stock market in the world’s second-biggest economy closed from January 24 until Monday, February 3. More and more states are rushing to evacuate their citizens from Hubei province and its capital city, Wuhan. Many have also imposed travel restrictions on travellers to and from China, with Georgia among them. Canada, Russia, and the US have recently reported that they plan to evacuate their citizens from China. The United States has already evacuated 200 of its citizens from the epicenter of the virus outbreak. Australia’s Foreign Minister Marise Payne said 243 of its citizens and permanent residents were evacuated from Wuhan on Monday on a governmentchartered aircraft to Christmas Island, where they will spend 14 days under medical screening. France
has also evacuated its citizens from China. On board the French plane were also two Georgian citizens. On January 31, three Georgian citizens were evacuated on a Turkish plane. Officials have reported that the health of the Georgian citizens is good. Those Georgian citizens will undergo a two-week quarantine before coming to Georgia. At present, there are three Georgian citizens remaining on the Chinese territories voluntarily. On January 31, two cases of coronavirus were confirmed in Russia. Yet, despite its edging closer, health professionals in Georgia report that the country is still in the green, low-risk zone for spreading the coronavirus. The Georgian National Disease Control Center announced Wednesday that no cases of coronavirus have been detected in Georgia so far. “Georgia spares no efforts to prevent coronavirus. Our health system is in full readiness to provide the necessary treatment in compliance with modern standards, even if the virus spreads,” the Center reported. China accused the United States of spreading "fear" in its response to the deadly coronavirus, and of not providing "any substantial assistance". China has designated 27 hospitals in Wuhan for the treatment of coronavirus, the state-run newspaper Global Times reported on Monday. The new hospitals started functioning on Monday, with hopes that they will be able to go some way to stopping the spread of the dangerous virus.
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GEORGIA TODAY
FEBRUARY 4 - 6, 2020
The Hill: America Needs Reliable Allies Like Georgia BY BEKA ALEXISHVILI
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n American news agency based in Washington DC wrote a comprehensive article about Georgia, and what it means for the US. The Hill issued an article authored by Janusz Bugajski, a Senior Fellow at the Center for European Policy Analysis. The commentary of the article seems to be data-based and impartial, with clear examples given as to why Georgia is so appealing for large key political players, such as the US and Russia. Mr. Bugajski notes the geographical importance of Georgia, its being at the center of many of today's geopolitical disputes. “It is the key state in the South Caucasus and sits astride the Black Sea, which Moscow uses as a launchpad to project military power toward the Balkans and the Eastern Mediterranean.” writes Bugajski. The Russian dominion over the Black Sea and the Caucasus would contest the safety of NATO members Romania and Bulgaria and NATO applicants Georgia and Ukraine. “It also threatens energy supplies to Europe from the Caspian Basin and transportation and trade routes between Europe and Asia that bypass Russian territory. Some of the major energy pipelines and rail links transit Georgia to European markets.” writes Bugajski as he highlights Georgia’s practicality as a ‘hallway’ of streaming energy resources to Europe. The article rightfully mentions Georgia’s contributions to the global ‘crusade’ against terrorism, and particularly the outlawed ‘caliphate’ of ISIS/ISIL. More-
over, it purposefully remarks on the ISAF (International Security Assistance Force) mission in Afghanistan to aid the Afghan governmental forces to suppress Taliban. ISAF is the NATO mission in which Georgia “was the largest non-NATO troop contributor”, and, correspondingly, “Georgia suffered the most casualties among Allied troops in Afghanistan on a per capita basis”, reads the article. On top of this, the country offered its territory for placement and transit of NATO forces, in addition to modernizing its airports and seaports to accommodate the Alliances’ militaries. Bugajski makes a very interesting observation, where he equates Georgia’s example as an US ally, to the regional powerhouses of anti-Russian and pro-Western leaning nation-states. The author emphasizes on the “dependable allies” which the US has to augment their interests. In the list of allies, Bugajski mentions Poland, Israel and ultimately Georgia. The article also underlines US appreciation of Georgia’s democratic and Western associated ways of regional and international diplomacy. “The [US] administration underscored its appreciation for Georgia's pro-American foreign policy and major contributions to global security, while condemning Russia's occupation of 20 percent of Georgia's territory.” reads the article. The article could not comment on Georgia’s aspiring ambitions without referring to NATO-Georgian relations. At the 2008 NATO summit, Georgia was promised membership, although without a clear timetable. Given that the country spends 2% of its GDP on defense, and its internal military infrastructure and capabilities are more than exemplary, this offers the NATO Secretary-
General Jens Stoltenberg the opportunity to say that Georgia “possesses all the necessary instruments to qualify for membership.” Although a number of NATO countries are concerned about Georgia’s accession to the Alliance, because of its occupied territories, which is a potential hot-spot for a new war, they must still adhere to the 2008 assurances. Bugajski thoughtfully comments on this paradox and gives examples of how and why this integration would work. “Moreover, Russia will not risk a direct confrontation with a militarily more powerful multi-national organization, and NATO itself acts as a
deterrent to renewed conflict, as we have witnessed in the Baltic states.” writes Bugajski, who is irrefutably realistic and factual. The author of the article also mentions that NATO membership may take some time, and it might as well be a long-term process since Georgia will be a fullfledged member of the Alliance. Yet, meanwhile the United States has given a special status to Georgia, an MNNA (Major Non-NATO Ally). Only a minority of nations have this official status granted them by the US, and Georgia's co-ranking republics in the group include Australia, Japan and South Korea.
Janusz Bugajski concludes his article with high praises of Georgia’s political orientation and its foreign policy vector. Just like the author, the society of Georgia knows its Euro-Atlantic integration is a long-set objective which cannot be altered, and it will not be distorted. Bugajski once more reiterates Georgia’s strategic partnership and association with the West, as he completes his article. “In addition to its pivotal strategic role, its staunch Trans-Atlanticism and its resistance to Russian imperialism, Georgia serves as a regional political role model and an alternative to Muscovite authoritarianism.”
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GEORGIA TODAY FEBRUARY 4 - 6, 2020
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Drug Monitoring Center Opened in Georgia BY TEA MARIAMIDZE
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National Center for Drug Abuse Monitoring has been set up in Georgia to support the development of an evidence-based drug policy. The information was released in a statement by the Ministry of Justice of Georgia, which reads that the aim of the center will be drugrelated information collection and analysis, implementation of evidence-based practice methodologies, and communication with relevant organizations at the international level to exchange information. The Ministry says it will help the country to establish a drug policy which will answer modern challenges in this field. The Center is to be led by the head of the Department of International Public Law of the Ministry of Justice, who will be accountable to the Interagency Coordinating Council on Drug Addiction, headed by the Minister of Justice. Representatives of the Ministry of Internal Affairs of Georgia, Ministry of Internally Displaced Persons from the Occupied Territories, Ministry of Labor, Health and Social Affairs of Georgia, Ministry of Education, Science, Culture and Sport of Georgia and the Prosecutor General's Office, as well as experts in the field, among other relevant agencies, will comprise the Coordinating Council on Drug Addiction. “The Drug Situation Monitoring Center will consist of two divisions: the task of the Data Research Unit is to collect, analyze and prepare relevant data on drug situation while the purpose of the Consulting Unit is to provide thematic support and consultation to the research unit. The selection of staff from the Ministry of Justice, who have relevant
Image source: coe.int
knowledge and experience, will start in February 2020 and employees will be selected by competition by March 2020,” the Ministry of Justice said. The decision to create the agency was made on March 27, 2018, and its establishment is envisaged by the agenda of the Association Agreement with the EU, the Visa Liberalization Action Plan and by the state Action Plan 2019-2020 to combat drug addiction. “With the establishment of the National Center for Drug Abuse Monitoring, Georgia will provide comprehensive information on drug abuse, their analysis and relevant decisions based on this analysis,” the Ministry said.
The statement came after the NGO Human Rights Education and Monitoring Center (EMC) released a report providing an overview of the key trends, judicial practices, and statistics for 2019 in the field of drug policymaking. The report reads that the state authorities have not yet expressed political will to introduce human rights-based drug policies through fundamental legislative changes, adding the current legislation remains a significant challenge for the criminal justice system. “The legislation in place, along with investigative and judicial practices, still carries the risks of arbitrary and unfair use of the drug policy,” the NGO stated.
EMC also noted that last year no legislative changes were made in the field of drug policy. It also underlined that the work on the issue of drug policy was not included in the governmental program for 2019-2020, developed during last year's changes in the government, which further demonstrated the state's position regarding the absence of a drug policy as a topic on the political agenda. The NGO report claimed that a National Center for Drug Abuse Monitoring, the main function of which would be to analyze information regarding the use of the substances, subject to special control, had yet to be put into place, which is a commitment the government undertook in accordance with the 2015 EU-Georgia Association Agenda Implementation National Action Plan. The report read that in 2019, the rate of criminal prosecution of drug offenses increased, as did the use of imprisonment for the purchase or possession of narcotic drugs in both minimal or large quantities. “The number of persons subjected to drug testing has increased, there is also a slight increase in the rate of positive drug test results. Nevertheless, the legal basis for mandatory drug testing and the legal status of the persons subjected to the test remain problematic,” EMC’s report read. The NGO also stressed that statistical data on drug offenses, essential for rational and fair drug policy making, is largely missing. EMC called on the authorities to establish a proper center that will process statistical information to assist the state in making policy decisions relevant to drug offenses, including processing data on the number of persons deprived of their liberty or otherwise convicted for drug offenses, information regarding the types of drugs used, information regarding the amount of drugs and sentences, the amount of penalties, statistics on convictions and the types of drug crimes.
Govt' Plans to Auction So-called Rike Jugs
Puri Guliani – this is what our ancestors called pastries that they earnestly created all over Georgia with variety of fillings. These pastries were later shared with important and beloved people, marking the significance of the dishes. BY ANA DUMBADZE
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he government of Georgia plans to sell the well-known building, the socalled Rike Jugs, located in Old Tbilisi, near the Bridge of Peace, Natia Turnava, Minister of Economy and Sustainable Development, said after the sitting of Cabinet of Ministers on Thursday. The initial price of the Rike Jugs is 95 million GEL. The Ministry of Economy included the building on the list of to-be privatized objects within the framework of the '100 Investment Offers to Business' project. “We are going auction so-called 'Rike jugs' within the project '100 Investment Offers to Business'. A solid amount of money was spent on the construc-
tion of this project. Unfortunately, to date, the project failed to find a function, although it is in a very interesting location and is visited by many,“ Turnava said. The Minister added that emphasis will be placed on the commercial and appropriate use of the building. “Through this transparent auction, we will be able to test how relevant this price is to meet current market requirements. Our task is to find the right use of the Rike Jugs through an open public auction," she noted. The Rike Jugs were installed over 15 thousand square meters of space in 2012. The facility was expected to serve as an amphitheater in Europe Square, however, it was never completed. The construction works cost 75 million GEL. The interior of the building is fully finished and it is popular among tourists and visitors of the Old Tbilisi district due to its original and distinctive design.
That’s why we call our Sakhabazo (bakery) and kitchen Puri Guliani. Here we bring history to life and contribute to the everlasting tradition of Georgian baking. Every day our team creates new variations of traditional dishes, Guliani breads, pastries and mouthwatering desserts by using only Georgian wheat and regional products.
Saarbrucken Square, Tbilisi Call: 577 00 00 83 9:00AM - 11:00PM
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GEORGIA TODAY
FEBRUARY 4 - 6, 2020
The Galt & Taggart Research team comprises Georgian and Azerbaijani finance and economic experts who have broad experience of covering the macro and corporate sectors of the two countries. Our current product offering includes Georgian and Azerbaijan macroeconomic research, Georgian sector research, and fixed income corporate research. For free access to Galt & Taggart Research, please visit gtresearch.ge or contact us at gt@gt.ge.
Electricity Market Watch FOR GEORGIA TODAY BY MARIAM CHAKHVASHVILI
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ector research is one of the key directions of Galt & Taggart Research. We currently provide coverage of key sectors of Georgian economy. As part of our energy sector coverage, we produce a monthly Electricity Market Watch, adapted here for Georgia Today’s readers. Previous reports on the sector can be found on Galt & Taggart’s website - gtresearch.ge.
ELECTRICITY CONSUMPTION AND GENERATION – SUMMARY OF 2019 Domestic consumption of electricity increased by 1.4% y/y and reached 12.8TWh in 2019. The growth is far below expected, as well as last years’ similar figures. The slowdown in growth is mainly explained by climate conditions. Additionally, a 7.8% decrease in Georgian Manganese electricity consumption reduced overall consumption growth by 0.7 percentage points. Electricity consumption dynamics of certain consumer groups are explained by legislative changes. Consumption by eligible consumers (also known as direct consumers) increased by 59.6% y/y, while distribution licensees’ consumption was down 11.6% y/y in 2019. From the group of distribution licensees, Energo-pro Georgia’s consumption reduced the most (-16.3% y/y), as several of its subscribers were registered as direct consumers. In line with the market deregulation started in 2018, all companies with an average monthly consumption over 5GWh were mandatorily registered as direct consumers. As a result, the number of direct consumers increased from two to a total 15 companies. Moreover, their share in overall domestic consumption increased from 12.0% in 2017, to 22.4% in 2019. Despite the slowdown in consumption growth, electricity imports and thermal generation increased by 7.8% y/y and 34.3% y/y, respectively. This growth is associated with a 10.1% y/y decrease in hydro generation, attributable to bad hydrological conditions. In 2019, the share of hydro generation in the total supply was at a 10-year low of 66.3%. Import of electricity increased by 7.8% y/y and reached 1.6TWh in 2019. Notably, for the first time this year, electricity was imported in July along with August – the months generally considered most suitable for export. A 68% of electricity was imported from Azerbaijan and the rest came from Russia (32% of total). The main import source during the JanuaryAugust period was Azerbaijan, with 91.1% of total imports. From September to November, Azeri import was replaced by Russian, with a 75% share in total. This switch is explained by the cheaper electricity import price from Russia – the average import price in August, when electricity was fully imported from Azerbaijan, was USc 5.2/kWh, while the average import price in October, when 99% of electricity was imported from Russia,
was USc 4.7/kWh (-8.8% difference). Trade deficit widened by 24.2% y/y and reached a record high of US$ 70.5mn in 2019. The cost of import increased by 3.4% y/y and reached $78.3mn (on average USc 4.8/kWh), from which c. US$22mn was spent on imports from Russia. On the other side, revenue from electricity exports was at a 10-year low of $7.8mn. A 58.8% annual decrease of electricity exports to a mere 0.2TWh is explained by a deficit on the local market and the comparatively low profitability of export markets. For the first time in 2019, electricity was included in the list of top 10 imported products. Its share in the country's total imports was 0.86% in 2019 and has been in this range (0.8%-0.9%) since 2017.
TARIFF MODIFICATIONS – ENGURI, VARDNILI AND GSE GNERC made significant tariff modifications for TPPs, Enguri, Vardnili and Georgian State Electrosystem. Moreover, the GNERC had approved the natural gas tariff for residential users by the end of 2019. Tariffs for Enguri and Vardnili were reduced due to the postponing of planned renovations of 2019 to 2021-22. The Enguri tariff decreased by 25.3% from 1.818 Tetri/ kWh to 1.358 Tetri/kWh, and Vardnili’s tariff almost halved from 4.002 Tetri/ kWh to 2.206 Tetri/kWh. According to the GNERC methodology, the tariff for the regulated companies operating in the electricity sector is set for a threeyear period, and their intermediate revision happens only if reality significantly deviates from the initial investment plan. The reason behind the 2020 tariff reduction was the postponed rehabilitation works on the Enguri tunnel and Vardnili’s electro-mechanical equipment, originally planned for 2019 and postponed until 2021 or 2022. The decline in the Enguri tariff will also affect the prices on the balancing market. The Enguri HPP has the smallest regulated tariff on the market, which, according to current market rules, is used as a reference price for balancing electricity purchased by ESCO from deregulated small HPPs during the MayAugust period. Respectively, power plants not having a direct purchaser will receive 1.358 Tetri/kWh from ESCO (instead of 1.818 Tetri/kWh) during the May-August
period of 2020. Notably, the SeptemberApril reference price was also changed recently but in the opposite direction, being increased by 15.9% y/y to 12.304 Tetri/kWh. The transmission fee of the Georgian State Electrosystem was reduced by 23.4% y/y. The tariff for 2020 is set at 1.013 Tetri per kWh, down from 1.323 Tetri/kWh in 2018-19. Direct consumers, exporters and distribution companies will pay this tariff, along with other service charges. The reduction of this tariff will affect the total service charges and decrease it by 12.9%.
TARIFF MODIFICATIONS – THERMAL POWER PLANTS Tariffs for thermal power plants were set for 2020-22. Thermal power plants have two sources of income – tariff for generated electricity and guaranteed capacity fee: 1) The methodology for generated electricity tariff calculation changed from fixed annual tariffs to fluctuate monthly ones, but the principle of covering only variable costs remained the same. Notably, the gas purchase tariff was set by GNERC at $143 per 1,000 m3, as it was in the previous tariff period. Thus, radical changes in these tariffs are not expected, only a slight increase might be observed in light of the currency fluctuations. 2) With a guaranteed capacity fee, the investor pays back the investment costs and gets a predefined profit margin. On the other hand, it is a source of reserve for the system. Guaranteed capacity fee is received by TPPs for its readiness to produce electricity upon a dispatcher's command. Guaranteed capacity charges increased for all five power plants by 25.8% y/y for 3rd and 4th blocks, by 5.3% y/y for Gardabani and insignificantly for Mtkvari Energy and G-Power. According to preliminary data, in 2020, the thermal power plants will receive a total of GEL 170.5mn as guaranteed capacity. This amount is paid by consumers and exporters in proportion to the electricity consumed. Importantly, the new Gardabani-2 Thermal Power Plant will operate under a different tariff regime and will not be a guaranteed capacity supplier. Its source of income is a 14-year guaranteed power purchase agreement at USc 5.5/kWh for 1,200kWh annual generation.
POLITICS
GEORGIA TODAY FEBRUARY 4 - 6, 2020
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Ukrainian MP Oleksey Goncharenko on PACE & Russia We should do so constantly and permanently.
INTERVIEW BY VAZHA TAVBERIDZE FOR GISP
WHAT WAS THE GEORGIAN DELEGATION’S TAKE?
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I was strongly supported by the Georgian delegation: they were the ones who voted against the certification of Russian credentials. Also Lithuania, Latvia, Estonia, almost the whole of Poland, and Sweden. In the Ukrainian delegation, of 12 people there was one from the pro-Russian party who voted for and all others were against.
he Russian Federation has paid RUB 70 million. It is a good price for a death license and they still kill Ukrainians in Ukraine, Georgians in Georgia, Britons in Salisbury, - Ukrainian MP Oleksey Goncharenko said at a session of the Parliamentary Assembly of the Council of Europe, where the issue of Russia’s voting rights was discussed. The Ukrainian MP also posed a question to Georgian President Salome Zurabishvili, who spoke at the session as the transitional president of the Council of Europe. The Georgian Institute for Security Policy (GISP) got the chance to speak to Goncharenko soon after.
THIS WAS THE FIRST PACE SESSION UNDER GEORGIAN PRESIDENCY. WHAT WERE YOUR IMPRESSIONS OF IT, AND OF PRESIDENT ZURABISHVILI'S PERFORMANCE? I cannot say I see any difference at the moment, differences are hard to achieve, but I believe and I hope that Georgia will come with some initiatives during the time of its chairmanship in the Council of Europe. I asked the Georgian
HOW WOULD YOU RATE THE EFFICIENCY OF THE SANCTIONS AND WHAT WOULD YOUR ARGUMENT BE TO THOSE WHO DON’T THINK THEY WORK?
President about new sanctions, one of the initiatives I think should come from the Georgian side. Unfortunately, she did not answer. In general, it was a long speech about many issues. There were some questions in the assembly but the speech was too long and there was not enough time to ask questions, because only limited people got to speak to her.
YOUR OWN SPEECH WAS TYPICALLY VERY CRITICAL OF RUSSIA'S ROLE IN GEORGIA AND UKRAINE. DO YOUR COMMENTS FALL ON DEAF EARS IN EUROPE? Those people who live closer to the Russian Federation understand me clearly. Those who live further away
have a different reaction. So, while some were coming and thanking us, saying that they support us, others were unhappy, saying that they are tired of listening to speeches about Russia. Today, Russia and Putin are the biggest challenges for the security of the whole world, so that is why I think they should listen to it and we need to speak out.
Sanctions really do work, and you can see it by the reaction of the Russian Federation, which is struggling and investing a lot of money to get rid of them. Dmitry Medvedev said that sanctions were the biggest problem for the Russian economy, so they do work. That is why they should continue their influence on the Russian Federation and I think we need new sanctions. That is what I asked President Zurabishvili and I think we all need to fight for this.
CNN Goes Crazy for Georgia
BY NINI DAKHUNDARIDZE
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eorgia has been catching CNN’s eye quite a bit lately, with the media company writing about Georgian cuisine on January 29, and
just two days later, on January 31, publishing an article about the Best 10 Georgia Locations. The first one about Georgian cuisine, written by Paul Rimple, a freelance journalist based in Tbilisi since 2002, who has been the Bureau Chief for Culinary Backstreets Tbilisi for four years now, highlights the very best of Georgian tra-
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ditional dishes. “The greatest gastronomic secret has been let out of the bag,” writes CNN, going into detail to praise Georgian cuisine, which is finally getting the acknowledgment it deserves. “Georgian food and wine, long revered for its individuality, exoticness, and delectability, is now finding its rightful
Journalists: Ana Dumbadze, Vazha Tavberidze, Nini Dakhundaridze, Tea Mariamidze, Tony Hanmer, Emil Avdaliani, Zaza Jgarkava, Nugzar B. Ruhadze, Beka Alexishvili, Elene Dzebizashvili, Maka Bibilashvili
place on tables around the world,” reads the article. “The best way to explore Georgian cuisine is to start with traditional fare, and no food says Georgia more than khinkali,” writes Rimple. He then advises on the do’s and don’ts with khinkali, underlining in a very Georgian-spirited way, “don't even think of using a knife and fork.” “Google ‘khachapuri’ and the iconic acharuli invariably comes up because, frankly, there is nothing like it in the world,” the author writes of the legendary Georgian dish. “It is the mother of all comfort foods, eaten with the hands by ripping off pieces of crust and dipping them into the arterially perilous fondue,” writes the CNN. While recommending Kharcho, the author calls it “ a spicy marriage of veal, tomato, garlic, and a plethora of spices.” The CNN food report describes six Georgian must-taste dishes: Khinkali, Khachapuri, Mtsvadi, Shkmeruli, Kharcho with Ghomi, and Chakapuli. While the article gives the background information on the food and Georgian traditions of cooking them, it also suggests the readers the best places in Tbilisi to eat the masterpieces of Georgian cuisine. The article published last Friday, written by Benjamin Kemper, a writer, guide and travel adviser, highlights 10 of the most spectacular touristic places to visit in Georgia. Although narrowing Geor-
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gia’s touristic potential to just ten places seems like a round of tough decisions, Kemper seems to have done a pretty good job. "Georgia may be small in size, but it still packs an astounding geographical punch,” reads the very first sentence of the CNN article titled ‘10 of the dreamiest places in Georgia,' published on January 31. The author starts by exploring the basic attractions of Georgia from the west – the Black Sea coast, to the east – where six of the highest mountains in Europe reside in the Caucasus. Kemper’s CNN story highlights his top 10 spots as Mutso, Ushguli, Vardzia, Gelati Monastery, Gergeti Trinity Church, Ananuri, Gomismta, Sighnaghi, Dartlo, and David Gareja. Additionally, the article gives background information about these culturally and historically significant locations, and sees the author promising that these ten places are sure to ignite the readers’ wanderlust.
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