Georgian prime minister presents package to stimulate economy

Georgia, Tbilisi, June 30 / Trend , N. Kirtskhalia/

On June 30, Georgian Prime Minister Nika Gilauri presented a package to media which will stimulate Georgian economy. The package is expected to be approved at governmental meeting on July 1.

Total of 260 million lari (1 dollar equals 1.66 lari) is expected to be attracted via sale of treasury liabilities. The funds will be spent to implement infrastructure projects.

Gilauri said the need for issue of liabilities is that the banks were able to secure assets as these papers do not contain any risk.

"One of the main components of the package is to create mechanisms to encourage banks," the Prime Minister said. "In particular, building companies are expected to be issued loans and regulations eased for banks."

Bankers believe the abolition of the optimal 30 percent reserve for the remainder of the property would allow banks to not rush to sell the property that they obtain via overdue loans.

The package calls for minimizing risks for commercial banks when issuing loans, which was limited by banks, despite the excess liquidity. However, it also was associated with a decrease in demand for loans because of the effects of global crisis.

"By bringing loan from the EBRD and the Asian Development Bank under sovereign guarantee, we intend to attract 700 million lari to the banking sector," Gilauri said.

A package to update the infrastructure of Tbilisi is scheduled to be designed which will help to crate thousands of new jobs. Gilauri said the funds will be directed not only to infrastructure projects (roads, water, etc.), but also to promote certain sectors of the economy.

The package also envisages a joint project by the Association of Banks, Association of Developers and the Georgian Chamber of Commerce and Industry to help construction companies to complete initiated projects.

In particular, the acquisition of the state apartments for those who live in homes depreciated in the old part of Tbilisi is the main point. The Georgian government annually spends 176 million lari for the repair of these houses.

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