In June Nika Gilauri, Georgian Prime Minister presented to society new financial package. According to PM the first results will be shown approximately in 3-4 month, the final one approximately in a year. Kakha Baindurashvili said that the new financial package already has yielded some results. The new financial project stipulates as well the rehabilitation of old Tbilisi. According to Minister, processes of European Bills and treasury were having a success. About the results after the new financial initiative Kakha Baindurashvili, Finance Minister talked with news agency GHN.

Kakha Baindurashvili: The negotiations are pending between construction companies. The City Hall coordinates this process to the some degree. We can say that some negotiations were successful at this stage. One of them is the project of AXCIS, according to which the dwellers of the Old Tbilisi living in almost destroyed houses will be accommodated in the modern flats. In turn this company will start construction on the place of old Tbilisi. The activation of the construction building sphere is activating. The builders are easily finding clients for development of its business, at the same time the old zone will be developed and what is the main the dwellers of Old Tbilisi will be accommodated in European-type flats. The government in such case appears as a guarantee and we are ready to help. The project was not passed to us yet. At this stage this is only a plan. We are ready to respond positively to such plans.

-The government started the issue of treasury obligations - Exchequer Stock. Was it necessary to make such step? As the same government ceased issuing of them. May it result to the reverse process (such experience we have had already)? In the past the percentage of the Exchequer Stock reached 300%, and the commercial banks hugely gained at the expense of the government. What mechanism is to prevent such process?

- In the country the internal financial market must be. All countries have it and we as well. There was a demand for the opening of financial market from the commercial banks and from the international organizations as well. When a commercial bank wishes to attract the foreign resources it needs own portfolio be invested in the very reliable securities. Throughout the world such papers are the Government-papers. When the commercial banks have no such papers, it will be difficult for them to attract the credit recourses. And as well all negotiations would be very difficult.

We started the fiscal stimulation of the economy. We did not invent it. This is a trick,
Which all countries are exploiting. We increased the deficit. This mean that we are
taking form the economy less than we are giving to it. So we are taking fewer taxes than transactions are. Consequently this will increase the mass of the money, which is in turnover, and this gives the economy to develop. In such situation to take back the amount of money which is static and to turn them back the only way is to issue the Exchequer Stock. The Banks were conservative in giving the loans. This is normal tendency in the time of world financial crisis. So we are right that started the fiscal stimulation. This means that we are making the turnover in the economy of the exceeding amount of money through the Exchequer Stocks.


- What mechanisms for security there are? The percentage is determined by the Banks. What guaranties exist that banks will not make a deal with each other?



- What about the security mechanisms, I would say that the today's system is completely different from the past one. Let's see the technical side - this is not a written paper, but this a transactions made by Bloomberg portal. Here the subjective interference is excluded. No difference what post have a person, it cannot do anything. Because this is an international platform. Moreover players are not only commercial banks. Any natural person or legal entity may buy it. No difficulties now exist in this area which was before. What about the growing of the percentage, if we will see that they are growing too much we will not issue any more the Exchequer Stocks.

- The foreign debt of Georgia increased. Can the country pay it?



- The debt increased and this is normal. But the amount of the foreign debt is not in any
circumstances the big foreign debt. The percentage of the foreign debt is only 5%. The foreign debt will not increase. We did this in the purpose of the fiscal stimulation. The economic activity of Georgia will increase after the financial crisis is lessening. The economic growth we are expecting from the second quarter. We will not have the necessity to attract additional loans.

- One more big debt the government has as an emission of Euro obligations.

- This is not a debt only for financing. The euro bound is as well an instrument which has every country. It is for determination of financial trust of the country from investors. This debt diminished after the war from 30 to 10 per cent. This means that the trust for Georgia all over the world increased.

This was an unavoidable step. And by my opinion was made in due time. At that time we have had less fiscal risks. If we were late we now will not have a Euro bound, and would be in more difficult situation.

- Prime Minister said that the "cheap credit" project will be considered as well for harvest. What amount of money will be dedicated for this purpose?



- At this stage it is difficult to name definite figures. This depends upon the harvest. I hope it will go well. We are trying to do our best. We will do everything to increase incomes for farmers. Accordingly what amount of money will be spent it depends upon the amount of harvest.

-What amount of donated money entered Georgia in fact. And what amount of money are you expecting to receive?

-Totally 700 mn are signed, it was promised to receive 4 mlrd. The real agreements amounted to the 700 mn. We as well are signing all other agreements. It is not very important to receive more money from ADB than it was promised, and among them from the IMF. The fact of receiving more money from such type of organizations denotes that they are estimating highly the policy which is carried out.

The inflow of money continues. Out of our control is as well the amount of money which donors are paying directly without sending them to Georgia. We already signed the agreement for 1.7 mn, but the time is necessary for organization of tenders, to carry out an appropriate works and so on. Now is the time when the maximal amount of money will be paid by transferring.




- The presentation of the future generation's fund was held. What purposes does it have?


- The future Generations'' Fund we created for investing of excess money (if we would have them). This means that if the Budget was profitable we did not spent it without purpose, but we save the money for the future generations. But the spending of money from this fund may happen only in crisis situations. Unfortunately the crisis appears to happen earlier. After the war it was necessary to spend money. For the first time it was necessary to build the homes for refugees. And in such case the law worked appropriately and this money were in Budged in the governmental deposits in the National Bank.

The Fund was not annulled legally, but in practice it was annulled, as until Georgia will not receive excess income, the Fund will not be filled. In the nearest two years we will not have the excess income in Georgia, because the Georgian budget will be in deficit.