Georgian PM answers MPs’ questions in parliament, 4 major topics discussed

Georgian Prime Minister Mamuka Bakhtadze has answered the questions of opposition MPs at today’s plenary session of the parliament of Georgia, where the main topics of discussion were the accumulative pension system, financial sector regulations, the TBC Bank issue, funding of State Legal Entity of Public Law and non-commercial legal entities.

This was the second time the PM met with members of parliament for interpellation, where the opposition MPs have the right to summon top officials to parliament and ask them questions on specific issues.

First of all I wish to tell you that we have transited to parliamentary democracy and it was indeed a choice made by our political team… I and every member of my Cabinet of Ministers demonstrate great respect towards this format…When questions of high public interest are raised the government is obliged to give answers to them”, said Bakhtadze.

Accumulative pension system

Bakhtadze said that the government wants to create a “decent pension system for our citizens” and none of the successful countries in the world have achieved this result without establishing pension funds.

• Read about the accumulative pension system of Georgia here.

We have not invented a wheel and it is the only way forward to ensure a decent pension for our citizens in the future… As for the specific numbers, let the society make its choice and analysis by taking into account all the factors, including inflation. A young person, currently aged 25, who enters the system now will be paid 2,300 GEL with current purchasing power when he/she will reach a pension age solely from this component on top of the base pension. It is truly a decent pension.

PM Bakhtadze answering MP's questions in parliament. Photo: Gov't of Georgia.

Bakhtadze also answered questions related to the management of the pension system and in which infrastructural projects this accumulated money will be spent. Bakhtadze said that the investment fund had been selected with engagement of opposition parties.

Opposition was part of this process and it was guided with objective criteria. This investment council includes people, who managed Finnish pension fund, French pension investment fund, world giants, Vice-President of the number one investment bank - JP Morgan - and many others”, said Bakhtadze.

Bakhtadze once again clarified in his response that “there are no question marks related to the pension fund” and “it is the only alternative”.

NBG regulations

Another major topic of discussion was the National Bank of Georgia (NBG) regulations on responsible lending practices, which mean that commercial banks in Georgia are restricted in issuing loans without meaningful analysis of consumers’ solvency.

Bakhtadze explained that these are the financial sector regulations and not the banking regulations.

Our intention was to set a ceiling on interest rates to drop them way down from 700 and 800 per cent per month. Georgia should no longer have unfair rules of the game that you left as a legacy. My second point is that a cap should exist on the sanctions and interest for overdue payments to make sure that people no longer lose their houses to meet their liabilities towards creditors. We introduced a bank exposure limit at 200,000 GEL, to promote lending in the national currency”, said Bakhtadze.

I wish to remind you that a new products has been offered to its customers by the commercial banking sector of the country in the form of a 7% interest on loans denominated in GEL…back when you were in power, interest rates were as high as what? 21 percent! Refresh your minds! Interest rates have been reduced three times!”, he added.

TBC Bank issue

Bakhtadze stated that all the institutional shareholders, including the TBC management reached an agreement amongst them and with the NBG.

• Click here to read about TBC and NBG case.

The central bank of the country applied sanctions as a result. Measures taken by the NBG were legitimate, including those that will follow. [An agreement reached by TBC Bank and NBG] has been shared by all institutional investors and international financial institutions. If you agree with an agreement of the NBG and TBC Bank, you should agree with everything that follows this case”, Bakhtadze said.

Funding of State Legal Entity of Public Law and non-entrepreneurial (non-commercial) legal entities

Bakhtadze recalled the Open Budget index, released last year which ranked Georgia 5th in the world out of 82 scores, based on an analysis of 115 nations’ budget transparency, participation and oversight.

This was the historic achievement…At the same time, we took the obligation reduce the budgetary expenditure of government agencies as much as possible. I took political commitment and said that it would be 3.9 per cent”, said Bakhtadze.

He said that today about 225,000 citizens are employed including State Legal Entity of Public Law and non-entrepreneurial (non-commercial) legal entities and among them are firefighters, rescuers, doctors, people employed at cultural and sport organisations.