Caucasian Business Week #101

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June 1, 2015 #101

June 1, 2015, Issue 101

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BE INFORMED, DO BUSINESS

GEORGIA

$80M HYDRO POWER PLANT WILL BE BUILT IN SVANETI REGION

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hedula 3 – this is the name of a new Hydro Power Plant (HPP) that will soon be built in Georgia’s Lower Svaneti region. Pg. 3

HOW ADJARA IS MEETING THE

2015 SUMMER SEASON

GEORGIA’S UNEMPLOYMENT RATE DROPS TO 11-YEAR LOW

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he 2014 unemployment rate was a decline of 2.2 percent on 2013 figures, when the country experienced 14.6 percent unemployment. Pg. 6

AZERBAIJAN REDUCES CAR IMPORT FROM GEORGIA

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HOLIDAYMAKING PRICES AT GEORGIAN RESORTS

ay 26-Some 1,737 cars worth $32.8 million were exported from Georgia to Azerbaijan in January-April 2015 or by 5.8 times less than in the same period of 2014. Pg. 6

Pg. 7

GOLD EXPORTS DOUBLE

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ccording to the official statistics, gold export from Georgia has exceeded 17,7 million USD through January-April of this year. However, the figure is more 1,8 times comparing to the same period of 2014. Pg. 11

MAIN RUNWAY AT TBILISI INTERNATIONAL AIRPORT NEEDS REPAIR

GEL STRENGTHENING VS ECONOMIC GROWTH Erroneous Dilemma and Theory Against GEL Strengthening

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he main runway at Tbilisi International Airport will soon undergo major repairs to make sure it meets internaPg. 11 tional standards.

NEIGHBORHOOD TURKEY’S ECONOMIC CENTRE CONTINUES TO SHINE

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s the only city in the world that straddles two continents, perhaps it’s no surprise that Istanbul is filled with contrasts. Pg. 13

WORLD NEWS OPEC SAYS GLOBAL OIL GLUT TO PERSIST TILL 2017

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rude supply from non-OPEC producers will continue growing for another two years, according to an OPEC draft report seen by Reuters. Increased production, mainly shale in North America, is a ‘turning point’ in the restructuring of global markets, it said. Pg. 13

KAZBEGI MARATHON: CHARITY TO HELP KIDS WITH LEUKEMIA Pg. 3

Pg. 5

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ightening of the monetary policy will decelerate the economic growth, representatives of both state sector and experts assert frequently. Is it correct to talk about such tight relations between tightening the monetary policy rate and the econom-

ic growth deceleration? In theory, this is correct, but in general, everything depends on specific cases and this is widespread approach in the economics. The Georgian sample shows that the relation between the strictness or softness of the monetary policy and economic growth is very insignificant.

REORGANIZATION OF GEORGIAN HEALTHCARE SYSTEM

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Global Alliance Presented Plans on World Healthcare 68-th Assembly

PASHA BANK TO ARRANGE FINCA BANK GEORGIA’S 20 MILLION GEL BOND ISSUANCE

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Mamuka Khazaradze: Abuse of Bank System’s Reputation will Fundamentally Shake All Sectors of Georgian Economy Pg. 9

Irakli Kovzanadze: Partnership Fund to Direct over 150 million USD Capital to Market in 2015 Temur Chkonia: Villagers Should not Demand Help from the Government

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Pg. 8

Caesar Chocheli: Georgia Needs Enterprises Working with the Use of Local Raw Materials Pg. 8 Giorgi Gakharia: We will be Involved in Discussions about Separating Banking Supervisory Functions from the National Bank of Georgia Pg. 8 Pg. 12

Currency

SAXO BANK LAUNCHES NEW MULTI-ASSET TRADING PLATFORM GLOBALLY AS TRADERS DEMAND SAME FUNCTIONALITY ON ALL DEVICES

CAN US GDP HELP GREENBACK EXTEND LAST WEEK’S RALLY?


2 MAIN EVENTS GEORGIA’S FUTURE EXAMINED AMID TENSE NATO-RUSSIA RELATIONS

GOVERNMENT NEWS

GEORGIA’S PM: WE WANT GEORGIAN DIASPORA TO RETURN HOME

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eorgia is stuck in a difficult place as it pursues its Euro-Atlantic future while facing continued pressure from Russia, says NATO Secretary General Jens Stoltenberg at a speaking engagement in the United States (US). After meeting US President Barack Obama, Stoltenberg addressed the Center for Strategic and International Studies (CSIS) in Washington D.C. and spoke about the tense relationship between NATO and Russia, and how the Alliance must “adapt” its current approach to global security to meet rising challenges presented by Russia.

GLOBAL CAMPAIGN RAISES AWARENESS OF GEORGIA’S TERRITORIAL INTEGRITY

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eople around the world are uniting to support Georgia’s sovereignty and territorial integrity. Dozens of people from more than 25 countries have pledged their allegiance to an internationalFacebook campaign by local non-governmental organisation Georgian Project, which aimed to increase international awareness of Georgia’s ongoing struggle against Russian oppression. The Georgian Project campaign shows people from all parts of the world holding banners that say Georgia’s occupied regions Abkhazia and Tskhinvali (South Ossetia) are part of Georgia. “We wanted to once again remind everyone that we are not alone; the whole world supports us and that we shouldn’t lose hope that one day our dream will come true and we will get our lost territories back,” said a representative from Georgian Project.

GEORGIA’S NATIONAL DEFENCE ACADEMY CELEBRATES 22ND ANNIVERSARY

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oday is the 22nd anniversary of the David Agamashenebeli National Defence Academy of Georgia, and to mark the occasion, a special celebration is being held at the Academy campus in Gori. The country’s President Giorgi Margvelashvili, Minister of Defence Tinatin Khidasheli and Chief of General Staff of the Georgian Armed Forces (GAF) Major-General Vakhtang Kapanadze attended today’s festivities. The event opened with a minute of silence to honour the memory of Georgian military servicemen who had died fighting for Georgia’s territorial integrity and others who had fallen in international missions. After this the military orchestra performed the state anthem.

JUDICIAL REFORM: PROSECUTOR GENERAL MAY BE ELECTED, NOT APPOINTED

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eorgia’s judicial system is undergoing reform. Lawmakers are currently debating several changes; one of which is the election, term and dismissal of Georgia’s Chief Prosecutor. Currently candidates are appointed to the role however Georgia’s Justice Minister believed it should be more democratic and transparent, and a person should be elected instead.

BNE.EU: “GEORGIA’S NEW DEFENCE MINISTER SAYS WESTERN SHIFT IRREVERSIBLE”

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ast week hundreds of American and Georgian soldiers stood shoulder-to-shoulder at a Georgian military base near Georgia’s capital Tbilisi and took part in a joint training exercise. Monica Ellena wrote a piece for news website bne Intellinews where she spoke to Georgia’s recently appointed Defence Minister Tinatin Khidasheli, who said the joint military exercises was more than just about strengthening the interoperability of the armed forces of the former Soviet republic with NATO forces. The Minister also admitted to have slight concern about Russia’s increasing soft power in the region, which portrays the West as sinful and alien to Georgia’s traditional values

June 1, 2015 #101

caucasian business week

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eorgia’s Prime Minister has made a plea to all Georgians living abroad to return home and help participate in the country’s development. At the country’s first professional forum for Georgian diaspora today, titled ‘Share Experience to the Homeland’, PM Irakli Garibashvili said the Government was doing its best to mitigate issues such as unemployment and poverty to make conditions right in the country so Georgian emigrants would return home and use their skills here. Today’s forum was hosted by the Office of the State Minister of Georgia for Diaspora Issues, attended by Government officials, the Patriarch of Georgia and invited guests, and focused on Georgia’s reforms, resources and migration-related problems. It was held at the Tbilisi Ivane Javakhishvili State University today, which also marked the Day of Georgian Diaspora. When the Prime Minister addressed the audience he made a plea to all Georgian emigrants and said his Government was doing its best to make conditions right in Georgia so they would return to their homeland. He said Georgians were “exceptionally talented” people and it was a huge tragedy for the country that more than a million citizens had decided to

live abroad while only 3.7 million remained in Georgia. He said a million Georgians living abroad was a significant number and the country needed Georgian diaspora to support Georgia’s development from wherever in the world they were. Without diaspora’s support, all the achievements and progress of the country “lost its value”. It is very difficult for me to understand why people don’t come back to their homeland for years. I know they have financial problems but every day is special and crucial for our country. Our country’s future is in our hands. It is a great responsibility to being the leader of the country, which has a unique culture, history, but do not forget the responsibility of citizens. The Government is unable to do something without the support and engagement of our citizens; they are the main source of power,” Garibashvili said. The PM believed current economic problems such as low wages and low job security, unemployment and poverty were some of the reasons why Georgian emigrants chose not to not return home. Ineffective use of our resources is the main problem of our country. Special research was carried out to study the potential of Georgia’s regions and it was discovered that we have huge potential

we can use. I can tell you that Georgia should not be a poor country, our citizens should not suffer poverty,” Garibashvili said. Meanwhile the recently established International Education Centre (IEC) was also a part of Garibashvili’s speech. The Centre, which he initiated last year, funded the studies of Masters and Doctoral programs for 77 young Georgian students in world leading universities in 2014. This year the Centre planned to finance the studies of 115 students. Garibashvili emphasized the most important component of the IEC was a clause that obliged funding recipients to return home after their studies for a minimum of three years and contribute their new knowledge to the local market. He said this would develop the students’ civic responsibility towards the state. At the end of his speech Garibashvili called on all Georgian living abroad to return home and “get involved” in the development process of the country. We are extremely interested to motivate emigrants to return home. This is my dream and main goal,” he said. After Garibashvili, Georgia’s Catholicos-Patriarch Ilia II addressed the forum participants. Before we say what emigrants should do for their homeland, first we must think about what Georgia does for them. We must do everything to strengthen their national identity. I wish you to return to Georgia soon. There is plenty of work for you here. You must do this work, not others,” the Patriarch said. Additionally, within the event the Office of the State Minister of Georgia for Diaspora Issues signed Memorandum of Understandings (MoU) with Tbilisi State University (TSU), the World Bank and the International Diaspora Engagement Alliance. The MoU between the Ministry and TSU highlighted mutual cooperation regarding educational issues, which includes planning and sharing of ideas about Diaspora issues; the MoU between the Ministry and the World Bank highlighted special projects which will be targeted for emigrants; and the MoU with the International Diaspora Engagement Alliance emphasized regional partnership in the Eastern Europe region.

WIPO BACKS GEORGIA TO ESTABLISH INTELLECTURAL PROPERTY SYSTEM

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specialized intellectual property agency of the United Nations is helping to develop Georgia’s economy by supporting the country develop an intellectual property system that will support innovative startups. The World Intellectual Property Organization (WIPO) is sharing top international experience with Georgia about how to create innovative enterprises. WIPO is a self-funding agency with 188 member states, including Georgia. WIPO Director General Francis Gurry is visiting Georgia and holding meetings with Georgian officials to learn about the country’s progress developing an intellectual property system. Today Gurry met Georgia’s Economy Minister

and Vice Premier Giorgi Kvirikashvili. At the meeting the sides focused on evaluation and commercialisation of intellectual property issues. Development of an intellectual property system was one of the priorities of the Georgian Government, within the Deep and Comprehensive Free Trade Area (DCFTA), Minister Kvirikashvili noted. Yesterday Georgia and WIPO signed a Memorandum of Cooperation that aimed to create a strategy to support innovative activities and develop a geographical indications protection system. Georgia became a member of WIPO in 1991. WIPO is one of the 17 specialised agencies of the United Nations. WIPO was created in 1967 to encourage creative activity, to promote the protection of intellectual property throughout the world.

The WIPO website stated the agency’s mandate was to “help governments, businesses and society realize the benefits of IP [Intellectual Property]”.

PARLIAMENT TAKES CONTROL OF GEORGIAN BANKS

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anking Supervision Department may separate from the National Bank and be established as an independent legal entity, if Parliament supports the Budget and Finance Committee Chairman, Tamaz Mechiauri’s initiative. How reasonable is this initiative taking into account the national currency’s fluctuations. The fact is that the public has serious questions about the banking system, – whether the national currency depreciation was caused by the banks’ speculative transactions. On the one hand, banks control all the transactions, on the other hand, the

BUSINESS WEEK caucasian

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Nadiradze Street 8 Director: Levan Beglarishvili Mobile phone: 591 013936; 577472234 WWW.CBW.GE Email: caucasianbusiness@gmail.com

information about these transactions is classified. In the backdrop when all agree that the current fundamental factors affecting national currency devaluation are exhausted and despite this, the lari is still strengthening, it is naturally that the main questions should be put to the market’s major players. The arguments, which are guarded by banks in this situation, basically mean the integrity of commercial secrets. In this situation, two things are noteworthy: The first – when it comes to the problem such as the devaluation of the national currency, ie, the

problem of national importance, why the banks should not have the obligation of information disclosure. Second, – why specific banks’ requirements in the foreign exchange market which are derived from the economy should be considered. As for the term a commercial secret, it means the protection of the information whose disclosure could harm the commercial interests of private companies. Against this background, the Parliament’s requirement to seize control of commercial banks, seems to be legitimate.

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

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

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


June 1, 2015 #101

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caucasian business week

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KAZBEGI MARATHON: CHARITY TO HELP KIDS WITH LEUKEMIA

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his year, on September 5th, the tradition-turned “Kazbegi Adventure Marathon” will be held for the sixth time. The event will take place in small town Stepantsminda and the surrounding areas, with the beautiful Kazbegi Mountain in the backdrop. The marathon is international and both Georgian and foreigner running enthusiasts participate in it. The participants and their fans have the opportunity to enjoy alpine fields, ancient tower ruins and beautiful churches. The eye-catching environment, clean air and enormous mountains will grant them unforgettable memories. The “Kazbegi Marathon” slogan is “Child Leukemia is Curable.” Each registered member automatically becomes a charity worker. Part of the fee paid during registration will go to benefit children sick with leukemia, which includes oncological and hematological patient coverage who’ve arrived from regions and are undergoing treatment in Tbilisi’s Parents’ House. The “Kazbegi Marathon” benefits healthy lifestyle implementation in Georgia and contributes

in the betterment of Small town Stepantsminda’s residents’ economic state. The marathon will be held on 4 distances: - Full marathon (42km) - Half-marathon (21km) - Fun Run (8km) - Relay Race (42km) The first three distances are individual, as for the Relay Race– which is taking place for the first time this year – it’s meant for groups and organizations. Companies operating in Georgia have a chance to create their own groups, participate in the relay marathon and win special prizes. On September 4th, the day before the marathon, the participants will be able to enjoy themselves at a traditional pasta party, sharing impressions and experiences with one another. After the marathon’s conclusion, each runner will be granted a sports’ massage. Every marathon participant who reaches the finish line will be rewarded with a medal and a certificate. Official website for the marathon: www.kazbegi-marathon.com


4 HEADLINES NEW FLIGHTS CONNECT TBILISI WITH EGYPTIAN RESORT TOWN HURGHADA

INTERVIEW caucasian business week

PARTNERSHIP FUND TO DIRECT OVER 150 MILLION USD CAPITAL TO MARKET IN 2015 Irakli Kovzanadze, the Partnership Fund executive director, talks about the Fund’s activity and the current problems before the Georgian economy

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ne of Egypt’s carriers is launching direct flights between Georgia’s capital Tbilisi and Egypt’s seaside resort town Hurghada. From next week the two cities will be linked via direct Air Cairo flights. The Cairo-based airline announced it would perform direct flights between Tbilisi and Hurghada four times per week from June 2, 2015. This decision was made at a meeting between Georgia’s Ambassador to Egypt Archil Dzuliashvili and Egypt’s Minister of Civil Aviation Hossam Kamal. The meeting was also attended by Air Cairo’s chairman Yaser Ramli.

ISRAEL AND CHINA WILL INVEST IN GEORGIA’S ENERGY SECTOR

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hina and Israel’s largest companies have pledged to invest in Georgia’s energy sector. Businessman Mikheil Mirilashvili, head of PEGASUS EastWest – an international, privately-held entity that focuses on developing businesses in the world’s fastest growing emerging markets – and representatives from China’s CEFC (Clean Energy Finance Corporation) met Georgia’s Prime Minister today and spoke about their plans to invest in the country’s developing energy market.

TBILISI TO HOST TEDX TBILISI 2015

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fter one year off, TEDxTbilisi is back for another exciting event. The third annual TEDxTbilisi event will be held on June 20, 2015 at 13:00 at Free University (Kakha Bendukidze University Campus 240, David Agmashenebeli Alley). TEDxTbilisi is an independently organized one-day event licensed by TED, a nonprofit devoted to sharing innovative and inspirational ideas. Each year we bring together talented people, experts and professionals from a wide variety of fields to talk about topical issues, often from extraordinary, unexplored dimensions.

DECLINE IN WINE EXPORTS MAY REDUCE PURCHASING PRICES FOR GRAPES

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good crop of grapes is expected in Eastern Georgia this year, but a sharp decline in exports is likely to have a negative impact on the purchase price as well as on the purchase of grapes in general. According to the National Wine Agency, in total 59 million bottles of wine were exported from Georgia to 46 countries in 2014, which is 26% more than in 2013, but at the end of 2014 and beginning of 2015 exports dropped significantly mainly because of the economic crisis in Ukraine and Russia. Accordingly, the demand for grapes is likely to fall as well.

- Mr. Irakli, you are reported to have introduced innovations into the production sector. Namely, the project of the so-called Sandwich Panels has come to a final stage. What does the project call for? What stage has the project reached and what concrete plans will be implemented under this project? - In June we will solemnly mark the successful completion of the project. This is the construction material that is used in the industrial construction and it is cheaper than the frames of reinforced concrete. Its installation takes less time. The enterprise has been constructed on the Rustavi highway and it was equipped with modern Italian and Korean technologies. The planned power of the production line will be 2.8 million units of M2 panels a year. 45% of the products will be sold in Georgia, while the remaining 55% will be exported. Domestic company LLC ICES is our partner in the project and its investment value makes up 6 million USD. - The Authorities have declared many times the agriculture sector is a priority direction, but the fact is, the field’s recovery remains a major challenge today. What is the fund’s attitude to the sector? Do you finance projects in this sector and what kind of specific projects do you prioritize? - As to our activity in the agriculture sector, we have recently launched the project for growing and processing blueberry. We have already financed the project and in June we will unveil a processing plant and receive the first harvest. Located in the settlement of Laituri, the Ozurgeti District, the enterprise will process blueberry crops through shock-freezing, and then pack and prepare the product for sales. The project is being implemented jointly with our partner LLC VANRIK AGRO and, besides the processing enterprise, the project also calls for organizing blueberry plantation on 70 hectares. - Mr. Irakli, the Partnership Fund was set up in 2011 to promote the domestic business and to implement projects in the priority sectors. How successfully does it fulfil this mission? - In this case I will refer to the figures. In September

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ompany “TELASI” will pay dividends to the shareholders of the company for the first time. The decision has been adopted at the shareholder’s meeting. According to the results of 2014, the shareholders decided to pay dividends of 8 802 000 GEL (in cash) through the upcoming 60 days. JSC “TELASI” has two big and several minatory shareholders. “Inter RAO” holds 75%-share of “TELASI”, while 25% is stately-owned (Partnership Fund).

the most important projects. This year, jointly with international consulting company Kohl&Partner, we have explored the potential of the resort and developed its development concept that suggests that the rehabilitated resort will genuinely compete with other spa resorts of Eastern and Central Europe. The concept calls for restoring thermal baths, rehabilitating state-owned hotels, constructing hotels equipped by modern technologies and medical devices, developing medical and spa tourism, constructing children entertaining centres and water attractions, arranging a golf playground, opening a shopping mall and arranging tropical gardens. Famous French company Compagnie de Vichy has already joined the project. The company manages famous spa and thermal resorts in Europe. The company agrees that in the future Tksaltubo balneology resort operators use its logo. As to the already implemented projects in the sector, at the beginning of 2015 we unveiled a 5-star Rixos hotel complex in Likani. This unique project is valued at 48.5 million USD. The asset is located on the territory of the former fourth management and it consists of a restaurant, a café, conference halls, football playgrounds, entertainment centres, a spa centre and a swimming pool. The international network of Rixos is the hotel operator and this is its first Rixos hotel in Georgia. The project has been implemented by a joint investment of our fund and Kazakh KazmunaiGas. The project was employing about 500 domestic workers during the construction works, while after the hotel inauguration about 200 residents of Borjomi have found new job places. Royal Baton hotel in Kvareli and Gino Wellness hotel in Akhaltsikhe also operate successfully. We finished the construction works in 2013. - Several weeks ago you announced plans for establishing exports promoting agency to support domestic companies. What is the goal of the agency and how will the agency assist exporters? - The fund has signed an agreement with exports promotion Italian Agency of Sace that will assist us in forming the agency structure and developing products and procedures for financing exporters. The agency will launch operation in 2-3 months to promote exports of Georgian products. We have chosen Sace, because Georgia has no experience in managing such an agency, while this company has got much experience and made huge contribution to the Italian economy. - How may citizens will be employed in these projects by the end of 2015? - The ongoing 9 project will employ about 3000 persons, however, along with a growth in the volume of projects, the number of employees will also increase.

An interview with Advisor to the President on Economic Affairs George Abashishvili

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THE STATE WILL RECEIVE DIVIDENDS FROM “TELASI” FOR THE FIRST TIME

2014 we published our financial report and its audit developed by KPMG, a member of the big four international auditor companies. Under the report, the Fund’s profits in 2013 marked 73.569 million GEL, up 8% compared to the previous year. And total revenues marked 979 million GEL. Total assets rose by 3% and exceeded 5 billion GEL. Total volume of investment projects of the Fund rose to 2 billion USD. At this stage, the 2014 financial report is being audited and I believe, the figures will be far impressive. Along with other active operations, we plan to direct over 150 million USD capital to the market in 2015. The power sector is one of the priority directions and we will inaugurate an implementation of the Post-Soviet Georgia’s major project this summer. I mean NENSKRA HPP project that is the biggest construction project and the biggest HPP to be constructed in the history of independent Georgia. The Korean State Water Company is our international partner in this project. I would like also to note EBRD, ADB and Korean ExIm Bank have officially confirmed their participation in the bank loans component. EBRD will finance the project by 220 million USD. Another major project in the power sector calls for constructing a 230 megawatt combined-cycle steam power plant in Gardabani. The construction works started at the beginning of 2014. The works have been completed, in practice. The asset will join the system this summer and the country will receive additional 1.8 billion kilowatt-hour electricity a year. In case of problems in Georgia’s power system, the Gardabani steam power plant will provide continuous electricity supply in the shortest period. The plant’s investment value has exceeded 220 million USD. The project has been implemented jointly with our subsidiary Georgian Oil and Gas Corporation (GOGC). - The tourism sector is one of the priority directions of Georgia. Your fund is very active in this sector. You have mentioned the hotels unveiled by you… What projects are you implementing now? - Our team is intensely implementing several serious projects, both small and major hotel projects. For example, we are implementing a medium-sized hotel project in Kutaisi. As a result, we will introduce an international hotel brand to Kutaisi, for the first time. This will be a serious statement for the Region and we hope other international brands will take a sample of that company. In the near future we will launch construction of a 5-star Hyatt hotel on Rustaveli Avenue in Tbilisi. We also plan to implement a 4-star international brand hotel project in Tbilisi. The consolidated investment value of both projects makes up 100 million USD. The Tskaltubo resort zone rehabilitation project is one of

ADVISOR TO THE PRESIDENT: THERE ARE SPECIAL STRUCTURES TO INVESTIGATE ABUSES BY BANKS

GEORGIA BUILDS BRIDGE TO GERMAN, TURKISH AND POLISH BUSINESSES erman, Turkish and Polish businessmen have presented their products and services to the Georgian market and established contacts with potential business partners and clients at Georgia’s largest trade fair, held in capital city Tbilisi last week. Two exhibitions held on the same day - Expo Germany and Caucasus Build – saw more than 200 companies from 21 countries gather in Georgia’s capital Tbilisi. The exhibition was held on May 20 in the third, fourth and eleventh pavilions of the city’s Expo Georgia exhibition centre.

June 1, 2015 #101

- You strongly negatively assessed the initiative to separate the Banking Supervision Agency from the National Bank, which had already been sent to Parliament. What are the dangers, if it is adopted? - The main principle is that the economy should be free from political influence, and the abovementioned initiative was not submitted on the basis of economic motives. It is obvious that there is no economic justification for why banking supervision must be carried out separately from the National Bank. The motivation of the project clearly indicates that the project was designed for political reasons. It states that in different countries there are different successful models of banking supervision, including this that operates in Georgia. If all of these models are successful, there is no explanation as to why one already existing successful model needs to be changed to another. The argument that it is necessary to adopt it only because this model is valid in some countries is unconvincing. The motivation part should have a clear and professional explanation of why the current system should be changed, and why the other system will be better.

- The initiators of the project say they want to put an end to the National Bank’s sole control of the banking system of the country. Is this argument convincing? - Members of the National Bank’s Board are appointed by the parliament. The board includes 7 people, and sole control there is almost impossible. Let me remind the MPs that in 2016 four seats will be vacant in the Board, in 2014 another member of the Board was approved - the process was transparent and included experts, professionals, members. This system makes the sole management of the National Bank virtually impossible. Presented by the MPs system provides the deputies nomination of members of the Board of the National Bank by the parliamentary groups that will immeasurably increase the risk of politicization, while the current system envisages much more serious involvement of professionals and experts in the selection of candidates to the board. - If the system of appointment of members of the Board remains intact, the question of the separation of the supervisory body will be on the agenda - what will be the position of the President? Will it be negative, as it is now? We have to see in what way the debates on this issue will be held in Parliament, but I repeat that while there is no clear explanation of the need for establishment of an independent supervisory authority and weakening the National Bank. Therefore, we cannot talk about the support of this document. We will not support any single initiative that could harm the economy. - Whether this initiative is associated with statements by a number of ministers who blame the large commercial banks for the weakening of the national currency? We must clearly understand that it is necessary to exercise caution in any statements relating to the banking system, since this sector is one of the most stable in Georgia.

Of course, this does not mean the inviolability of the banks, but the political pressure on the commercial banks and the decisions that can cause fluctuations in the banking system are very dangerous. Investors and shareholders are behind the banks, the banks reputation is very important for the business climate of the country. Such statements are a very bad signal to investors. At the same time, if a bank commits an offense, there are special structures that can investigate it under the law. But any solution that do not contribute to the stability of the banking system, including the issue of supervision, are absolutely unacceptable. - Who of the expert community and the banking system is involved in the development of the project? Nobody. During his speech in the Parliament, President said that the government should consult with the business when making decisions related to the economy. The project we are talking about directly concerns the banking sector, but representatives of the financial system were not asked in the drafting process. That is, the document was adopted without any consultation. - Many experts accuse the National Bank of conscious devaluation of the national currency. Do you have any questions to the National Bank? The issue of devaluation of the national currency is much more complex than the activity of one particular institution, including the National Bank. I am not a supporter of conspiracy theories and believe that now is not the time for mutual accusations that are interesting to nobody. Now we have to cooperate and have a clear vision of the actions needed to resolve the situation. - What is your forecast concerning the national currency rate? On the one hand, imports have reduced, respectively, the outflow of currency. On the other hand - foreign exchange earnings have increased. Accordingly, there are no obvious economic factors that have contributed to the decline in the country’s currency.


June 1, 2015 #101

ECONOMIX

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caucasian business week

GEL STRENGTHENING VS ECONOMIC GROWTH Erroneous Dilemma and Theory against GEL Strengthening

TOP STORY

Nodar Chichinadze, President of the Association of Young Financiers and Businessmen

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ightening of the monetary policy will decelerate the economic growth, representatives of both state sector and experts assert frequently. Is it correct to talk about such tight relations between tightening the monetary policy rate and the economic growth deceleration? In theory, this is correct, but in general, everything depends on specific cases and this is widespread approach in the economics. The Georgian sample shows that the relation between the strictness or softness of the monetary policy and economic growth is very insignificant. Let’s start with one diagram (Diagram 1) and then we will wider cover the issue. The diagram shows the dynamics of monetary policy rate and the economic growth in 2008 to 2014. Let’s discuss separate periods due to the change in these two parameters: - In the first quarter of 2008 the refinancing rate was 12%, while the economic growth rate marked 11%; - In the fourth quarter of 2008 the refinancing rate was 10% and the economic growth rate was minus 5.6% (but this is a post-war indicator); - In the second quarter of 2009 the refinancing rate was 6% and the economic growth marked minus 8.7%; - Up to the third quarter of 2010 the monetary policy rate was tightened to 6.25% and the economic growth rate marked 7.7%; - In 2011 the monetary policy rate was tightened again to 7.5%, while the economic growth marked 8.6%; - In 2012 the monetary policy rate decreased to 5.25%, while the economic growth shrank to 3.2%; - In 2013 the monetary policy rate continued falling and the economic growth rate also fell; - In the first quarter of 2014 the monetary policy rate fell to a historical minimum, while the economic growth hit 7.6%; - In the next quarters of 2014 economic growth rate was shrinking amid the smooth monetary policy; Average annualized indicators also clearly demonstrate a weak relation between the monetary policy rate and the economic growth, that is, the level of the monetary policy rate o and the economic growth rate on average due to the years. These tendencies are reflected in the Diagram 2. The diagram shows the lowering the monetary policy rate results in decelerating the economic growth rate and on the contrary, the monetary rate growth accelerates the economic growth pace. And now I will try to explain the reasons for this situation, while the stricter economic policy rate is expected to decelerate the economic growth rate. WHY WILL NOT STRICTER MONETARY POLICY RATE DECELERATE THE ECONOMIC GROWTH RATE? The NBG monetary policy affects a supply of credits to the economy, consequently, the economic activity and economic growth, but this is only a theory and even this theory acts or does not act in this or that specific situation. We frequently talk about various economic processes; we rarely take into account the economic model and structure of the country. For example, we say that the GEL devaluation is useful for the exports’ competitive capacity. We say the floating exchange rate is good, we do not take into account the most important factor – the economy dollarization level. Because of the high level of dollarization, a growth in the exports’ competitive capacity through the GEL rate devaluation is unimportant compared to the losses from an increased value of foreign currency denominated loans. The higher the dollarization coefficient, the lower monetary policy efficiency and its affect on economic developments. The money for the economy is the same as the blood for the body. The NBG makes influence on the money mass through monetary policy, but its influence is confined with only the GEL mass, because of the high level of dollarization the NBG influences only a small part of total money mass (including foreign currency). Consequently, affect of its policy on total economy is very low.

As of April 1, 2015, 65% of deposits and 64% of loans are denominated in foreign currency. What should we expect in this situation if the NBG tightens the monetary policy? This decision will bring the following process: The rise in the interest rate by the NBG affects the bank sector’s interest rate. This signifies loans become more expensive and the demand for loans falls, the economy crediting shrinks and the economic growth decelerates. But the NBG is able to carry out similar steps on GEL denominated loans. Consequently, the higher the dollarization coefficient, the less the NBG policy influence on the economy. Amid a 65% dollarization of the economy, considerations as if stricter monetary policy will decelerate the economic growth are erroneous by about 65%. Indeed, the NBG is able to make the GEL more expensive, but this will not affect the interest rates on USD loans and, finally, no extreme negative affect will be made on economic growth. The NBG has declared several times stricter monetary policy will negatively affect the economic growth and the GEL strengthening through monetary instruments will be more harmful than the GEL devaluation, but, I believe this is not a correctly determined dilemma. Monetary instruments may be used for strengthening the GEL without negative affect on economic growth. First of all, because of the high level of dollarization this tightening makes insignificant affect on economic growth. On the other hand, an alleviation of the burden on USD denominated loans will make far positive affect on business bodies, on their economic activity and in whole on the economic growth. HOW TO STRENGTHEN GEL The NBG keeps genuine leverages for making urgent affect on the GEL exchange rate: deposit certificates, minimum reserve requirements, refinancing loans and refinancing rate (in this case I do not talk about currency interventions). Deposit Certificates – two years ago, as of June 27, 2013, the volume of deposit certificates was 850 million GEL, that is, the NBG borrowed this amount from commercial banks, in other words, the NBG extracted this mass from turnover. Since then the volume of deposit certificates was permanently decreasing. Its volume shrank to 280 million GEL as of May 20, 2015. This signifies the NBG has returned 570 million GEL to commercial banks. Through this instrument the NBG is able to extract the GEL volume. Minimum Reserve Requirements – Commercial banks preserve part of the accumulated money at the NBG. Today, the minimum reserve requirement makes up 15% in USD and 10% in GEL. For many years these indicators were changing in various directions: from 2% to 10% in GEL denominated deposits and from 5% to 15% in USD denominated deposits. It is worth noting following the 2011 rise in inflation, the minimum reserve requirement in USD increased stage by sage from 5% to 10% and later to 15%. This norm remains in force today and currently, commer-

cial banks have preserved 1.5 billion GEL minimum reserve requirement at the NBG. Under the today exchange rate, this sum makes up 670 million USD. If the minimum reserve norm in USD shrinks to 10%, commercial banks will have 223 million USD free money resources. As a result, the USD deficit in the Georgian economy will considerably decrease. If the rate shrinks to 5% (the level of 2011), commercial banks will have 445 million USD free money resources. This mechanism will make significant positive affect on the GEL exchange rate. Refinancing Rate and Amount of Loans – Rise in the refinancing rate and lowering the amount of loans, which currently exceed 1 billion GEL, will shrink the GEL supply and make positive effect on the exchange rate. Why does not the NBG resort to these measures? The first argument is the economic growth will decelerate. At the same time, the main goal of the NBG is to reach the 5% target inflation rate. Today the inflation rate is 2.5%. Is the 2.5% inflation real amid the 30% devaluation of GEL? Does the official inflation indicator reflect the reality? Statisticians are to answer these questions, but I will try to express my considerations too. ADEQUACY OF INFLATION INDICATOR For the last 3-4 years the inflation rate in Georgia is either negative or near the 0 point. This happens after 15% inflation rate in 2011. What has happened in 2011? To curb the two-digit inflation, along with tightening the monetary policy, the NBG revised the methodology for calculating the consumer prices, supposedly, to mask the reality and decrease the inflation indicator. Namely, the ratio of food products in the consumer basket fell to 30% from 40%. The ratio of expenditures on healthcare, residential house, water, electricity and natural gas have also decreased, while the ratio of alcoholic beverages, entertainment and holidaymaking have increased. Moreover, the ratios of 5 main cities have changed in the total indicator, where prices are examined. Namely, the ratio of Tbilisi decreased to 54.8% from 61.6%, Kutaisi’s ratio shrank to 17.8% from 18.2%, the ratio of Batumi has slightly increased to 11% from 9.3%, the ratio of Gori has risen to 7.2% from 6.4%, while the ratio of Telavi has increased to 9.2% from 4.5%. This signifies the consumer prices calculation methodology was revised to show as if living conditions had been improved in the country and expenditures of an averaged statistical citizen of Georgia had increased on luxury things and decreased on food products. Therefore, referring to law inflation indicators as an argument for not tightening the monetary policy is incorrect and the real rise in prices may differ from the official statistics. P.S. if the arguments work in the USA, this does not signify the same arguments will work in Georgia too. Tightened monetary policy may make negative affect on the economic growth in the USA too, but in the country with a high level of dollarization, this influence is far insignificant.

Diagram 1

Diagram 2

$80M HYDRO POWER PLANT WILL BE BUILT IN SVANETI REGION

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hedula 3 – this is the name of a new Hydro Power Plant (HPP) that will soon be built in Georgia’s Lower Svaneti region. Turkish company Anadolu Tasıt Ticaret A.S. announced it would invest $80 million USD to build the 51 megawatt Khedula 3 HPP in Georgia. The HPP will be built on Khedula River in Lower Svaneti. Today Georgia’s Energy Minister Kakha Kaladze and Anadolu Tasıt Ticaret A.S. Energy Group Coordinator Tugban Izzet Aksiyom signed a Memorandum of Understanding (MoU) on establishing the new power station. Specifically, the MoU outlined Anadolu Tasıt Ticaret A.S. had 18 months to complete a feasibility study on the river. The Turkish company has already funded the creation of the Paravani HPP in Georgia’s Samtskhe Javakheti region. “We are one of the largest investors in Georgia. More than 100 million US dollars has been invested in Georgia by our group. For us and other investors it is important to see that there is a stable political environment in the country. We will continue investing in Georgia. The Paravani HPP project is one of the bright stars in the region,” said Aksiyom. Georgia’s Energy Minister said the Georgian Government was “doing everything it can” to utilise the all of the country’s natural resources. “This is being done for our people and for our country. This is being done for Georgia to be an energy independent country,” Kaladze said. Meanwhile the Energy Minister noted an official announcement about the problematic Khudoni Hydro-Electric Power Plant in Svaneti region will be made in the coming days. “The decision about Khudoni HPP has already been made [and] society will learn about it in few days. Right now we are negotiating with an investor about the state’s participation in the project,” Kaladze said. Problems have surrounded the establishment of the Khudoni HPP for more than 20 years. Construction of the Khudoni dam on the Enguri River in western Georgia began in 1986 but was halted in the late 80s after protests over environmental concerns. The project has remained unfinished since then. Environmentalists believed construction of the 200m dam and reservoir for the Khudoni HPP would cause the Khaishi village to flood, requiring resettlement of local residents. For this and other environmental reasons, local residents, environmental protections groups and some experts are against construction of the vast hydro power station. Despite this the Government maintained that construction of the power plant will give the country energy independence and economic benefits.


6

BUSINESS

caucasian business week

June 1, 2015 #101

BUSINESS ASSOCIATIONS NEGATIVELY EVALUATE CHANGES IN THE BANKING SUPERVISION

B GEORGIA’S UNEMPLOYMENT RATE DROPS TO 11-YEAR LOW

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he number of people employed in Georgia is increasing. Official statistics from the country’s national statistics office, Geostat, revealed at the end of 2014 the unemployment rate in Georgia was 12.4 percent – the lowest it has been in 11 years. The 2014 unemployment rate was a decline of 2.2 percent on 2013 figures, when the country experienced 14.6 percent unemployment. Since 2006 unemployment in Georgia went from 13.6 percent, peaked in 2009 at 16.9 percent and has continuously dropped each year since then. This results show that employment has increased in Georgia. I understand the problems of those [who fit into the] 12.4 percent [unemployment category] but we have to solve all the problems step-by-step,” said Georgia’s Finance Minister Nodar Khaduri. In terms of gender, last year 10.4 percent of women were unemployed and 14 percent of males were unemployed. These figures showed a 1.9 percent drop and 2.5 percent drop respectively. Geostat noted the unemployment rate did not change for the 55-59 age category, while it reduced in all other groups. A sharp reduction (11.3 percent) in unemployment was seen in the 15-19 age group, however this category also showed the highest unemployment rate of all other age categories.

Unemployment remained highest in Georgia’s capital Tbilisi however this had reduced by 6.6 percent in the past year, said Geostat. As unemployment drops, employment rises. In 2014 the country’s employment rate increased by 1.6 percent. Geostat data showed employment increased in rural areas (0.8 percent), while it was decreased in towns (0.5 percent). Most people in Georgia were self-employed (60.2 percent of total employment figures) however trends since 2006 showed more people were being hired as employees. Of the working-age population (aged 15-65), 66.5 percent were ‘economically active’ meaning they were employed, said Geostat. The employment rate of this group of people increased by 1.7 percent in the past year. Meanwhile today at the first Diaspora-Profession Forum Georgia’s Prime Minister Irakli Garibashvili said Georgia “should not be a poor country”. Our main problem is that we use our resources incorrectly. We do not see our resources, which are unique,” he said. “Several months ago we learnt the potential of Georgia’s regions and discovered that we have huge potential that we can use.” He believed unemployment was the main problem in Georgia and that was the reason why Georgia’s citizens who lived abroad did not return to their homeland.

THE LAST YEAR RECORDS 5.2% UPTURN IN NUMBER OF HIRED EMPLOYEES

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ccording to “Sakstat”, 39,8% of employees are hired (annual growth – 1,1 percentage point), which is the maximum of 11 years. The share of self-employees is declined to 60,2% among the employees. As of official data, employment level is grown by 1.6 percentage point in the cities as well as in the village type settlements. Activeness level is decreased by 0.5 percentage point in the city type settlements, while the index is grown by 0.8 percentage point in the village type settlements. It should be noted, that the share of economically active population has amounted to 66.5% of working-age people (15 years old and elder people) in 2014. Population activeness level is increased by 0.3 percentage point comparing to the previous year, whereas employment level – 1.7 percentage point. In addition, employment level has reached the highest index in 2014 through the last 11 years, while activeness level of 2014 is merely behind the index of 2012.

As for the employment from the gender point of view, it should be noted that unemployment level has been reduced in women (by 1.9 percentage point) as well as in men (by 2.5 percentage point) in 2014 comparing to 2013 and respectively, the index has made up 10.4 percentage point (the minimum index of the last 14 years) and 14.0 percentage point (minimum index of the last 7 years). Usually, unemployment level is higher among men comparing to women. This is conditioned, because most of the unemployed women are housewives and they belong to the category of non-active population. It should be noted, that activeness level is insignificantly increased in both: women and men in 2014 comparing to 2013. However, the figure has amounted 57.1 and 77.4 percentage point. Employment level among women has reached the highest rate in 2014 through the last 13 years, while in men – through the last 11 years and respectively, the figure has made up 51.1 and 66.6 percentage point.

THE NEGATIVE TRADE BALANCE OF GEORGIA IS ON 3 YEARS’ MAXIMUM IN JANUARY-APRIL

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he negative trade balance of Georgia is on 3 years’ maximum in January-April. In addition, the index is merely behind the rate of 4 months of 2012 , when the balance between export and import has amounted to 1,737 billion USD. According to Sakstat, the negative trade balance is grown by 51 million USD comparing to January-April of the previous year and it

amounts to 1,637 billion USD as of 4 months of the year. However, Georgia had trade relations with 126 countries through 4 months, whereas the figure has been 123 in 2014. In addition, export exceeded import merely with 26 countries from the trade partners of this year with total volume of 91.3 million. It should be noted, that trade deficit has amounted to 1.728 billion USD with 98 trade partners.

usiness Association of Georgia, American Chamber of Commerce, International Chamber of Commerce, EU-Georgian Business Council, Georgia Employers Association and the Association of Bank of Georgia released a statement saying that they extremely negatively assess unfounded suspicions towards the country’s banking system and individual commercial banks about the alleged participation in some currency speculation. For more than two years, the business sector has been talking about the need for significant reforms to stimulate the economy, such as the abolition of income tax, the private pension system reform, the development of stock markets, capital markets support and other. Against this background, we could not understand the amendments to the organic law on the National Bank initiated in the Parliament, which basic essence is to deprive the National Bank of the supervision function of the financial sector. If we recall the recent statements by a number of officials about the lack of access to information

on banking transactions, the above-mentioned legislative initiative to be directly perceived as the threat to the banking secrecy guarantees, which represent the cornerstone of success not only for Georgian, but also for any country’s banking system. By doing so, completely groundless, hasty and unjustified, we put the banking sector, which has been the most successful and sustainable sector over years, in jeopardy; partners and founders of which are often the world’s leading international financial institutions, the banking sector attracted hundreds of millions of dollars of investments into the country in the last few years. This legislative initiative poses a problem not only to the banking system, it largely affects the country’s business and investment environment, the formation of which often takes years and decades. We hope that before adopting the relevant decisions, the current situation will be thoroughly analyzed in order to avoid hasty decision-making and find other rational problemsolving ways, “- the Business Associations’ statement reads.

GEORGIAN LARI DEVALUATION HARMED TOUR OPERATORS

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he devaluation of the national currency has reduced the number of customers of tour operators working on outbound tourism by 30%. The reason for this is the economic crisis and consequently, a reduced purchasing power of the population. “Love Travel” company says that consumers generally, as well as in previous years, give preference to the Turkish and Egyptian beach resorts, though European destinations are also in demand. Cost of a week tour to Turkey and Egypt starts from $ 240 per week. According to the agency “Good Travel” , the priorities have changed – if in the past year,

there was a demand for Turkey and Egypt, this year European destinations are growing in demand, particularly Hungary, Czech Republic and Greece. Cost of tours to these countries starts from 200 euros. The agencies say that prices rose only for tours in the national currency. But because of the devaluation of the GEL, customers have to pay more, respectively, the demand dropped. “If before the tour cost $ 300 or GEL 500, now the price rose to GEL 700. The difference is very large, and many people prefer to refrain from travelling, “- say representatives of tourist companies.

EXPORTS PROMOTION AGENCY TO INTRODUCE TWO PRODUCTS FOR BUSINESS SECTOR

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xport Promotion Agency will offer 2 products to the companies at the first stage - selective credit risk insurance and financial guarantees on the circulating capital. According to the “Partnership Fund”, these two directions have been singled out after the meetings held with banks and exporters. Export Promotion Agency will be established as the subsidiary company of “Partnership Fund”. The Fund and international consulting company “SACE” are working on the formation of

the agency through a month. Formation of new agency’s structure will be finished before the end of June. It should be noted, that export from Georgia amounts to 23% in the total trade turnover as of the final data. Namely, according to 4 months, merely product of 689 million USD were exported , while the import volume amounts to 2,326 billion USD. Respectively, the negative trade balance has made up 1,637 million USD through January-April, 2015 and 54% of foreign trade turnover.

AZERBAIJAN REDUCES CAR IMPORT FROM GEORGIA

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ay 26-Some 1,737 cars worth $32.8 million were exported from Georgia to Azerbaijan in January-April 2015 or by 5.8 times less than in the same period of 2014, the Georgian National Statistics Service said in its foreign trade report as of January-April 2015. The share of this category of goods in the total volume of Georgia’s export to Azerbaijan hit 36.6 percent during the reporting period. Azerbaijan’s share in the total export of this category of goods from Georgia equaled 45.1 percent. The car export from Georgia to Azerbaijan decreased threefold in terms of value and by 8,330 units in terms of quantity compared to the same period of 2014. For comparison, some 10,067 cars worth $97.69 million were exported from Georgia to Azerbaijan in January-April 2014. The decline in the volume of car exports to the country is the result of Azerbaijan’s transition to

Euro-4 ecological standard, the use of which began from April 1, 2014. The adoption of Euro-4 standard significantly restricts the import of used cars, which account for the major part of vehicles exported from Georgia to Azerbaijan. The cars are delivered to Georgia from abroad. Some 13 percent of Georgia’s export accounted for Azerbaijan in January-April 2015. The goods worth $89.6 million were exported from Georgia to Azerbaijan in January-April 2015. The country’s export to Azerbaijan decreased by 2.1 times compared to the same period of 2014. For comparison, Georgian goods worth $188.45 million were exported to Azerbaijan in January-April 2014.


June 1, 2015 #101

TOURISM

7

caucasian business week

HOW ADJARA IS MEETING THE 2015 SUMMER SEASON

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he Autonomous Republic of Adjara is meeting the 2015 summer season with new tourism assets. In the near future, 5-star hotels such as Hilton Batumi, Leogrand Hotel & Casino, Marina Coliseum, Castelo Mari, DreamLand Oasis will open in the Region. In the summer season the elite residential complex of Palm Apartments will offer about 15 apartments to the city visitors. In 2015 small and medium-sized assets opened and launched operation, as well as hotels Porto Franco, Royal Venetia, Old City, hostels Batumi Sun Hostel and Holland Huck. Many other similar low-budget assets will open in the region. About 820 hotel suites will be introduced with about 1700 beds. In summer 2015 additional charter and regular flights will be carried out from Poland, Israel and Ukraine. As part of the advertising campaign the Adjara tourism department has conducted negotiations with Rainbow Tours, one of the major Polish tour operators. As a result, for the 2015 season the company expects the visitors inflows from Warsaw, Katowice and Poznan to grow by 30%. With the support of the Adjara tourism and resorts department Israeli company Eshet Tours has provided active cooperation with domestic travel companies. The company continues operation in Georgia, namely, in the tourism market of the Autonomous Republic of Adjara. New Israeli airline Akria will also launch flights for the 2015 season. The airline will also perform a charter flight to Batumi every week. The frequency of flights will increase from Ukraine. Several Ukrainian companies are interested in increasing charter and additional flights. From May to October about 10 flights will be performed from Ukraine to Kyiv a week. According to the information of some companies, the number of flights may further increase during the active season. Ukrainian airline Ryanair has already launched Odessa-Batumi-Odessa regular flights. The flights are being performed twice a week: Tuesdays and

Saturdays. Kyiv-Batumi-Kyiv charter flights will be performed three times a week from May 31 to October 24: Tuesdays, Fridays and Sundays. In the summer season Ukrainian airline Ryanair will perform additional flights to Batumi. On June 14 Ukraine International Airlines (UIA) will resume flights from Kyiv to Batumi. Direct flights will be performed three times a week from the Borispol Airport: Mondays, Saturdays and Sundays. The Batumi-Kyiv flight ticket price will be 88 EUR, while the Batumi-Kyiv-Batumi flight ticket price will be 177 EUR. Dniproavia will also perform flights from Ukraine to Adjara starting June 3 from Odessa and Dnepropetrovsk. INNOVATIONS IN THE TOURISM INFORMATION CENTRES The re-branded tourism information centres will offer many innovations for the 2015 season and introduce discounts cards uniting various services. Namely, the card includes 10 tickets of the municipal transport, a phone SIM card, 15%-25% discount cards for tourism assets in the Region (hotels, cafes and restaurants, attractions). For the first time in 2015, the information centre at the boulevard entrance will offer services foe luggage storage and sending open cards. The centre at the ropeway will provide a 24 hour service to the city visitors. A hotline will be also introduced for giving information on all tourism-related issues. NEW TOURISM ROUTES A total of 14 new projects for marking new tourism routes was developed in 2014, of which 5 ones have been already marked and due maps have been printed. A total of 5 new routes will be marked in 2015. Consequently, we will have 10 marked tourism routes in Adjara. NEW WEBSITE The Tourism and Resorts Department of Adjara has developed a new modern website for the new

tourism season. The new website is applicable to mobile devices and includes content changes and convenient navigation. INNOVATIONS IN TRANSPORTATION SERVICES Batumi’s new central railway station will serve the Adjara visitors starting May 2015. The new railway station is located on King Tamar highway near the city. The complex will include a railway station, a parking place, a business centre, entertaining centres, cafes and other multifunctional assets. The railway station will serve 150 visitors an hour, while 30 buses will be off from the station an hour. BatumVelo will meet the new season with additional terminals. In summer season 23 new Velo terminals and about 370 bicycles will serve tourists. One-day, 10-day and one-year BatumVelo cards will be sold at the boulevard tourism information centre. This year BatumVelo terminal will be also organized at the Batumi Botanical Garden. RENOVATED INFRASTRUCTURE IN THE BATUMI BOULEVARD This year special preparatory works are being carried out in the Batumi boulevard, where infrastructural works have been performed in several directions, - the Lake of Swans was lined with engraved railings, the Zoo corner has been rehabilitated, modern-design cages and doors have been arranged for peacocks and parrots, the field cover along Ninoshvili Street has been fully rehabilitated and it has been lined with natural granite plates and basalt edging, the boulevard has been greened, the Japanese Garden arrangement started on 1500 square meters near the university. Water fountains have been installed, as well as European standard three-cabin rubbish bins, modern-style fitness equipment and new amusements for children. CULTURE EVENTS AND FESTIVALS The city will host all the international events

that are associated with Batumi – Black Sea Jazz Festival, BIAFF international festival of author movie films, TOPUZ festival of animated films, Batumi international festival of classic music, Batumi Yards Histories. In July we traditionally expect Jazz Festival lovers to visit our city. This year 9th Black Sea Jazz Festival will be held on July 23-26, in which, traditionally the world stars will take part: George Clinton and Parliament Funkadelic, Lisa Stansfield, Snoop Dogg and so on. Batumi Grafikart Festival will also be also held and French and Georgian artists will paint several places in Batumi. In August Batumi will host an international classical music festival at the head of Eliso Bolkvadze, who will host the world music stars for 4 days. Besides international festivals, this year the city visitors will see many other interesting events. Free concerts of folk bands and domestic and foreign artists will be held from June to September. OTHER INNOVATIONS Food assets have also introduced many innovations. The region’s restaurants are meeting the 2015 season with renewed interior and new cafe-restaurants. Adjara, BK, Grill Town and other restaurants have opened in Batumi. Reconstruction works were carried out in Batumi’s one of the most visited assets – Dolphinarium. The asset’s design has been renewed and, in response to the increased demand, about 100 seats have been added for visitors. The Batumi Dolphinarium will hold three shows a day in the summer season. The Batumi Botanical Garden will meet the 2015 season with renovated central park and new services. Tourists will be able to enjoy WiFi services at special zones in the Garden. Special zones will be arranged for children for the first time in 2015. The garden management has introduced a new package with 10%, 18% and 25% discount prices for travel agencies. bfm.ge

HOLIDAYMAKING PRICES AT GEORGIAN RESORTS

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he summer is coming and both foreign and domestic holidaymakers most frequently ask: how much does the holidaymaking cost at various resorts in Georgia and where can we spend our summer weekends? A certain category of individuals consider comfortable environment more important than prices, while a major part of the holidaymakers find prices the most important. The location is also very significant. Some holidaymakers prefer seaside, others prefer highlands or clean air and peace in summer. The Banks&Finances has tried to clarify at what price visitors with averaged incomes are able to spend their holidays at various resorts of Georgia and what innovations the resort cities offer to them during the summer season. In summer, as a rule, the sea is the most relevant theme. Such resorts as Batumi, Kobuleti and Ureki are flooded by visitors during the season. The number of domestic and foreign visitors is growing every year, according to owners of the

domestic hotels. The price of suites ranges from $30 to $590. The Banks&Finances newspaper has contacted Royal Venezia, one of the hotels in Batumi. Holidaymakers are able to spend their time at 165-280 USD here. Adjara based hotels permanently offer various discount campaigns to visitors and this factor makes the holidaymaking in Adjara more attractive. The summer actualizes mountains too, besides seaside. In Svaneti for the last years the number of visitors has sensibly increased, including the number of domestic and foreign tourists. Hotel prices here range from $50 to $170. In Racha, the price of two-bed suites at the Sunset Shovi hotel is 135 USD. The price includes a triple meal. An European-standard hotel operates in the resort of Shovi that is famous for mountainous air, pine trees and mineral waters. Those who prefer resorts with healing plants and air, they can visit such resorts as Surami and Shovi. Hotel prices in Surami range from 30 USD to 50 USD. As to Shovi, holidaymakers are able to

spend beautiful time there at 25-230 USD. Holidaymakers wishing to enjoy mineral waters along with clean air, Borjomi and Bakuriani resorts are due places. According to the last statistics, the number of visitors has sensibly increased there. Hotel prices in Borjomi range from 50 USD to 472 USD, while prices in Bakuriani are lower and they range from 60 USD to 160 USD. Georgian Vice Prime Minister and Minister of Economy and Sustainable Development Giorgi Kvirikashvili talks about the ongoing projects and plans of the national tourism administration: “I would like to make a special accent on the tourism sector, because no other sector brings such currency revenues as the tourism. The sector employs many individuals in the small and medium-sized businesses. This sector works and its image should further strengthen as an industrial field. This is very important for our economic development. We have received positive dynamics in the tourism direction for last months. Contrac-

tion in number of tourists inflows halted in April and the month recorded a 0.6% upturn. The figure is very small, but encouraging. It should be also noted we are conducting very intense campaigns on 9 target markets: Azerbaijan, Turkey, Ukraine, Belarus, Kazakhstan, Latvia, Hungary, Israel and Russia. We have also launched AD campaigns on EuroNews and this campaign will be intensified in several days. Georgia is participating in 20 international and two domestic tourism exhibitions. The country is hosting 40 press and introductory tours. To this end budget funds have been already mobilized. We have composed a plan of a number of works in relation to these issues and this plan is being implemented. This year Georgia will host Youth Olympic Games and this will strengthen Georgia’s image as an international tourism country. It is worth noting in 2017 Georgia will host a conference of Mountain Resorts. As a result, we expect the image of Georgia as a tourism country to grow further”, Kvirikashvili said. bfm.ge


8

HEALTHCARE caucasian business week

QUOTES

“Villagers Should not Demand Help from the Government”

TEMUR CHKONIA Businessman co-founder of Coca-Cola Bottlers Georgia To reduce poverty in the country it is necessary to reduce bureaucracy, create a good investment climate, quickly and flexibly discuss various projects that require authorization from the government. The government should facilitate the work of brands that can produce export products. Work should be carried out in two directions; it’s necessarily to satisfy the local market and develop export

markets. At a time when the country’s population is 3,7 million we should not expect that foreign investors will be interested in the internal market. It is necessary to attract international brands that work for export. There is no alternative at this stage. Much is being said about Georgian wine’s great export potential, but it will take 10-15 years to become a reality. Bureaucratic barriers prevent a fast development of business. Some procedures require too much time, and the government knows this well. That’s why this issue arose - we are poor and must become rich. All came to the conclusion that we need effective work. When they say “we are working 24 hours a day” - it is also wrong. We have to work 8 hours a day, but to work properly and efficiently, and this would be sufficient. Another vivid problem – Georgian people accustom to living in poverty. We got used to buy very old, second-hand cars, second-hand clothes, we are accustomed to cheap food, markets, street trading, etc. Given that we live in the 21st century and modern shopping centers should open everywhere. We constantly see whining people begging the state for help. How can a man who lives in the village ask the government for help? In Georgia, everything is expensive, products are imported from other countries, it comes to the fact that the villagers buy greens in Tbilisi. This is a complex topic. I do not want to blame someone. It is a mental problem. Everyone thinks that the state should help, a neighbor should help. Everyone thinks of the aid, and not about finding a way out. Today, a lot of social programs were launched in our country, and this is wrong. People need to get used to work.

“Georgia Needs Enterprises Working with the Use of Local Raw Materials”

CAESAR CHOCHELI Georgian Businessman We will not overcome poverty until jobs are created in the country and people have the opportunity to fend for themselves. To do this, we need to create as many jobs as possible, respectively, we have to build new plants, develop tourism, and only after that it will be possible to get out of this state. There is no alternative, and I do not think that somewhere there is a country that has overcome poverty without creating jobs.

Government programs, such as “Produced in Georgia” are of course a good initiative and praised them when they were just announced. The only thing I did not agree with then and I cannot agree now is limitation on the amount. Today the country needs any enterprises small, medium, and large. Apart from programs, the desire of both government and society, and of course, business is necessarily. But if you pay attention to the topics of news programs on TV, you can see that during the day maximum half an hour is devoted to business and economics, all the rest of the time is given to politics. So one of the problems is that there is not enough serious media outlets whose sole focus is business. Their number should increase in order people to be less interested in politics, and more - in economy. And now, instead of thinking about the welfare of their families, people are convinced that tomorrow everything will be better by itself, so they passively wait for improvements. Instead of weaving political intrigues, it will be better to engage in economic issues. Georgia has few resources, but they are sufficient to develop local production. If today we have some production, it is largely dependent on imported raw materials. We need to develop these sectors where local raw materials can be used. Accordingly, in such a situation imports and the outflow of currency will reduce. Industries I have in mind are agriculture, processing industry, production of building materials. For example clay, from which we can produce ceramic products, which today is 100% imported.

June 1, 2015 #101

REORGANIZATION OF GEORGIAN HEALTHCARE SYSTEM

Dr.Malkin and Margaret Chan, Director General of WHO

Global Alliance Presented Plans on World Healthcare 68-th Assembly

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r. Jean-Elie Malkin, President of GAHSC (Global Alliance for Health and Social Compact), attended the 68th World Health Assembly which took place last week in Geneva. On this occasion he participated in different events and meet with high level people and decisions makers. An event on digital health was organized by the association of French pharmaceuticals companies. Some concrete examples were presented demonstrating clearly theadvantages of using e-health in training programmes for health professionals and showing the huge benefit of using mobile phones (m-health) in prevention programmes like tobacco prevention or prevention of complications of diabetes. Awa CollSeck, Minister of Health of Senegal and Said AidiMinister of health of Tunisia presented ongoing e-health and m-health initiatives in their countries and Dr.Malkin had the opportunity to discuss with them and other attenders the importance of digital health as a key component of health system. Dr.Malkin had also the opportunity to meet and discuss with Florence Gaudry-Perkins, Director of International Affairs of Alcatel-Lucent one of the major IT company, who emphasized in her intervention the role of Private Public Partnership with IT sectoras a very efficient mechanism to implement digital health programmes. Dr.Malkinattended an event organized by UNITAID, an organization hosted by WHO, which uses innovative financing to increase funding for greater access to treatments and diagnostics es-

pecially for HIV/AIDS, tuberculosis. The meeting was focused on Innovation for health and in particular on partnership between governments, international organizations and private sector. On this occasion Dr.Malkin meet with PhilipeDousteBlazy, Chairman of UNITAID and under UN secretary general for innovating financing mechanisms and discussed with him the different health financing systemespecially in the eastern Europe region. During the World Health Assembly Dr. Malkin attended the opening session in which German Chancellor Angela Merkel delivered a very powerful message on the need for improving the role of WHO in supporting countries towards a more efficient health system for the benefit of all populations. At the reception organized by german mission in Geneva Dr.Malkin meet with Margaret Chan, Director General of WHO and had the opportunity to present the work of GAHSC in the region of eastern Europe and especially in Georgia. Margaret Chan welcomed this initiative and wish all success to GAHSC. Dr. Malkin had numerous other meetings in particular with representatives from Georgia mission in Geneva, with Minister of health of Moldova M.Buga, with Minister of health of Belarus M.Zharko, with M.Kuljanov Senior adviser of ministry of health of Kazakhstan, and Michel Sidibe, UNAIDS executive director. Dr. Malkin present t all these people GAHSC emphasizing the innovative and pragmatic ways of working on health systems and promoting the wish of GAHSC to build partnerships with major stakeholders.

“We will be Involved in Discussions about Separating Banking Supervisory Functions from the National Bank of Georgia”

GIORGI GAKHARIA Business Ombudsman According to the business ombudsman, business has felt inconvenience and discomfort about the draft law on the separation of the Financial Supervision Agency from the National Bank as businessmen were not involved in this process. “We have agreed to increase their involvement in the com-

ing days. Both one and another side adduce their arguments. I think that somewhere in a week we will have a balanced decision. The main message of the business is that this process and initiative is an important process in which the business should be engaged,” - Gakharia notes. According to him, we shouldn’t play with the banking sector and it is a very important sector. “While discussing the issue commercial banks topic should come out of the brackets because it is a specific initiative proposed to the National Bank. Business has its own vision and its own arguments. The other side has its arguments. I could not see insurmountable problems. We’ll weigh everything and make a decision,” Gakharia notes. He believes the consultations should be held with the business about the bill, because business treats this bill very carefully and did not see the instruments of how this law will work. A legislative initiative providing for the transformation of the Supervision Agency over commercial banks into an independent structure was registered at the bureau session on Monday. The initiative belongs to Tamaz Mechiauri, the head of the Budget and Finance Committee of the Parliament. In his words, the separation of the Agency from the central bank was caused by a non-transparent activity of the National Bank of Georgia.

Dr.Malkin and Awa Coll Seck, Minister of Health of Senegal


June 1, 2015 #101

BANKING NEWS

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caucasian business week

PASHA BANK TO ARRANGE FINCA BANK GEORGIA’S 20 MILLION GEL BOND ISSUANCE

ABUSE OF BANK SYSTEM’S REPUTATION WILL FUNDAMENTALLY SHAKE ALL SECTORS OF GEORGIAN ECONOMY The Anaklia Seaport project is valued at $2-2.5billion. The Project will be Implemented in about 10 years

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n May 29 Courtyard Marriot hotel hosted a joint news conference of FINCA Bank Georgia and PASHA Bank. The news conference announced FINCA Bank Georgia plans for issuing 20 million GEL bonds with a 3 year maturity period. FINCA Bank Georgia intends to place 200 bonds with a nominal value of 100 000 GEL and a 10.1% annual interest rate each. The interest rates will be paid semi-annually. The issuer, FINCA Bank Georgia, plans to use the proceeds from the issuance for crediting the micro and small business sectors in the national currency. This will enable its customers to protect themselves from currency risks. PASHA Bank enjoys significant experience in securities underwriting in its home market, Azerbaijan, and plans to actively contribute to the development of the Georgian capital markets. The deal has very important characteristics such as: The bonds are to be issued in GEL;

The deal participants are two non-IFI (International Financial Institution) companies; The volume of the bond issue amounts to 20 million GEL; “The proceeds of the bonds to be issued in the domestic currency will enable FINCA Bank Georgia to respond to current market challenges and to credit its clients in GEL. The issue will also positively contribute to the development of local bond market. It is worth mentioning this deal is the biggest GEL bond issuance without IFI participation”, noted Vusal Verdiyev, the CEO of FINCA Bank Georgia. “This is our first securities underwriting deal in Georgia and we are already in the process of negotiations with several other interested parties. We believe that there is a tangible potential in Georgia for this business line and we will try to contribute by applying our experience and expertise,” commented Mr. Shahin Mammadov, CEO of PASHA Bank in Georgia.

LIBERTY BANK PROFITS IN JANUARY TO APRIL MARKED 10.2 MILLION GEL

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iberty Bank finished January-April with profit of 10,2 million GEL and its share has been defined by 9,1% (Q1- 8%, 8,3 million) among the profitable banks (17). As of May 1, loans amount to 784 million GEL (Q1 – 766,7 million) and 95% is denominated in GEL. Reserves (68,8 million GEL) total to 8,3% of the portfolio. However, it is not linked to the GEL devaluation – the bank is on high-risk segment (retail) and traditionally, reserves have been always high.

Assets are defined by 1,6 billion GEL, market share – 6,8%. However, the capital amounts to 167,8 million GEL. The chartered capital of the bank is 166 million GEL. The shareholders of the bank will approve new composition of the Supervisory Board. Lado Gurgenidze, executive chairman of the Supervisory Board and the shareholder (7.33%) has decided to leave the shareholders structure by the future. The shareholders’ joint meeting will discuss entrance issue of new members: Irakli Rukhadze and George Kalandarishvili.

CURRENT CONDITION OF COMMERCIAL BANKS’ LOAN PORTFOLIO

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ccording to National Bank of Georgia (NBG), the volume of lending by commercial banks (including loans to non-residents) in April 2015 increased by 262.8 million GEL (1.8 percent) compared to the previous month (decreased by 0.3 percent, exchange rate effect excluded) and exceeded 14.8 billion GEL by May 1, 2015. The volume of loans in the national currency increased by 20.0 million GEL (0.4 percent) and the volume of loans in foreign currencies increased by 242.8 million GEL (2.6 percent or decreased by 0.7 percent exchange rate effect excluded). By the end of April 2015, commercial banks issued 1.6 billion GEL worth of national currencydenominated loans (6.2 percent more compared to the previous month), and 5.8 billion GEL worth of foreign currency denominated loans (1.5 percent more or 1.8 percent less exchange rate effect excluded) to resident legal entities. In the total volume of lending to legal entities, trade has the biggest share - 31.5 percent. Compared to the previous month, in April 2015 the volume of loans provided for trade increased by

3.3percent (exchange rate effect excluded 0.6 percent), or 74.4 million GEL, and exceeded 2.3 billion GEL by May 1, 2015. The share of loans provided to the industrial sector constituted 22.5 percent of total loans to legal entities, amounting to 1.7 billion GEL by May 1, 2015 (0.4 percent more and 2.3 percent less exchange rate effect excluded) 6.5 percent comes for construction, amounting to 485.3 million GEL (4.3 percent more, or 1.7 percent more exchange rate effect excluded). Therefore only three sectors - industry, construction and trade compose 60.5 percent of the total volume of lending to legal entities. The volume of lending to resident individuals increased by 2.0 percent (exchange rate effect excluded 0.4 percent), or 131.5 million GEL, and exceeded 6.8 billion GEL by May 1, 2015. Larization ratio for total loans constituted 35.29 percent by May 1 2015, while the same indicator for loans issued to the households was 52.70. Compared to the April 1, 2015 exchange rate effect excluded larization ratio increased by 0.26 percentage point for total loans and 0.04 percentage point for households.

The Government will select the company by competition that will implement the Anaklia Seaport development project. Anaklia Development Consortium is among the pretender companies. It unites TBC Holding and Conti Group. The company founder Mamuka Khazaradze is conducting intense negotiations with potential partners of the project abroad. After several hours of his return from China we interviewed him. The interview started with the recent developments in Georgia during his absence, namely, the fact commercial banks were accused on the GEL exchange rate devaluation. Mamuka Khazaradze, a TBC Group head: “The last month has recorded an about 19% contraction in imports and this tendency has strengthened the GEL rate. It is worth noting the coming tourism season is also strengthening the GEL exchange rate. It will take much time to substantiate what factors have enhanced the GEL rate, what have conditioned changes in terms of macroeconomic indicators. - However, there were unpleasant evaluations before. For example, Kakha Kaladze noted they had no information on transactions by commercial banks. - Commercial banks act in line with the Georgian legislation. Commercial banks perform the transactions ordered by both physical and legal bodies. I have also heard about plot theories of commercial banks. The bank investors have lost 250 million USD because of the GEL exchange rate devaluation. If the bank system and its reputation are shaken, and this may be preconditioned by many factors, even more so by statements of the politicians, almost all directions of the Georgian economy will be frustrated. - How would you appraise the activity of the National Bank of Georgia (NBG)? - During my visit to Azerbaijan I have got detailed information on what has happened there. Azerbaijan has carried out major currency interventions to strengthen the national currency. The country has spent 3 billion USD that equals to Georgia’s total currency reserves. But Azerbaijan failed to receive desirable results. 3 billion USD was lost in one day, in practice. Therefore, when some experts assert the NBG was to spend currency reserves to stop the GEL rate devaluation, they do not know the issue. The GEL exchange rate and any other currency are determined by a complex of circumstances. The exchange rate is not determined by only sales of USD and purchase of GEL. The exchange rate is determined by investments in the economy, external factors, other currencies, the level of exports, money transfers, tourism and so on. Consequently, whilst making an analysis, we should avoid populism, because we are discussing sensitive issues. I welcome everyone, who will expose violations and I will be the first to support them who wants to cast light on the issue, but I cannot

understand what we are seeking when we have got similar examples around. - What amount of investments will you and our partners put in the Anaklia Seaport development project and for how many years? - This is a very large-scale project and no specific group has got a sufficient amount of money to implement it. The investments are being drawn through a consortium in the form of capital and credit resources. We started working on the project two years ago and we have already made investments of several millions of USD in the preparatory period’s works. Several millions will be still invested until the necessary sum has been accumulated. The first stage of the project is valued at about 800 million USD. The first stage calls for constructing a free trade space and an industrial park. In whole, the project is valued at $2-2.5 billion. The investments will be made for 10 years. If the scheme justifies and there are favorable circumstances and if the Georgian products successfully penetrate the European market, then the project volume and the investments funds may also increase. The project will involve many stakeholders and this project may be also put out for a stock exchange. This may become one of the major centers in the region, where financial, enterprising and logistics powers will be accumulated.

CURRENT TENDENCIES OF BANK DEPOSITS

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ccording to National Bank of Georgia (NBG), the total volume of non-bank deposits in the country’s banking sector increased by 3.1 percent, or by 395.5 million GEL, compared to April 1, 2015 and reached 13.0 billion GEL by May 1, 2015. However, as a result of operations (exchange rate effect excluded) the above mentioned indicator increased by 0.9 percentage point and the exchange rate changes caused its increase by additional 2.2 percentage point. In April 2015, the volume of time deposits increased by 245.1 million GEL (or by 3.3 percent). Operations caused its increase by 0.7 percentage point and exchange rate changes caused its increase by 2.6 percentage point. Demand deposits increased by 150.4 million GEL (3.0 per-

cent). Contribution of exchange rate changes in the growth rate was 1.7 percentage point and contribution of operations was 1.3 percentage point. The larization ratio of total non-bank deposits constituted 33.75 percent by May 1, 2015; The larization ratio increased by 0.07 percentage point compared to April 1, 2015, excluding the effect of exchange rate. The annual average weighted interest rate on time deposits constituted 5.2 percent. In particular, the interest rate for national currency denominated deposits was 8.3 percent and the interest rate for foreign currency denominated deposits 4.1 percent. The share of the US dollar in the total volume of foreign currency denominated deposits equals 81.7 percent and the share of the euro equals 15.3 percent.


PUBLICITY

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caucasian business week

June 1, 2015 #101

BUSINESS ACADEMY IN KRAKÓW A PLACE OF OPPORTUNITIES

Study at European Business Academy in Kraków!

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cademy offers you many opportunities. First of all not only study, but you also expand your interests through being active in students’ scientific associations and cultural events. Also, while studying with us, you may gain some experience, doing an internship in chosen universities. FIRSTLY-STUDYING Academy adjust courses that offer to the demands of the labour market. and always consults the syllabus with experts to meet students’ expectations. For example: philologists can choose from different specializations such as: sinology, translation or international business – which are practical and up-to-date. Academy’s aim is that students who graduate be prized and wanted specialists. During the classes students are provided with all the needed knowledge but academy’s stuff also wants to encourage them to take part in interactive teaching tools (simulations, case studies and strategic

games). The future interpreters have the opportunity to practice their skills in the specialized cabins for the simultaneous translating. SECONDLY-INTERESTS. STRATEGIC GAMES website is a very valuable source of information. You can immediately notice that a lot is going on here. University organizes many events and conferences- everyone can find something for themselves. Everyone can find an event that she/he can be interested in and gain some new knowledge being accompanied by great people. To fulfill passions and use energy, students can be members of students associations. The Project Management SMART PM Association or the PR Association are only the few suggestions that Business Academy has. While being active, a student can gain new experience and get to know new people. A wide social network may benefit in the future not only during students’ parties but also in professional work.

THIRDLY-MULTICULTURALISM It is said that if you know foreign languages, you can get to know the world better. Academy fully supports this motto and ensures that students get the professional knowledge of different foreign languages and language training courses. They also want to give them a chance to study abroad and that is why there is the possibility of spending some time in a chosen country as part of Erasmus programme. It is a great opportunity for our students to explore new places, meet foreign people and practice their language. We appreciate very much the cooperation with international universities and would like to highlight that we are highly regarded by other cultures. Representatives of various countries are coming to our university: the Congolese, the Chinese, the Ukrainians or the Iraqis. If you are interested in exotic civilizations then our Students Association of the Institute of Studies of Civilizations is the place you are looking for! The association is engaged in a dialoque between countries and a discuss on widely understood multiculturalism. FOURTHLY- INTERNSHIPS Business Academy holds the principle that practice makes perfect.

We think that interning is a crucial part of starting a professional career, it is a big chance to be noticed by a future employer. Our cooperation with the business environment gives graduates a head start on the labour market. A huge help is the Careers Office of the WSE which gathers and circulates information about internships available for students. There is a possibility to seek an advice from a career counselor who has the office at our university. Those, who consider establishing their own business, can contact the Business Incubator. FIFTHLY-THE ATMOSPHERE The European Business Academy guarantees both, conditions for development and a nice atmosphere conductive to developing. It is a place where we help you to find your own career path and we gladly support students’ initiatives. We often organize different kinds of conferences and scientific debates in the political and economic fields. The Academy hosts a number of meetings during which students can expand their interests and meet outstanding guests. Many concerts, parties and cultural events are held in our Academy. It is definitely a favorable atmosfere of Kraków – the city that never sleeps.


June 1, 2015 #101

COMPANY NEWS

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caucasian business week

GOLD EXPORTS DOUBLE

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ccording to the official statistics, gold export from Georgia has exceeded 17,7 million USD through January-April of this year. However, the figure is more 1,8 times comparing to the same period of 2014. It should be noted, that export of processed or

semi- processed gold of 5,04 million USD has been made in April, which is the maximum of the year. Therefore, gold of 1,6 million USD has been exported in April of the previous year. The share of processed or semi- processed gold amounts to 2,6% in Georgian exporting basket and it takes the 10th position in the top ten.

JSC TOLIA SELLS 4 000 GEL SHARES

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hares of JSC “Tolia” were sold for the first time after 2006. The deal has been fixed on the shares of the company. Totally 6 026 shares have been alienated with a total value of 4 000 GEL. It should be noted, that the deal on

BEER MAKES THE EARTH GO ROUND OR FACTS FROM AROUND THE WORLD

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eer – is a universal and tasty means for making friends, having fun and looking for adventures. That is why this alcoholic beverage has the largest number of consumers in the world. Therefore, do not be surprised if you find many surprising facts about beer in this post. The main thing is that they are real! Everything started in Sumer. Yes, the first beer recipe was created by Sumerians, which counts over 4,000 years now. Beer used to play the role of a currency in Old Egypt. Egyptians were remunerating pyramid workers by 4 liters of beer per day. This trend is still being followed in Amsterdam, where alcoholics are paid 5 cans of beer along with monetary compensation for cleaning the streets. Finland is not falling behind: husbands winning the “Wife Lifting Competition” are being awarded with the volume of beer corresponding to person’s wife’s weight. In medieval centuries beer was being consumed more frequently than water, since the latter was transmitting diseases (due to its contamination), while the alcohol contained in the beer was making this liquid safe. George Washington, the first US President was a big fan of beer and he even owned a brewery in Mount Vernon. Argentineans went even further: here political parties have their own beer brands. Can you imagine what happened in London in 1814 when a huge beer cask fell apart and 1400

liters of this divine liquid were spilt in the streets. So the tastiest tsunami is also related with beer. It is said that moderate consumption of beer prevents heart diseases and dementia. For your information, at any time, 0.7% of world population is drunk. This means that now when you are reading this post, 50 million people feel extreeeeeeemely good. However, be reminded that you must not drive in such state. By the way, it is advisable that we, the beer fans, are aware of our weaknesses: cenosillicaphobia means fear of empty glass, therefore as soon as you empty one glass immediately fill it again. Prior to 1970 consumption of low-alcohol beer was allowed in schools in Belgium. If you manage to drink 61 or more cans of beer, you may beat the hangover record. The longest hangover lasted for 4 weeks when one Scotchman emptied 60 cans of beer. Since we are talking about records it needs to be noted that the highest content of alcohol in beer is 67.5% and those who drink it deserve appraisal. Like humans, chromodoris reticulate also likes beer. Beer is very much liked in Africa, but due to lack of barley malt and hop on this continent, you can come across with banana beer. So the N1 beverage is distinguished by its variety and has been trying for millenniums to make the mankind better. Finally, my name is Mevludi Kapianidze, a son of Caucasian beer and I will be delighted if you find at least one interesting fact from my posts. So visit my blog every now and then.

WHAT DOES YOUR FAVE FOOD SAY ABOUT YOUR FASHION STYLE?

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oads of articles draw links between your favourite food and your personality. But have you ever considered how the food you eat relates to your fashion style? The food delivery service foodpanda take a stab at defining what you wear by what you eat. 1. FAST FOOD Admit it - fast food is comfort food. And just like this quick and convenient category of grub, you like things simple and snappy. Your key consideration when you reluctantly open your wardrobe each morning is how to keep things as comfy as possible. You embrace your many loose, oversize shirts and relish throwing them over your softest jeans...to be paired with sneakers or flats, of course. Your style: Conveniently casual

2. CHICKEN RICE Few meals are as starkly simple yet as tasty as chicken rice, that Singaporean (sorry, Malaysians) dish of freshly blanched chook served with fragrant rice. Similarly, your ensembles are sleek yet stylish. Your solution to spicing each one up? Adding a punchy statement accessory or two in place of chilli and dark soy sauce. Your style: Minimalist chic(k) 3. ALL-DAY BREAKFAST You love checking out new cafes and get ideas on where to go from foodies on Instagram. Which is much like how you dress yourself - by flipping through magazines and scrolling through fashion influencers’ posts for style inspiration. Your fave pieces right now are culottes, cropped tops, cutesy bold prints and denim, and you fit right in with the cool young crowd. Your style: Trend follower 4. KHINKALI Hip new restaurants rarely get a dime from you. You much prefer taking a table at your nearest homey restaurant and chowing down on straightforward faves from the Georgian national cuisine. “Can’t go wrong with that” is your mantra - and it funnels down to your wardrobe that’s filled with reliable gotos that you’ve had for yonks. Some call you boring, but you’re always quick to respond with - say it now - “can’t go wrong with that”. Your style: Classic

“Tolia’s” shares has been fixed for the first time. However, “Tolia’s” shares were sold at the trade sessions through 2005-2006. The company is places in the listing of Stock Exchange from late 2006. “Tolia” has 557 298 share in total, with a nominal value of 1000 GEL on per share.

KAZAKHSTAN’S AMBASSADOR – KAZAKH MANAGEMENT WILL RETURN TO KAZTRANSGAS TBILISI THIS YEAR

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eorgian and Kazakh sides decided that KazTransGas Tbilisi would be returned to the Kazakh side this year. CBW was told by Kazakhstan’s Ambassador to Georgia Yermukhamet Yertysbayev. At the same time, he can not specify when it will happen saying the issue is still “up in the air” and the parties are looking for ways of solving it. Georgia’s Minister of Finance touched on the KazTransGas-Tbilisi topic at the meeting with Kazakhstan’s Minister of Finance within the framework of the EBRD’s annual meeting. “We talked about Georgia’s debt of 25 million to the Republic of Kazakhstan. Kazakhstan is ready to consider restructuring of the debt. We will continue to cooperate on this issue. We discussed the KazTransGaz issue as well,”- Khaduri stated. Recall that the Energy Minister Kakha Kaladze last year announced about the possible returning of the company to the Kazakh side. In early 2015 Deputy Energy Minister Mariam Valishvili stated

that work was underway. Negotiations were held during the Prime Minister’s visit and the relevant documents were being prepared for the return of the Kazakh management. Valishvili said that a principle decision had been made about the Kazakh government’s return. Several months ago, the government of Kazakhstan announced about KazTransGas privatization plans in 2015. The Kazakh state company KazTransGas acquired Tbilisi gas distribution company TbilGas for USD 12. 5 million in 2006. By 2009, the company has accumulated a debt of GEL 80 million. Some 68 million of this sum amounted to Georgian Oil and Gas Corporation. In order to deal with the debts, in 2009 the corporation appointed a special manager. After the change of power, the Kazakh side hoped to return to the management of the company, but almost two years have passed, and the government of Georgia states that KazTransGas has not paid the debt, that’s why the company is still under state control.

GEORGIAN RAILWAY ISSUES 50.33 MILLION GEL DIVIDENDS

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s of the company’s report, per share value of railway company’s dividends has amounted to 0.05 GEL, which is totally 50,33 million GEL. The allocated dividend volume has made up 25 million GEL in 2013, respectively the growth is 101%. It should be noted, that Partnership Fund holds 100% of JSC “Georgian Railway”. To note, revenues of “Georgian Railway” is

grown by 31,7 million GEL in 2014 and the figure has made up 511,5 million GEL. The growth has been fixed in all segments of operations. However, profit is significantly reduced despite the revenue increase. Namely, “Georgian Railway” has received a profit of 39,28 million GEL instead of 65,23 million, which has been fixed in 2013. The difference between the currency rates has become the main reason.

MAIN RUNWAY AT TBILISI INTERNATIONAL AIRPORT NEEDS REPAIR

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he main runway at Tbilisi International Airport will soon undergo major repairs to make sure it meets international standards. Remedial work will begin on the runway in September, announced the Government after officials met with representatives of Turkey-based TAV Airports Holding today - the company responsible for operating Georgia’s two main airports - Tbilisi and Batumi International Airports. The decision to overhaul the runway was made at today’s meeting after the Government renewed its agreement with TAV Airports Holding to continue operating the Tbilisi International Airport. The company’s first contract with Tbilisi International Airport, signed in 2005 TAV Airports Holding responsible for operations at the airport until 2025, but today this agreement was extended until 2027. In a media statement, the Georgian Government said it welcomed the investments made by TAV Airports Holding in Georgia and the renewed

agreement reflected that. The parties noted the deal was signed after two years’ negotiations. The media statement said further developing the airport and upgrading the runway and terminal were the main topics of today’s discussion. It did not state whether the runway rehabilitation works will have any effect on flights into and out of Tbilisi, nor did it mention how long the works would take. Meanwhile Georgia’s Prime Minister Irakli Garibashvili and TAV Airports Holding President Sani Sener announced the renewed agreement included some changes but did not explain what these changes entailed. However it is known that the agreement outlined the role and responsibilities of TAV Airports Holding while operating Tbilisi International Airport. TAV Airports Holding were first offered a 20-year contract to operate Tbilisi International Airport in 2005. This was the first project the company had outside of Turkey. At the time of the original discussion, Georgia was expected to become an important bridge between Europe and Asia, and now this has become a reality.


CURRENCY

12

SAXO BANK LAUNCHES NEW MULTI-ASSET TRADING PLATFORM GLOBALLY AS TRADERS DEMAND SAME FUNCTIONALITY ON ALL DEVICES

KASPER ELBJØRN Head of International Communications, Saxo Bank

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axo Bank, the online trading and investment specialist, is beginning the global roll-out of SaxoTraderGO, its new, intuitive multi-asset trading platform, following the successful launch of the platform to French customers earlier this month. The platform is now available to clients in Europe, with clients in MENA, APAC and Latin America getting access during the first weeks of June. SaxoTraderGO was built from the ground up with a focus on usability and supports a seamless user journey between Web, Android and iOS devices. The development of SaxoTraderGO was informed by a survey of nearly 3,000 Saxo clients globally who stated that maintaining platform performance and functionality when switching between different devices is a key priority for them. This indicates a behavioral shift among retail traders who are looking at the choice of platform not simply as a means to trading, but as something that makes a difference to their performance. Speed and quality of execution were the two highest priorities for clients in terms of trading performance, followed by availability of

trading instruments. “Today 20% of our revenue from retail clients is generated via mobile and tablet devices and 75% of all our trades and orders come from clients who use multiple devices to trade. With SaxoTraderGO, we have developed a platform that works the same on desktops, tablets and mobile phones and carries through changes to layout or settings across devices. Retail investors can now seize trading opportunities and achieve the best execution regardless of where they are and what device they are using,” Christian Lund Hammer, Head of Platforms, said. To be able to deliver an integrated user journey across devices, SaxoTraderGO has been developed in HTML5 and built with a new open application program interface (API). Saxo Bank’s API enables rapid feature development and ensures a unified client experience across devices and platform services such as content, trading and account services. In total there are around 150 endpoints serving accounts, balances and positions over instruments and exchanges. Also, clients can see their account history, manage data subscriptions and view price alerts. Later this year, Saxo plan to make available the same API to other financial institutions and external developers. “We know from our surveys that the focal point of everything we do is the platform. Our clients prioritize a faster, better and more intuitive trading experience as high as content and analytics. Technological prowess is key to success and the high number of return visitors and returning trading clients indicates that SaxoTraderGO is a platform that clients are comfortable with and appreciate,” added Christian Lund Hammer. The client survey brought to light trends in trader and investor priorities. The choice of platform and the investment strategy were deemed equally important for good performance. The global survey also highlighted some regional nuances. Clients in China and South Africa were the most content-thirsty, with insights and analytics ranking as very high priorities. Clients in CEE are the most outward looking when it comes to trading, with clients in Poland, Russia and the Czech Republic placing access to markets and asset classes high in their list of priorities.

EUROPEAN STOCKS FALL AMID INVESTOR CONCERN ON GREEK DEBT TALKS

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uropean shares declined for a second day on investor concern Greece won’t reach an agreement with creditors in time for a debt repayment. The Stoxx Europe 600 Index slipped 0.8 percent to 403.42 at 11:04 a.m. in London, trimming its monthly gain to 1.9 percent. Greece’s ASE Index lost 0.6 percent. Benchmark gauges of French and German stocks fell more than 1 percent as automakers led declines among industry groups. “There is some profit taking due to the ongoing talks about Greek debt,” said Konstantin Giantiroglou, head of investment advisory and research at Neue Aargauer Bank AG in Brugg, Switzerland. “People are trying to gauge how is

growth developing this quarter. The expectations for U.S. growth are already low.” Greece is under pressure to make stronger commitments to overhaul its economy and strengthen public finances before any further funds are released. The Mediterranean nation hasn’t yet said how it will make almost 1.6 billion euros ($1.75 billion) in International Monetary Fund payments scheduled for next month, with the first transfer due June 5. Investors will also look to a report on U.S. economic growth Friday for clues on the timing of a Federal Reserve interest rate increase. Economists now forecast gross domestic product shrank in the first quarter, after earlier predicting a small increase.

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CAN US GDP HELP GREENBACK EXTEND LAST WEEK’S RALLY?

uccessful readings of Building Permits and Housing Starts, which rallied to more than seven year highs, triggered US Dollar up-move during the early days of last week. The greenback up-move stalled on Wednesday and Thursday when FOMC minutes cut down the chances of June hike while market players again favored the greenback rally on Friday when Core Inflation printed highest level since January 2013, fueling the US Dollar index (I.USDX) to disturb five weeks of decline. Moreover, hawkish tone of the Fed Chair, Janet Yellen, in her speech at Providence, Rhode Island, also backed speculations that the Fed will continue looking for a rate hike during 2015 and gave enough of reasons to the market players for supporting the US Dollar index towards testing three week high. The Euro region currency remained weaker as Greece again failed to convince its international creditors and is running out of cash to repay about 300 million Euros ($330 million) to the IMF during early June. The GBP had a mixed trading week as considerable improvement in Retail Sales countered negative Inflation reading while the JPY weakened noticeable losses, even after hawkish tone of the BoJ, as improvement in USD hurt safe haven demand of the Japanese currency. Recent up-tick in US Dollar causes market players to await important US details, mainly the second estimate of US Q1 2015 GDP, Durable Goods Orders and Consumer Confidence, in order to confirm the greenback up-move. Moreover, monetary policy meeting by the Bank of Canada (BoC), GDP numbers from UK, Canada and Switzerland and the BoJ monetary policy meeting minutes, are some of the important details to fuel forex volatility during the current holiday shortened week. It should also be noted that the European economic calendar is almost empty, with only Wednesday’s GfK German Consumer Climate, during the current week and could push the market players towards Ex-European details. Alike major global markets, US market is also close on Monday; however, monthly details of Durable Goods Orders m/m and CB Consumer Confidence, scheduled for Tuesday, coupled with the New and Pending Home Sales, scheduled for release on Tuesday and Thursday respectively, are likely to provide meaningful insights to determine near-term USD moves. However, second estimation of Q1 2015 US GDP, scheduled for Friday, is likely to gain major market attention to foresee chances of Fed rate hike and USD trend in-turn. Recent downticks in US growth numbers put pressure on the Federal Reserve to avoid being too hawkish about the world’s largest economy. The advance reading of Q1 2015 GDP, the first estimation, also lagged behind its consensus and printed the lowest number, 0.2%, in previous three quarters. Market consensus favor magnified effect of bad weather conditions and expects the reading to plunge negative, to -0.9%. Should the actual figure match forecasts, it would be the least in a year and could wane the recent optimism amongst Fed policy makers. Alternatively, a print beyond previous reading, 0.2%, could become supportive to the Fed Chair’s recent comment that the economic conditions are likely to improve soon, supporting the Fed to hike interest rate during later part of the year. Moreover, the Durable Goods Orders, which rallied in its previous release, again becomes likely print a negative growth, to -0.4% from upwardly revised 4.7% gain, while the Consumer Confidence Index may remain almost unchanged, to 95.3 from 95.2. Details relating to New Home Sales and Pending Home Sales show unclear scenario of US Housing Market as New Home Sales signals an improvement to 501K against the 481K while the Pending Home

Sales is expected to print weaker growth number, to 0.8% from 1.1% prior. Other than these top-notch readings, monthly reading of Chicago PMI, scheduled for Friday, and the weekly Jobless Claims, are additional numbers to help determine USD moves. The Manufacturing index, Chicago PMI, signals a bit of improvement, to 53.1 from 52.3 while the Jobless Claims are expected to print 272K reading against 274K prior. With majority of headline numbers favoring continuation of USD correction, irrespective of recent rally, disappointing readings could provide considerable damages to the expectations supporting near-term rate hike by the Fed and to the US Dollar in-turn. However, growth numbers will be highlighted and an improvement in actual figure can support the greenback to extend its recent up-move. Its not the US GDP that could only gain spot lights, growth number from UK, Switzerland and the Canadian GDP are expected to infuse forex volatility too. Moreover, monetary policy meeting by the Bank of Canada and the release of recent BoJ meeting, coupled with Japanese details relating to Spending, Inflation, Unemployment Rate and Industrial Production, are additional data points that market players would like to know about. Second estimation of Q1 2015 UK GDP, scheduled for Thursday, is likely to print GBP positive reading, to 0.4% against the initial estimation of 0.3%; however, the numbers still remains lower than its Q4 2014 print of 0.5%. Should the actual reading surpasses 0.5%, it becomes considerably positive for the GBP while a break below 0.3% is likely to tame recent UK optimism and can pullback the GBP strength. Quarterly reading of Swiss GDP, scheduled for Friday, is likely to drag down the CHF, as the number is expected to wipe its previous two quarters’ 0.6% gains by printing 0.0% mark. Given the actual reading meets forecast, it becomes likely that the SNB thinks of taking another initiative, after its January rate cut, to infuse the economy. Having cut its benchmark interest rate during January, the Bank of Canada (BoC) remained standstill during the following months; however, weakness in economic numbers, coupled with declining Crude prices, Canada’s main export, continue forcing the market players to expect central bank action. Even if the BoC isn’t expected to act on its current monetary policy on its Wednesday’s meeting, the rate statement could provide details of the economic outlook and helps foresee near-term BoC moves. Should the central bank sound dovish and/or cut down the interest rate in a surprise, the CAD is likely to plunge heavily while static outcome of the meeting, with no changes in economic outlook, continue supporting the sideways trading of CAD. Other than the BoC meeting, monthly reading of Canadian GDP, scheduled for Friday, could also help determine near-term CAD moves. The GDP numbers is likely to print 0.2%, highest in three months, against previously registered 0.0%, and could help CAD gain if the actual reading matches the forecast. Minutes of recent BoJ meeting, scheduled for release on Wednesday, and the details relating to spending, inflation, unemployment rate and industrial production, scheduled for Friday release, become important to foresee near-term JPY moves. Even if the BoJ sound more hawkish in its recent monetary policy, without altering its current monetary policy, details relating to growth outlook and the policy makers’ view on recent economic improvement could help examine recent JPY weakness. Moreover, the multiple releases are JPY supportive where improvements in spending and industrial production could counter the weaker inflation expectations and negate the nearterm decline of the JPY.

Admiralmarkets.ge/analytics/ facebook.com/adimralmarketsgeorgia/


June 1, 2015 #101

WORLD

BLATTER SET TO WIN NEW TERM DESPITE SOCCER CORRUPTION SCANDAL

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orld soccer boss Sepp Blatter was expected to be re-elected on Friday, defying growing calls for him to step down in the face of corruption scandals engulfing the sport’s gov-

erning body. Addressing delegates at FIFA’s annual Congress in Switzerland, where members began voting to decide the organization’s presidency, Blatter promised more transparency and urged members to remain unified. Europe, which accounts for all but three of the countries that have ever made it to a World Cup’s final match, is particularly keen to banish the 79-year-old Swiss. But Asian, African and Latin American states were expected to rally around him. Each of the 209 countries in FIFA has an equal vote. To win, Blatter needs two-thirds of the 209 votes. If he fails to cross that threshold, it goes to a second round, when a majority determines the winner. First results were expected at around 1600 GMT (1200 ET). Earlier, on a visit to Berlin, British Prime Minister David Cameron told Blatter to go “the sooner the better”. Chancellor Angela Merkel said the dirty side of soccer must be cleaned up. In a low-key address that contrasted with a more defiant reaction on Thursday, Blatter said he was “appealing to unity and team spirit so we can move forward together.” He also sought to distance himself from the scandal, the biggest crisis FIFA has faced in its 111-year history. U.S. authorities have accused top FIFA figures and sports executives of corruption, while Switzerland is investigating the award of the next World Cup finals to Russia and Qatar. The scandal widened on Friday when Britain’s Serious Fraud Office said it was examining possible corruption at FIFA. A judge in Argentina has ordered the arrest of three businessmen accused of using bribery to obtain soccer

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media rights, and the Brazilian Senate moved to open a formal inquiry into soccer bribery allegations. FIFA takes in billions of dollars in revenue from television marketing rights and sponsorships, making it one of the wealthiest and most powerful sports bodies in the world. It has been dogged by corruption scandals for decades, mostly investigating itself and avoiding scrutiny by criminal courts. “We cannot watch everyone all the time. We have 1.6 billion people directly or indirectly touched by our game,” Blatter said. Russia and Qatar deny wrongdoing in their successful bids to host the cup. Russian President Vladimir Putin has accused the United States of meddling in an effort to prevent Blatter’s re-election. Qatar on Friday issued a further defense of its bid and said it would carry on with plans to stage the event. The decision to host the world’s biggest soccer tournament in a small desert state where daytime summer temperatures rarely fall below 40 degrees Celsius startled many in global sport. Blatter, who has been criticized for not doing enough to combat corruption in FIFA, is being challenged by Jordanian half his age, Prince Ali bin Al Hussein, for the most powerful job in soccer.

BOYCOTT THREAT Many of Blatter’s opponents have spoken of steps they can take if he secures re-election. English Football Association chairman Greg Dyke said England could back a possible boycott of the 2018 World Cup if Blatter stays in office. Other European soccer officials have also alluded to the prospect of a boycott, but that is still seen as unlikely given the tournament’s importance to the global game. Some countries that have supported Blatter said they were switching allegiance following the scandal, but the numbers still appeared to favor his re-election.

NEIGHBORHOOD

Modern Silk Road may be created

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zerbaijan, Turkey, Kazakhstan and Kyrgyzstan plan to create a Modern Silk Road. The Turkish countries plans to create a single tourist package. A memorandum of understanding on this issue was signed at a meeting of ministers of tourism in Baku on May 20. The meeting was held within the framework of the Cooperation Council of Turkic-speaking countries. The main purpose of the memorandum is to support the creation of a joint tourist product of Turkic-speaking countries, increase the role of the private sector of member countries and expand cooperation between them, Secretary General of the Council Ramil Hasanov told journalists. Culture and Tourism Minister, Abulfas Garayev said the projects that will be supported by the associations of private tourism, will be raised to the international level. “This helps to attract a large number of tourists to Azerbaijan, Turkey, Kazakhstan and Kyrgyzstan,” the minister said.

Turkey’s economic centre continues to shine

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s the only city in the world that straddles two continents, perhaps it’s no surprise that Istanbul is filled with contrasts. While its opulent palaces and ancient domes pay homage to the bygone Byzantine and Ottoman Empires, the Turkish capital is a cosmopolitan hub with design-driven hotels, a lively nightlife and a strong contemporary arts scene. The city was thrust into the spotlight in 2010 when it was named European Culture Capital. Whether marvelling at the ancient domes of Hagia Sophia and Süleymaniye or being seen at the latest outpost of Soho House, visitors flock to Istanbul in droves, helping boost Turkey’s tourism income by 6.2 per cent to $34.3bn (£22.9bn) last year. Istanbul is Turkey’s economic heartbeat. Here you’ll find the Borsa Istanbul (BIST), the headquarters of Turkey’s largest companies, the offices of major global firms such as Citibank and Merrill Lynch, as well as the bases of manufacturing plants producing clothing, tobacco and industrial goods

Armenian government yet undecided on policy of minimum wage

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he Armenian government has not yet decided on the policy of minimum wage. Speaking in the parliament, Labor and Social Affairs Minister Artem Asatryan said a model should be formed that would reflect not only the amount of minimum wage, but other factors. “We can set higher wage based on social demands. But what if employers start cutting jobs? We have to understand what is more important for us,” the Minister said. A new model should be formed taking into account these factors, he added.

The ruble rebound is threatening a key part of Russia’s economy

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ussia’s ruble is on a roller-coaster. After being the world’s second worst-performing currency against the dollar last year, it is among the best in 2015. That will help keep a leash on inflation, to the relief of millions of Russians. But it is worrying one part of the economy — the local industry that had seen demand grow for its Russian-made goods when the falling ruble made imports hugely expensive. Russian sectors, from building materials to craft beer, took advantage of the ruble’s drop to undercut better-known imported rivals and gain a bigger domestic market share.

WORLD NEWS

America is officially the most competitive country in the world

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n what may come as no shock to anyone, America has topped the rankings on a list of the most competitive countries in the world. The International Institute for Management Development (IMD)– an international business school in Lausanne – has released its annual list of world competitiveness according to the key factors of innovation, drive, effectiveness of each country’s infrastructure and strong business efficiency. Hong Kong moved up, hot on the heels of the USA, to second place, with Singapore in third, overtaking Switzerland, which dropped down into fourth place

OPEC says global oil glut to persist till 2017 - media

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rude supply from non-OPEC producers will continue growing for another two years, according to an OPEC draft report seen by Reuters. Increased production, mainly shale in North America, is a ‘turning point’ in the restructuring of global markets, it said. “Since June 2014, oil prices have experienced a significant reduction, reaching levels even lower than the crisis experienced in 2008, yet non-OPEC supply is still showing some growth,” OPEC’s long-term strategy report says, Reuters reported on Thursday. Supply from rival non-OPEC producers will grow at least till 2017, the document said.

Germany Replaces Japan With World’s Lowest Birthrate

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ove over Japan. Germany now has the world’s lowest birthrate, and its economy is poised to suffer as a result. Germany recorded about 8.3 births per 1,000 citizens in the five years through 2013, less than Japan’s 8.4 and the U.K.’s 12.7, according to a study released on Friday by consultants BDO AG and the Hamburg Institute for International Economics. While other western nations are also experiencing declining birthrates, nowhere has the change been as drastic as in the country that carries the crown of Europe’s economic powerhouse. The tally has shrunk by half in the past 50 years, according to the findings.

Creator of Silk Road website faces sentencing for drug scheme

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he accused mastermind behind the underground website Silk Road will be sentenced on Friday for orchestrating a scheme that enabled more than $200 million of anonymous online drug sales using the digital currency bitcoin. Ross Ulbricht, 31, faces up to life in prison after a federal jury in Manhattan found him guilty in February of charges including conspiracy to commit drug trafficking, money laundering and computer hacking. Prosecutors are seeking a sentence “substantially above” the 20-year mandatory minimum that U.S. District Judge Katherine Forrest must impose on Ulbricht, who admitted to creating Silk Road but denied wrongdoing.

U.S. economy contracts in first quarter; dollar hurts corporate profits

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he U.S. economy contracted in the first quarter as it buckled under the weight of unusually heavy snowfalls, a resurgent dollar and disruptions at West Coast ports, but activity already has rebounded modestly. The government on Friday slashed its gross domestic product estimate to show GDP shrinking at a 0.7 percent annual rate instead of the 0.2 percent growth pace it estimated last month. A larger trade deficit and a smaller accumulation of inventories by businesses than previously thought accounted for much of the downward revision. There was also a modest downward revision to consumer spending.


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June 1, 2015 #101

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 16 Akhmeta Str., Avlabari, 0144 Tbilisi. E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi ;Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: +995 32 2 75 21 11, Fax: +995 32 2 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str. Batumi, Georgia; tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16 Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy

TBILISI GUIDE

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

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

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

Restaurants CORNER HOUSE Tbilisi, I. Chavchavadze ave. 10, Tel: 0322 47 00 49; Email: contact@cornerhouse.ge RESTAURANT BARAKONI Restaurant with healthy food. Georgian-European Cuisine Agmashenebeli Alley 13th Phone: 555 77 33 77 www.barakoni.com CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CAFE 78 Best of the East and the West Lado Asatiani 33, SOLOLAKI 032 2305785; 574736290 BREAD HOUSE Tbilisi , 7 Gorgasali St. , Tel: 30 30 30 BUFETTI - ITALIAN RESTAURANT Tbilisi , 31 I. Abashidze St. , Tel: 22 49 61 DZVELI SAKHLI Tbilisi , 3 Right embankment , Tel: 92 34 97, 36 53 65, Fax: 98 27 81 IN THE SHADOW OF METEKHI Tbilisi , 29a Tsamebuli Ave. , Tel: 77 93 83, Fax: 77 93 83 SAKURA - JAPANESE RESTAURANT Tbilisi , 29 I. Abashidze St. , Tel: 29 31 08, Fax: 29 31 08 SIANGAN - CHINESE RESTAURANT Tbilisi , 41 Peking St , Tel: 37 96 88 VERA STEAK HOUSE Tbilisi , 37a Kostava St , Tel: 98 37 67 BELLE DE JOUR 29 I. Abashidze str, Tbilisi; Tel: (+995 32) 230 30 30 VONG 31 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 BRASSERIE L’EXPRESS 14 Chardin str, Tbilisi Tel: (+995 32) 230 30 30 TWO SIDE PARTY CLUB 7 Bambis Rigi, Tbilisi Tel: (+995 32) 230 30 30

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

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

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

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

GSS Car rental offers a convenient service for those who are interested in renting car in Georgia. Rental fleet mainly consist of Japanese made SUV’s, the company has various models of cars including sedans and minivans which are in good technical condition. Contact information: Email: info@gsservices.ge. Address: Shalva Dadiani 10

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

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

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


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Two luxurious residences for 464 apartments with amazing sea view. Shopping Center, Conference Hall, Cinema, Bowling Center, Trade and Dining areas are integrated within the project. Hotels and Residences have absolute infrastructure that integrates panoramic restaurants on the roof and inside the hotel, Casino, SPA, swimming pool, terraces, laundry, shopping mall, dining areas, Gym, cinema, bowling center, a la Carte Restaurants, playground for children, outdoor swimming pool, private beach with gold sand yacht club. The construction of the complex will be finished in 19 April, 2017 in compliance with all the European standards. 10% Adv Payment 36 MONTH INTERNAL CREDIT 25% Adv Payment 60 MONTH INTERNAL CREDIT

STARTING PRICE IS FROM 1425 $ Address: Mtsvane Street N1, Batumi Tel: +995 577 14 17 14 info@metrocity.ge www.facebook.com/MetroCity.GE

www.metrocity.ge

June 1, 2015 #101