JAN. 30 2017 (The Conway Bulletin) — Georgia’s economy grew by an estimated 2.2% in 2016, the slowest growth rate since 2009, media reported quoting the statistics service. This was a drop from 2.9% in 2015 and 4.6% in 2014. Georgia, like the rest of the region, has been trying to deal with an economic slowdown linked to a recession in Russia and an overly strong US dollar.
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(News report from Issue No. 315, published on Feb. 3 2017)
JAN. 27 2017 (The Conway Bulletin) — The CEO of Swedish mobile operator Telia, Johan Dennelind, said that he was confident that he would be able to sell off the company’s remaining assets in its Eurasia region this year. Interest in Telia’s regional asset which include Azercell, Geocell, Ucell, Kcell and Tcell have been light. A corruption scandal in Uzbekistan, linked to a 2008 bribe, triggered the sale.
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(News report from Issue No. 315, published on Feb. 3 2017)
FEB. 1 2017 (The Conway Bulletin) — Two Soviet-era Mi-24 military helicopters crewed by Georgians and Belarusians collided on the border of Rwanda and Uganda, media reported. The Georgian ministry of defence said that the Georgian crew were working privately and were not employees of the Georgian military. It’s unclear how serious the crews’ injuries are. The incident does highlight the use of contractors from Georgia and other parts of the former Soviet Union who were trained to fly Soviet planes and helicopters.
FEB. 3 2017 (The Conway Bulletin) —
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(News report from Issue No. 315, published on Feb. 3 2017)
FEB. 3 2017 (The Conway Bulletin) — Shares in the Bank of Georgia rose by more than 50% last year to a peak of 380/$1 in mid-December. Since then they have come off the boil slightly hitting a three-month low of 312/$1 on Jan. 12.
Now, though, things appear to be picking up again. The Bank of Georgia’s share price measured 350/$1 on Feb. 2 and analysts predicted more growth. London- based brokerage Peel Hunt said Bank of Georgia’s subsidiary Georgia Healthcare looked good this year and was likely to see profits rise.
“We update our model to incorporate the strong growth expected in Georgia Healthcare’s profitability,” the broker said, explaining that it had given Bank of Georgia a ‘buy’ rating.
It also said that Georgia’s macroeconomic outlook looked good for Bank of Georgia.
“In addition, we continue to expect Bank of Georgia to benefit from underlying Georgian economic growth, supporting the core Banking division,” the brokerage said.
Last month, Georgia’s Central Bank chief Giorgi Kadagidze said that Georgia’s GDP would grow by more than 4% because of tax cuts, an infrastructure investment plan and a free-trade deal with China.
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(News report from Issue No. 315, published on Feb. 3 2017)
JAN. 22 2017 (The Conway Bulletin) — The 840km Baku-Tbilisi-Kars railway link between the Caspian Sea and central Turkey will be completed in the next two months, Turkish energy minister Ahmet Arslan told media. The route is seen as a vital piece of infrastructure linking Europe and China. Mr Arslan said is would double the cargo capacity between Turkey and the Caspian Sea and become an important part of China’s so called “One Belt, One Road” trade project.
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(News report from Issue No. 314, published on Jan. 27 2017)
TBILISI, JAN. 25 2017 (The Conway Bulletin) — Georgia increased its key interest rate by 0.25% to 6.75%, its highest level since September 2016, because it said that inflation was beginning to pick up again.
The data shows that consumer demand in Georgia is still weak, year- on-year prices rises in December were measured at 1.8%, but the Central Bank said that its forecasts showed inflation rising throughout the rest of the year.
“The monetary policy decision is based on the macroeconomic forecast, according to which while demand side pressure on prices is weak, inflation is expected to be above its target rate for the most of the 2017,” it said in a statement.
Georgia’s inflation target was 5% for 2016 and is 4% for 2017.
Georgia has cut taxes on reinvested company profit, pledged to invest an extra 600m lari ($225m) in infrastructure projects and cut a free- trade deal with China.
Also on Jan. 25, Bloomberg News published an interview with Georgian finance minister Dimitri Kumsishvili. He said that a blend of tax cuts and spending on infrastructure would help Georgia’s economy grow by more than the predicted 4%.
Last year, weighed down by a collapse in the value of its currency a recession in Russia and the poor economic condition of its neighbours Azerbaijan and Armenia, annual GDP growth in Georgia measured 2.7%.
Since June 2016, Georgia’s lari currency has lost 21% of its value. The Georgian Central Bank has largely refused to buckle to demands to spend wildly to support the lari’s value and Mr Kumsishvili was adamant that the best way to strengthen it was through the economy.
“Strengthening the economy is the answer for the lari rate, this is the main task,” he told Bloomberg.
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(News report from Issue No. 314, published on Jan. 27 2017)
JAN. 24 2017 (The Conway Bulletin) — Georgian president Giorgi Margvelashvili vetoed a bill passed through parliament, which is dominated by the Georgian Dream coalition that he represents, that he said would damage the independence of the courts. The proposed bill had focused on changing the process through which court judges are appointed. Mr Margvelashvili and the Georgian Dream have increasingly rowed over governance issues.
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(News report from Issue No. 314, published on Jan. 27 2017)f
TBILISI, JAN. 25 2017 (The Conway Bulletin) — Georgians have been lining up to convert their dollar denominated loans into lari under a so- called “larisation” programme aimed at easing debt burdens after the lari currency lost 21% of its value in six months.
The government will administer the programme jointly with the Central Bank starting from Jan. 17. It will run for two months.
Giorgi Tsutskiridze, the executive director of Association of Banks of Georgia, said that people had initially taken out bank loans in US dollars because they have a lower interest rate.
“Usually foreign currency loans have a relatively low annual interest rate, which is on average 3-4% less than loans in lari,” he told The Conway Bulletin.
Since the launch of the programme last week, 5,000 people have applied to switch their loans and around 250 have already made the switch. The majority of loans in Georgia are US dollar-dominated.
Georgian economy has been hit by a strengthening US dollar, a recession in Russia and weaknesses in its neighbouring economies.
Mr Tsutskiridze said the conversion of US dollar loans into lari was necessary to revive the economy.
“Dedollarisation is a vital strategy. Without rapid economic growth, we will end up in poverty,” he said.
In order to be eligible for the programme the loan must be linked to real estate received before Jan. 1, 2015.
Creditors will convert loans at 20 tetri less than the current rate with the government subsidising the difference.
Not everybody, though, is convince that the “larisation” plan is a good one.
“The lari is so devalued now against the dollar that even with the favourable exchange rate that the government offers, I would end up paying much more anyway,” said Merab, a Tbilisi resident who works in a local grocery store.
“I’d rather just wait and hope for the lari to stabilise.”
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(News report from Issue No. 314, published on Jan. 27 2017)
JAN. 27 2017 (The Conway Bulletin) — >> Why are people getting so upset about this new gas deal between Georgia and Russia?
>> After a couple of rounds of negotiations in Geneva, Georgian energy minister Kakha Kaladze returned to Tbilisi heralding a new gas deal which he said he had negotiated with Russia that was better than the previous arrangement. The new arrangement returned to a monetised price that Georgia would pay Russia for gas rather than, under the old deal, take a 10% cut of the volume that Russia sends to Armenia.
>> Right. But why would Georgia want to start paying for gas rather than just take a slice of the transit volumes?
>> That’s exactly the point. Kaladze returned from Geneva heralding the new deal as a victory for Georgia over Russia but it could be more of an own goal. Certainly Margvelashvili was immediately critical of the deal. He may have been playing politics, he has fallen out with his former colleagues in the Georgian Dream coalition and often sounds like an independent politician, but his concerns have been parroted by others too.
>> Go on. What are the details?
>> Kaladze was coy with the details of the deal and exactly how much Georgia would now have to pay Russia for gas but a think-tank called World Experience for Georgia (WEG) said that it would now have to pay $185 per 1,000 cubic metres of gas which is more than Armenia and Germany pay for their gas.
>> So what have the Georgian energy ministry and Kaladze said?
>> Surprisingly little, other than back Kaladze’s statement that the price negotiated was a good one. And this secrecy could be part of the problem. They have said that the actual price negotiated is a commercial secret, a statement that hasn’t gone down well.
>> But there must be some upside put forward by the government other than the price.
>> The deal does give Georgia more flexibility about where it sources its gas. It is likely that Azerbaijan’s Socar will be the big winner here with more gas being sourced from them.
>> And Kaladze? What has he said?
>> He’s come out fighting as he knows that his political reputation is on the line. Without being any more specific on the pricing structure agreed with Russia, he accused Pres. Margvelashvili of being unpatriotic. This row is likely to run and run and may have more far reaching political implications.
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(News report from Issue No. 314, published on Jan. 27 2017)
JAN. 26 2017 (The Conway Bulletin) — US car rental company Enterprise, which owns the Enterprise, Alamo and National brands, said it had made a franchise deal with Yerevan- based TravelCar. The deal will expand the brands to Armenia and also to neighbouring Georgia. The deal is part of a global drive by Enterprise to spread its business across the Middle East and Asia.
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(News report from Issue No. 314, published on Jan. 27 2017)f