Unpaid Mortgage Problem to Be Solved
13 December, 2012
Unpaid Mortgage Problem to Be Solved
Prime Minister of Georgia intends to address the unpaid mortgage problem across the country as the problem affected regions no less than the capital of Georgia. Economic analysts think the unpaid loan problem should be solved without governmental interference.
During his visit in Ajara last week, Bidzina Ivanishvili, Prime Minister of Georgia pledged to solve the unpaid mortgage problems in Ajara and then go ahead with other regions of Georgia. During his meeting with the majority MPs on December 8,
2012, Ivanishvili accentuated that the common most trouble some problem in all regions is mortgages and works are carried out to ease the problem to population across the country and the process will take its start in Ajara.
As a matter of Fact Ajara, specifically Kobuleti district of Ajara, suffered from the unpaid mortgage problem more than orher regions of Georgia. Population of Kobuleti, one of the most favorite seaside tourist haunts in the Black Sea littoral of Georgia, took mortgage loans in 2008 in order to improve their hotel and guest-house infrastructure however the August war with Russia took an irretrievable impact on the tourist season and borrowers failed to repay loans in time. Now they face eviction and poverty as the only property and living source for most residents of Kobuleti is their houses and the income taken from the renting during tourist season. The insolvent borrowers permanently organized rallies and actions asking for help to regulate the problem with banks, but to no avail. Ex-Finance Minister Dimitri Gvindadze, promised them to find a solution to their problem and even took a list of 300 clients with the overdue mortgages from banking branches of Kobuleti but the problem remained unchanged. New Premier during his briefing with Georgian media on November 22, 2012 accentuated that new government plans to address to tackling the overdue mortgage problems from Kobuleti although he did not disclose any plans what remedies would be undertaken exactly. Eviction of people did not stop in Kobuleti meantime.
Based on Public Registry data 173 thousand families have already lost their houses due to unpaid mortgages since 2008 while there are 1.1 million families overall in Georgia, so the figure of evicted families makes 15% of total number of Georgian households that seems alarming to economic analysts. There were several suicides committed by people been deprived of their dwelling place, one young men burnt himself in a region, another fell under train at the subway station but no actual preventive remedies followed. President Mikheil Saakashvili just reprimanded banks and appealed to stop impoverishing people as a part of pre-election campaign in this past summer. Menatime, by end of this October a two-year moratorium was declared on mortgages immediately after a to-be-evicted woman committed a suicide. The US to facilitate to the mortgage problem in 2008 set up a special fund assisting insolvent borrowers to pay off their mortgages, Greece also announced a two-year moratorium on mortgages.
Georgian economic analysts think Georgia as a developing country with low debt-clearance culture cannot duplicate the practice of the west and should look for other solutions to the problematic loans. On the other hand they find governmental interference in the loan problem as the state interference in business.
Soso Archvadze, an economic analyst, thinks one of the ways out will be if Georgian government instead of direct interference with banking affairs would set up fair market rules and release the business from latent governmental pressure Georgian entrepreneurs suffered during the previous regime. Archvadze believes the political pressure impelling banks [as well as other businesses] to fork out money to finance sundry ex-governmental initiatives beyond the taxes they ought to pay in the state budget was the reason banks have been imposing high interest rates on loans that broke down borrowers ultimately. And if new government relieves them from unofficial payment banks will put out milder loan terms without any special remedies.
“Banks also need guarantees,” He said. “Banks are entrepreneurs like other businesses and they are regulated by law on entrepreneurs and commercial banks. Therefore, if they get firm guarantees from the state that they will be free of crackdown it will ease situation without any special programs and cut credits price down.”
Paata Sheshelidze, President of Free Economic School, fears that governmental interference in order to solve the mortgage problem may undermine the banking sector.
“Banks also borrow money from other financial institutions and how are they supposed to run the business if their outstanding loans are not paid off? Besides, they have obligations against depositors too and where will they get the money to perform banking services to deposits?” Sheshelidze wonders. “Those who committed suicides made irresponsible decisions when they took loans they could not pay and banks cannot be responsible for that.”
Both Archvadze and Sheshelidze rule out adoption of moratorium on mortgages as a remedy as far as Georgia has just started learning market economy and cultivating legal responsibilities to pay debts. Therefore, moratoriums, amnesty and that kind of preferences may encourage cheating and evading loan payment.
Print
Other Stories
Anaklia Port and its importance for Georgia
In 2016, Anaklia Development Consortium was authorized to launch the construction of Anaklia Port.
Cryptocurrency mining threatens electrical network in Abkhazia
In the breakaway region of Akbhazia rampant cryptocurrency mining is threatening the shaky electrical network, reports an article of the news portal EuroNet.
Caucasus Wine University to be opened in Gurjaani
In the Kakheti region a new viticulture campus of the Caucasus University is in the process of planning.
Photos describing life of the poorest in Georgia
Fight with poverty should be among top priorities of every government in every country.
Training farmers to rescue the organic hazelnut production in Georgia
Even drizzling rain and unpleasant gusts of wind can’t prevent the farmers from coming and participating in the agricultural training.
Bleak times for organic farmers in Georgia – but there is hope
Organic hazelnut production is a delicate plant in Georgia that has emerged just a couple of years ago. Various pests, among them the Asian stink bug Parosana, trouble hazelnut farmers and menace their livelihood – even before their businesses could really take off.
Hybrid car imports are going through the roof in Georgia
Thanks to their fuel economy, the popularity of hybrid cars is increasing in Georgia, where fuel affordability is low and prices for fuel are unstable.
The New Year offer from MAQRO Construction - Apartments with unbelievable discounts and the parking spaces for FREE!
Location, green yard, spaces for various needs, experience of the construction company and parking space are the main important criteria for potential buyers of apartments.
Interview with the co-founder of Kiwi Vegan Café – the first vegan place in Tbilisi
Behind the Kiwi Vegan Café stands a group of activists who wants to raise Georgian’s awareness for animal rights and welfare.
Biblusi opens first shop for tourists - Georgian
The largest book shop in Georgia Biblusi opens the first shop specially designated to the needs and interests of tourists and named it Georgian.
Georgia improves by five ranks in the Prosperity Index
In the overall Prosperity Index rankings, Georgia has climbed by 5 positions from 85 to 80 when compared to last year. As such, Georgia is the best performing country in the CIS zone.
The future is bright for electric cars in Georgia
The numerous hybrid cars in the streets of Tbilisi cannot be overlooked. Entrepreneur Sulkhan Gvalia calls them “pagers”, referring to the predecessor of mobile phones.
Georgia’s fight against the big tiny enemy – Asian Parosana
It’s a tiny creature, but the harm it did to the Georgian agriculture sector was and still is immense.
New cable route: from Kobi to Gudauri in 15 minutes
On the 15th of December, cable transport is scheduled to be opened connecting Kobi and Gudauri.
Tourist boom in Gudauri – majority of hotels are booked by foreigners
Gudauri is among the most popular winter resorts in Georgia.
Medical tourism increases in Georgia
In the last 9 months, Georgia was visited by 19 500 foreigners for medical and recovery purposes.
Doing business in Georgia has become easier than in America
According to the Doing Business 2019 report published by the World Bank, Georgia ranked 6th among 190 countries in terms of simplicity of doing business. This was an improvement over two ranks compared to last year.
Problems that foreigners frequently face in Georgia
The importance of Georgia as a tourism hub is growing year after year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Bitcoin.com Head Speaker List featuring Circle, DEX.top and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23
GAZELLE FINANCE GEORGIA AND TBC BANK HELP THE WESTERN REGIONAL CENTER OF MODERN MEDICAL TECHNOLOGIES EXPAND ACCESS TO QUALITY HEALTHCARE SERVICES IN KUTAISI, GEORGIA
TBC Bank and Gazelle Finance have teamed-up to support Medical City, a leading healthcare provider in the western region of Georgia to launch the Western Regional Center Of Modern Medical Technologies.
PHOTO OF THE DAY

Exchange Rates
GEL Exchange Rate
Convertor
20.01.2019
21.01.2019
USD
1
USD
2.6629
2.6629
EUR
1
EUR
3.0368
3.0368
GBP
1
GBP
3.4463
3.4463
RUB
100
RUB
4.0103
4.0103
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.6629
EUR
1
EUR
3.0368
GBP
1
GBP
3.4463
RUB
100
RUB
4.0103
January 2019
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31