Fund of Partnership urges country to socialism
10 March, 2011
Fund of Partnership urges country to socialism

To revive Georgian economy, the government is setting up a Fund of Partnership-kind of investment foundation incorporating the money of both the state and private sector. Part of experts finds the move right if it is properly executed. Some fear the state-based investment venture is a latent lobby of elite business and a step back to socialism.
To refurbish the investment-deficient economy of Georgia government decided to set up a state investment Fund of Partnership that will be attracting foreign

investors to finance sizable projects along with the state.  Neither the fund volume nor the target projects are defined as of yet.
Economic analysts think attraction of foreign investors through the government-supported investment fund bespeaks of inclement business climate of Georgia that fails to guarantee that the money of the investors will be paid back. 
Notwithstanding some economic analysts approve the Fund idea if it will be based on minutely defined program whence the money will be taken from, where be put exactly and what economic benefit can be expected as a result. But government does not provide with detailed program-description as of yet under the pretext that they work within the legal frameworks of the Fund at the moment and project-related details will be clear later.
To this point the bill for Fund of Partnership is under parliamentary procedures starting past week. 
According to Giorgi Khuroshvili, parliamentary secretary of government, the questioned investment fund will be attracting private investments to finance the suspended projects. He did not elaborate which ones however. But economic analysts suppose that most probably construction of a new oil refinery with 4. 5 million tons of productive capacity per year [calculated to meet Georgian demand on oil and oil products completely and also go on export] as well as Caucasus logistics center [expected to provide service to entire Caucasus region and even Middle East] will be topping the list of shortlisted projects. President of Georgia trumpeted meaning and importance of both projects in this past February.
Vakhtang Lezhava, the Chief Economic Advisor to Georgia’s Prime Minister, does not rule out this presumption but thinks it is too early to judge on target projects, details till the Fund legal mechanism is shaped out.
According to him, shares of co-financing and ownership of the enterprises [by the state and private investor] will be different in different projects “but two things will be crucial: the shortlisted projects must be very large-scale, and business must be interested in it,” He told Georgian Journal.
According to Khuroshvili, the Fund will be financing only projects that will not create artificial competition with the private sector and will require less financing. By preliminary decision agriculture projects requiring at least GEL 5 million investments and non-agriculture projects worth at least GEL 30 million will be eligible projects for the governmental investment fund. The Fund will never cover the service and real estate sectors.
Ditrikh Muller, an economic analyst with the Georgian Investment Group, approves the idea of supporting agriculture that cannot be developed without the state support as no big investor seems willing to invest in this sector scantly financed by banks. But he finds crucial where from the state is supposed to take money for this Fund, and where exactly to invest. 
“This kind of state investment funds are created in countries with the surplus in the budget like countries rich with oil and gas resources, but how Georgia is supposed to take extra resources for state investments. Are they gonna take more state loans? Right, but it must be well-reasoned where this money will be put and what economic benefit taken will be. I would approve if the state takes a loan to deploy small processing plants in regions to give an impetus to agriculture but they must provide with programs,” he said. 
According to Khuroshvili, the state financing most probably will be based on dividends of the state-owned enterprises,  international financial institutions [loans and grants] as well as on privatizations, and the Premier of Georgia will head the Fund supervisory council.
Levan Kalandadze, Director Executive of Georgian Small and Medium Business Association, also approves the state fund idea if it is based on three key principles: be transparent, not become an alternative to banking sector/investment funds,  and clearly stipulate who will be the decision maker while choosing target-projects and according to which criteria they will be selected.
“State interference in the business is bad but if it creates favorable conditions for certain businesses and then divests the shares it can be useful. Investors do not invest in Georgia because they lack guarantees, and state participation in projects will create such guarantees and attract investors. Commercial financial sector is not ready today to finance big projects and disburse for example GEL 100-120 million worth credits immediately. Since we have no investments the state money can be allowed along with foreign investors, but I find crucial to privatize the state share in the financed enterprise gradually so that in 10-15 years they would become completely private,” Kalandadze told GJ.
Paata Sheshelidze, President of Free Economic School of Georgia, advises government to make business environment more investor-friendly instead of pushing the country back to socialism.
“How can we call investor a guy who finances business through the state-based money,” Sheshelidze wonders.
He believes that financing business sector falls within competence of banks and investment funds alone and the state corrupts the climate.
“Let the banks and their clients to find solution themselves. I suppose that through this fund government will be financing its “own” corporate groups in certain sectors like they did in construction sector [City Hall supported suspended construction projects through its guarantee at banks] and insurance companies [that enjoyed 60% of profit margin thanks to the state-supported health-insurance], these groups alone are supposed to gain a profit in fact. This is a return to the socialist past and no attraction of investors,” Sheshelidze warns.

Other Stories
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Winemakers to produce Kvanchkara in its place of origin - Racha
Khvanchakara is a semi-sweet Georgian red wine which originates from Racha, in the western part of Georgia. Kvanchkara is made of two types of grape Mujuretuli and Aleksandrouli.
The level of Georgian wine and Chacha exported has increased
The National Wine Agency of Georgia has recently published statistical information about the level of Georgian wine and Chacha exported between January and July, 2018.
New fire engines to be Manufactured in Georgia
The Acting Head of the Emergency Management Agency Shalva Khutsishvili said that the old Zili fire engines (which were made in the USSR) will be phased out and replaced with new ones, manufactured in Georgia.
Georgia witnesses a record number of tourists
The Georgian National Tourism Administration publishes statistical information about international visits to Georgia.
Canadian businessman plans to build a hotel in Bakhmaro
Canadian businessman Vadim Malishev plans to build a hotel in Bakhmaro resort, Guria, in the western part of Georgia.
Coffee Factory will open in Tbilisi in October
The first coffee factory (which will be located on the Kakheti highway) in Tbilisi will open in October.
Places in Georgia where real estate is the most expensive
The real estate market in Georgia is growing annually. In Tbilisi as well as other regions of Georgia new developments are increasingly taking place.
How much does a vacation cost in Tbilisi?
It is the middle of summer and those who have not yet taken a vacation are looking for an appropriate place for sure!
The price for extreme sports in Georgia
Georgia offers a variety of options to extreme sport lovers.
The number of Georgians who own property abroad increases
The number of foreign properties owned by Georgians is increasing.
How much does Taxi cost in Tbilisi?
Stories how Taxi drivers try to deceive passengers and charge them with more money than they should pay are known for everybody all over the world.
What are the highest paid areas in Georgia
According to the data collected by the National Statistics Office of Georgia in the first quarter of 2018 the highest paid jobs in Georgia are found in the financial and insurance fields.
Exchange Rates
GEL Exchange Rate
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
September 2018
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