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Businessman Lasha Papashvili: Government and National Bank must Cooperate

If the Lari is Kept at 2.50 in Winter, it will be a Great Achievement

An interview with Vice President of Business Association of Georgia Lasha Papashvili

Business Association recently met with the Minister of Economy of Georgia David Kumsiashvili. What issues were discussed during the meeting? Whether the meeting touched on the issue of the national currency devaluation?

We discussed  the economic situation in the country, both in terms of positive and negative. In general we are positive. As for the lari, this is an issue that concerns not only the Ministry of Economy. One can only welcome the fact that government officials want to take active measures to stabilize the financial situation in the country. How  good and right it will be done – we shall soon see.

It is important that the government has made an emphasis on those sectors that can  attract investors. In Georgia, there are a few sectors that can attract investors and may increase the inflow of foreign currency, namely,  tourism, agriculture, real estate, banks, etc. The government is well aware.

Whether the specific challenges facing by the business were considered   at the meeting?

We touched on these problems too, in particular, the need to review the property tax. This issue has been discussed for  2 years, we raised this issue earlier, attitude to this initiative is  positive, but a solution still cannot be accepted. What hinders –it  is a topic for another big conversation.

We also raised the issue of the need for differentiated taxation for hotel business. The hotels in Tbilisi and for example, in Batumi and Telavi  can’t  pay the same property tax, as the hotels in the capital are busy all year round, and in the regions – for a few months at most. Therefore, differentiation is needed. Regional hotels have to pay less.

Did you get any promises? Has  the Minister of Economy any plans in this regard?

The Minister agreed with us, but the problem is that it is the only tax that is in the competence of local authorities,  they should put this initiative to the central government. But they are in no hurry to do so, and the government cannot solve the problem on their own.

We often hear statements by representatives of both the government and the National Bank that one of the reasons for the devaluation of the national currency is that businessmen are hoarding dollars, but in September they will begin their spending that will lead to the lari’s strengthening. But the second half of September has come and the rate of national currency continues to fall. When will a turning point come?

Unless there is some major change, it will be very difficult to keep the lari even at the current level. If in the winter the rate is  kept at GEL 2.43-2.50 per dollar, it will be a great achievement of the government. To date, there is every reason for it to happen.