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State Financial Government Incompetence is a Main Problem for Georgian Economy

Georgian financier, Kacha Chargeishvili, who lives in America talked about the Georgian banking system. Chargeishvili has many years of experience of working in the banking sector.  His career is connected to global financial companies such as: Citigroup, Bank of America, and Merrill Lynch.He was also a head of European financial group, which implemented 500 billion USD financial transaction. He often makes comments on CNN and on different leading channels in the world.

How would you estimate current circumstances in a Georgian banking sector?

A Current situation after the unprecedented global banking and financial crisis (2007-2008) is still creating big problems for developed countries. Few of the major problems are: Negative interest rate and the fall in economic growth.  Political instability is another problem as well, which was one of the reasons for Brexit.

I left Georgia long time ago, but I hope that current government can succeed in economic growth. Today, the biggest problem for Georgian economy is an incompetency in the financial governance which reflects on banking sector.  Some of the ministers have such absurd answers to the questions concerning the current economic processes, in some countries, they would be sent to jail for such inadequacy.

Incompetency is a problem of only bankers or maybe, people themselves are not enough conscious about it?

Incompetency is an issue for the financial governance.  The state cannot regulate banking system, which is followed by negative results for the customers.

Recently, in the banking system a major event took place. More precisely, TBC Bank and Bank Republic have been consolidated.  What do you think, how could this change a situation in the current banking system in Georgia?

The unity of Georgian commercial banks is very similar to the system of Russia and developing countries in Africa.  Georgian banks are only trying to distribute money to clients ineffectively and establish too high prices.  Consolidation of TBC bank and Bank Republic will decrease effectiveness of competitive system; however there is a major problem in the governance system.

Will banks consolidation limit the competition?

Banking system is limited and they make profit by transferring financial resources, which is something that is for free for the customers in the developed countries.  After the banks consolidation, these processes will become less affective and make a negative influence on the competition.

Was there the same incompetency in the financial field during the previous governance?

Of course, there was. We have the problem of lacking qualified workers in this field for 20 years already. I hoped that new government would try to find professionals to work in this field but from today’s perspective, it is obvious that they need profound changes.

Can you make any predictions about Lari currency changes in the near future?

There is not policy that defines lari currency in the country. Therefore, no one can suggest a prediction for lari currency changes; either it’s the Minister of Finances or the president of National Bank. In general, they always try to cover deficient Georgian economy with lari inflation tendencies.