THE NATIONAL THE NATIONAL SUPPORTED BY SUPPORTED BANK OF GEORGIA BANK 18 March, 2019 News Making Money http://www.fi nchannel.com

Are We Ready for Vakhtang Nexia TA: Being the Butskhrikidze New Paternity Leave becomes recipient of Policies in Georgia? best of 120 countries the magazine By GIORGI MZHAVANADZE Georgia have the opportu- nity to take leave intended ISET FIRST award for childcare. It is a fact that since 2011 the number of fa- The FINANCIAL -- TBC he following blog ar- thers who have taken “child- Bank’s General Director ticle was conceived of care” leave can be counted Vakhtang Butskhrikidze was within the delibera- on just two hands (includ- nominated as one of four win- tions of a project, to- ing the ISET Alumni, Giorgi ners of “The International gether with UNFPA, Balakhashvili). As a future Award for Responsible Capi- Trelated to the cost assess- father this topic proves to be talism 2019” by the interna- ment of potential changes to particularly interesting, and tional organization “FIRST”, the leave policies of working in the following sections London. parents. Admittedly, like the Within the framework of majority of the population, the awards ceremony, her I had no idea that men in Royal Excellence Princess Continued on p. 2 Anne awarded Vakhtang Butskhrikidze with the award “The FIRST Award for Pro- Georgia in top 10 asylum moting Responsible Capital- seekers in the EU ism in Adversity 2019”. The FINANCIAL -- In 2018, of asylum applicants in 2018 See on p. 4 580 800 fi rst-time asylum is comparable to the level re- The FINANCIAL opened branches in more market since 2014. seekers applied for interna- corded in 2014, before the than 120 countries, which are The growth of the Georgian tional protection in the Mem- peaks of 2015 and 2016. accumulating annual revenue subsidiary has been nothing CURRENCIES ber States of the European Syrian (80 900 fi rst-time s the fi nancial ser- of USD 4 billion globally. but spectacular, both from Union (EU), down by 11% applicants), Afghan (41 000) vices sector con- (2018) 2016 to 2017, and from 2017 Mar 15 Mar 9 compared with 2017 (654 and Iraqi (39 600) continued tinues its rapid Under the leadership to 2018 the company has 600) and less than half of the to be the main citizenships of growth on the of a very charismatic trio: shown more 100% growth in 1 USD 2.6864 2.6878 number recorded in the peak people seeking international. Georgian market, Boris Megrelishvili, Davit revenue. 1 EUR 3.0372 3.0396 year 2015 when 1 256 600 ANexia TA strives to become its Lomidze, and Gela Mgheb- 100 RUB 4.1034 4.0740 fi rst-time asylum applicants brightest representative. rishvili, Nexia TA has been were registered. The number Continued on p. 8 Nexia International has operating on the Georgian Continued on p. 5 1 TRY 0.4912 0.4942

© 2019 The FINANCIAL. INTELLIGENCE BUSINESS PUBLICATION WRITTEN EXPRESSLY FOR OPINION LEADERS AND TOP BUSINESS DECISION-MAKERS 2 HEADLINE NEWS & ANALYSIS fi nancialnancial nnewsews 18 MARCH, 2019 | FINCHANNEL.COM CURRENT PRICES ON GASOLINE AND DIESEL 18 MARCH, 2019, GEORGIA

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If you are seeking permission to use The FINANCIAL trademarks, logos, service marks, trade dress, slogans, screen shots, FEWER TOURISTS, CHEAPER KHACHAPURI?! copyrighted designs, combination of headline fonts, or other brand features, please contact publisher. he average cost of cooking “&” is the copyrighted symbol used one standard Imeretian by The FINANCIAL Khachapuri in the second FINANCIAL (The FINANCIAL) is registered month of 2019 decreased trade mark of Intelligence Group ltd in Georgia and Ukraine. Trade mark to 3.54 GEL, 2.2% lower registration by Sakpatenti - Registration Tmonth-on-month (in comparison date: October 24, 2007; Registration N: 85764; Trade mark registratrion to the previous month), and 3.5% by Ukrainian State Register body - lower year-on-year (compared to Registration date: November 14, 2007. the same month of last year). ADVERTISING The Khachapuri Index is driven All Advertisements are accepted subject primarily by the price of cheese, to the publisher’s standard conditions of the main ingredient in khacha- insertion. Copies may be obtained from puri. In February 2019, the cheese advertisement and marketing department. Please contact marketing at: price declined in almost all large marketing@fi nchannel.com Georgian cities, relative to the see fi nancial media kit online www.fi nchannel.com same month of last year. The high- est yearly price decrease (13.5%) Download RATE CARD of Imeretian cheese was recorded in the capital, Tbilisi. For Khacha- puri lovers, Telavi is currently the most expensive city, with Tbilisi taking second place. On average, the price of cheese stands at 7.85 GEL/kg, which is 3.4% lower than the previous month (January 2019), and 6.4% decrease is potentially associated to the Georgian National Tourism Georgia decreased by 0.4% and the lower compared to the same month with the reduction of trips by in- Administration, in February 2019, number of same day trips by 10.7%, DISTRIBUTION of last year (February 2018). This ternational travelers. According the overall number of tourists in compared to the previous year. The FINANCIAL distribution network covers 80 % of key companies operating in Georgia. 90 % is distributed in Tbilisi, Batumi and Poti. Newspaper delivered free of charge to more than 600 companies and their managers. To be included in the list please contact distribution department at: temuri@fi nancial.ge CONTACT US EDITOR-IN-CHIEF ZVIAD POCHKHUA E-MAIL: editor@fi nancial.ge editor@fi nchannel.com Phone: (+995 32) 2 252 275 HEAD OF MARKETING DEPARTMENT SOPHO PKHAKADZE E-MAIL: marketing@fi nancial.ge marketing@fi nchannel.com Phone: (+995 32) 2 252 275 / EXT: 1 Equal Rights Are Not Just for SALES NANUKA BERIDZE n.beridze@fi nancial.ge Phone: (+995 595) 488 886 OMAR KHOPERIA Women: Are We Ready for New Phone: (+995 592) 072 159 o.khoperia@fi nancial.ge COMMERCIAL DIRECTOR LALI JAVAKHIA Paternity Leave Policies in Georgia? E-MAIL: commercial@fi nancial.ge commercial@fi nchannel.com Phone: (+995 558) 03 03 03 By GIORGI MZHAVANADZE HEAD OF DISTRIBUTION DEPARTMENT TEMUR TATISHVILI ISET E-MAIL: temuri@fi nancial.ge Phone: (+995 599) 64 77 76 COMMUNICATION MANAGER: he following blog article EKA BERIDZE was conceived of within the Phone: (+995 577) 57 57 89 deliberations of a project, together with UNFPA, re- COPY EDITOR: IONA MACLAREN lated to the cost assessment Tof potential changes to the leave MAILING ADDRESS: policies of working parents. Ad- 17 mtskheta Str. Tbilisi, Georgia mittedly, like the majority of the OFFICE # 4 population, I had no idea that men PHONE: (+995 32) 2 252 275 in Georgia have the opportunity (+995 32) 2 477 549 FAX: (+95 32) 2 252 276 to take leave intended for child- E-mail: info@fi nchannel.com care. It is a fact that since 2011 the on the web: www.fi nancial.ge number of fathers who have taken daily news: www.fi nchannel.com “childcare” leave can be counted on just two hands (including the ISET Alumni, Giorgi Balakhash- vili). As a future father this topic proves to be particularly interest- ing, and in the following sections I will off er a brief overview of the ex- isting regulations behind Georgian leave policies, compare them with Intelligence Group ltd. 2019 European practices, and underline the economic and social implica- Member of tions of paternity leave. In more developed countries, for mothers and taken just before, health of mothers and newborn working parents are potentially during and/or immediately after children. eligible for three main types of childbirth. This leave is generally Georgian vs. leave: considered a health and welfare European Practices Maternity leave – available only measure, aimed at protecting the Continued on p. 11 HEADLINE NEWS & ANALYSIS 3 FINCHANNEL.COM | 18 MARCH, 2019 ppublicityublicity

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Law Report: Injunctions

DAVIT TABATADZE GOCHA OKRESHIDZE t is lawyers’ job to help clients eff ect a month before the term the claim. But sometimes the re- achieve their goals. In a litiga- of the guarantee was due to ex- spondent does not have an alter- tion, winning the case is im- INJUNCTION IS AN IMPORTANT PART OF A CIVIL pire. Not only was this materially native property. In this case Civil portant, but what follows is of wrong, but also constituted a seri- Procedure Code contains special equal, if not of superior signifi - PROCESS BECAUSE IT SECURES THE CLAIM AND ous misuse of judge’s discretion. provisions for a couner-guaratnee. Icance. The judgment rendered in MAKES JUDGMENT ENFORCEABLE. HOWEVER, Just recently partners of the Counter-guarantee is a mechanism client’s favor must be enforced, INCONSISTENT PRACTICE AND LENGTHY company fi led a lawsuit against di- that allows the claimant to request meaning, the respondent shall rector requesting certain company- the other party to deposit certain perform the action order by the LITIGATION TURNS THIS PROCEDURAL TOOL INTO related documents which the direc- amount as a guarantee for losses court. Judgment-proof respondent A WEAPON AGAINST RESPONDENTS, CAUSING tor refused to supply. The partners potentially caused by injunction. is as bad as losing the case. In a also asked the court to apply the This mechanism is especially dif- world of civil procedure, one of the TREMENDOUS FINANCIAL AND OTHER PROBLEMS injunction and prohibit the direc- fi cult in a property related cases most important mechanisms that TO THE COMPANIES AND PRIVATE INDIVIDUALS. tor from destroying the requested where the calculation of damages secures enforcement of a court de- documents. Civil Procedure Code might not be easy to make. Addi- cision is called injunction. In this explicitly states that one of the in- tionally, if the claim is not success- Law Report we will write about junctive measures can be restrict- ful the Civil Procedure Code allows injunctions with the one eye on is- ing the respondent or any third the respondent to claim damages sues related to injunction and the severe fi nancial diffi culties and tunately, courts are also reluctant person to perform certain acts. sustained as a result of injunction. other eye on suggested practical sometimes even go bankrupt as a to make exceptions from the over- Court’s refusal to use the injunc- However, the clause is rarely used solutions to them. result of injunctions imposed upon arching, general type injunctions. tion may incentivize the director to in practice. Injunctions are primarily de- them. Courts usually put an injunc- More diffi cult are the cases destroy the evidence against him. Injunction is an important part signed to enable and ensure future tion on immovable property (land where the courts freeze respon- In other cases judges refuse of a civil process because it secures enforcement of court decision – plot, fl at, house), restricting their dent’s bank account. Such an to freeze the company’s and/or the claim and makes judgment judges grant injunctions in order alienation, use as a collateral and injunction makes it impossible individual’s bank accounts even enforceable. However, inconsis- to avoid impossibility or material sometimes even renting out. Also, for the respondent to dispose the though the claimant makes suf- tent practice and lengthy litiga- complication of judgment enforce- courts freeze the bank accounts. In funds deposited on the bank ac- fi cient showing of actual fraud tion turns this procedural tool into ment. To get an injunction party, practice, it often happens that the count, pay salaries and fi nance or misrepresentation. Refusal to a weapon against respondents, usually the claimant, applies to the injunction is issued against prop- day-to-day business transactions. freeze the account enables the re- causing tremendous fi nancial court and asks the judge to impose erty that values disproportionately Given the average trajectory of spondent to siphon the funds and and other problems to the com- certain restrictions on the respon- higher than the claim itself. This dispute longevity, this may last for make it impossible to enforce the panies and private individuals. It dent, third party or a property, in puts an unreasonable and undue months, even years. Courts have decision. has long been recognized that the order to preserve the status quo restrictions on respondent’s prop- been mindful of this damaging Respondents have number of provisions of injunction must be until the issue is ultimately de- erty rights. Respondents with their practice and in recent times freez- tools to counter injunctions. First amended and modernized. Unfor- cided. assets frozen are no longer able to ing the bank accounts are used in of all, if the injunction is placed on tunately, so far the legislator failed It comes as no surprise that sell the property or pledge it for a only rare occasions. an immovable property with the to act. with restrictions various problems credit. In a construction/real es- Parties encounter problems in market value signifi cantly higher befall. Part of those problems are tate development related disputes other specifi c instances as well. In than the claim, a respondent is en- caused by improper application of for example, sometimes the courts one case for example, Tbilisi City titled to make an off er of alterna- injunctive measures by the courts puts an injunction on a fl at or a Court used an injunction against tive property in lieu of frozen asset. and the other part is a result of commercial premise, rendering it the company and a commercial The court will make a substitute as lengthy court proceedings. Com- impossible to register the whole bank restricting encashment of long as the proposed property is of panies, as well as individuals face fl oor in a Public Registry. Unfor- bank guarantee. Injunction took a market value reasonably close to

Vakhtang Butskhrikidze becomes Non-EU citizens: recipient of the magazine FIRST award 4.4 % of the EU population in

The FINANCIAL -- TBC Bank’s Gen- eral Director Vakhtang Butskhrikid- 2018 ze was nominated as one of four win- ners of “The International Award for Responsible Capitalism 2019” by the international organization “FIRST”, London. Within the framework of the awards ceremony, her Royal Ex- cellence Princess Anne awarded Vakhtang Butskhrikidze with the award “The FIRST Award for Promoting Responsible Capital- ism in Adversity 2019”. Vakhtang Butskhrikidze was presented the award by Suma Chakbarti, the Presi- dent of EBRD. The awards ceremony, which programmes, whether it be train- successful entrepreneurial activity was held at Lancaster Palace on 7 ings, lectures, Business Reward, or and social responsibility. March, was attended by represen- meetings.” At various times, winners of tatives of the London Diplomatic “Our main goal is to simplify the FIRST’s prestigious prizes have in- Corps, business and government lives of people by creating digital cluded: Güller Sabanch, Chairman circles, including Tamar Beru- ecosystems.” of Sabanci Group; Howard Schulz, chashvili, Plenipotentiary Ambas- “After coming so far in Georgia, Founder of Starbucks; Paul Pol- sador of Georgia to Great Britain, we decided to expand to other coun- mann, General Director of Unile- as well as staff of the London TBC tries too. TBC aims to increase its ver; Alan Wood, CEO of Siemens; The FINANCIAL – The number accounted for 48 % of its total Bank offi ces. customer base by up to 10 million, John Brown, CEO of British Petro- of people residing in European population. A high proportion “Over the course of 27 years we which means a 5 time increase of the leum. Union (EU) Member States with of foreign citizens (10 % or more have succeeded despite fi nancial current number.” The multidisciplinary organiza- citizenship of a non-member of the resident population) was crisis, civil war and armed con- “This award does not just belong to tion FIRST was founded in 1984. country on 1 January 2018 was also observed in Cyprus, Austria, fl icts. Today, our brand is a marker me, it belongs to the 7 000 employ- It aims to strengthen strategic dia- 22.3 million, representing 4.4 % Estonia, Malta, Latvia, Belgium, of pride for Georgia, is the most ac- ees of TBC who bring our culture and logue between industries, the fi nan- of the EU population. In ad- Ireland and Germany. In con- tive in CSR, and is recognized as the philosophy to our customers. I am cial sector and government. FIRST dition, there were 17.6 million trast, non-nationals represented best supporter of business. We have very grateful that such people stand regularly organizes a number of people living in one of the EU less than 1 % of the population achieved all of this because we have beside me,” Vakhtang Butskhrikidze international conferences and high- Member States on 1 January in Poland, Romania and Lithu- done business as a true citizen of our said in his acceptance speech. level meetings attended by govern- 2018 with the citizenship of an- ania. country.” ment offi cials and the executives of other EU Member State. In most For more statistics on the “We have developed special pro- corporations. Experts of the orga- EU Member States, the majority number of national and non-na- grammes for business support, About FIRST nization are working in 60 coun- of non-nationals were citizens of tional citizens in the population, with a special emphasis on SMEs. tries, across three continents. In the non-EU countries. acquisition of citizenship and in- Within the framework of this plat- From the year 2000, the organi- years 2010 and 2013, the magazine In relative terms, the EU ternational migration flows, take form we provide not only fi nancial zation FIRST has been awarding on FIRST became the fi rst recipient of Member State with the high- a look at the Statistics Explained support but also invest in them to an annual basis the private business the “The Queen’s Award for Enter- est share of non-nationals was article on migration and migrant develop and grow, with diff erent leaders of various countries for their prise”. Luxembourg, as non-nationals population statistics. HEADLINE NEWS & ANALYSIS 5 FINCHANNEL.COM | 18 MARCH, 2019 fi nancialnancial nnewsews Nexia TA: Being the best of 120 countries

By GELA MEGENEISHVILI The FINANCIAL

s the fi nancial services sector continues its rapid growth on the Georgian market, Nex- ia TA strives to become Aits brightest representative. Nexia International has opened branches in more than 120 coun- tries, which are accumulating annual revenue of USD 4 billion globally. (2018) Under the leadership of a very charismatic trio: Boris Megrel- ishvili, Davit Lomidze, and Gela Mghebrishvili, Nexia TA has been operating on the Georgian market since 2014. The growth of the Georgian sub- sidiary has been nothing but spec- tacular, both from 2016 to 2017, and from 2017 to 2018 the compa- ny has shown more 100% growth in revenue. GELA MGHEBRISHVILI, Managing Partner DAVID LOMIDZE, Managing Partner BORIS MEGRELISHVILI, Managing Partner With such incredible growth, Nexia TA earned its rightful posi- tion expectation of 6th place on the Georgian market. To achieve such results in less than a 5-year period is nothing short of amazing. The fi gures have not gone un- noticed however, earning its Geor- gian representatives the rightful name of the best Nexia subsidiary globally! (Nexia has branches in more than 120 countries). None other than Kevin Arnolds, the Chief Executive of Nexia In- ternational, stated himself: “The award was given to the team, whose contributions to the de- velopment of Nexia International were unrivalled.” “Fully meeting the numerous criterion for winning is not the only feat of our team’s that we are proud of,” stated Gela Mghebrish- vili, a leading partner of Nexia TA. “Being the best of 120 countries puts Georgia on the map, numer- ous investors have come to us, ea- ger to learn more about Georgia; we were bombarded with ques- tions relating to the diff erent en- trepreneurial sectors in our coun- try and many of these investors were keen on doing business in the nearest future.” The team takes huge pride in introducing their home country done outstanding work, however that their management team will made solely to make a profi t. We very high GPA. However, if we see to the entire world. “We really be- nobody can remain 100% sure only have to face representatives believe that breaking that stereo- determination, passion, and sim- lieve that foreign investments will while facing such fi erce competi- from any controlling institutions type is crucial. CSR (Corporate So- ply the high practical value that hugely boost our economy. The tion. I cannot fully describe the twice - once while greeting them cial Responsibility) is very impor- the person brings to the table, we fact that Nexia TA plays a role in range of emotions that grabbed us and then while saying goodbye - as tant and an exemplary company will surely hire them,” stated Gela such a great deed is a motivational when our team was announced the we will take care of the rest,” Gela should be a benefi cial part of soci- Mghebrishvili. boost to continue our activities,” winner,” stated Davit Lomidze, a Mghebrishvili proudly told The FI- ety. We are just trying to do that,” With quality of personnel being added Boris Megrelishvili. leading partner of Nexia TA. NANCIAL. stated Boris Megrelishvil. given huge attention, Nexia TA And the motivational boost As the holders of two prestigious The confi dence and expertise Currently, thanks to this service established the company’s own seems to have had a very positive nomination awards, Nexia TA is that the company carries is defi - many individuals and companies training academy, where the most eff ect. keeping up the work necessary to nitely worthy of praise. have managed to avoid the unfair qualifi ed will give lectures for ab- Winning apparently became ad- become the best company on the However, there is one less pub- payment of huge sums of money. solutely no price. dictive to Nexia TA, as the Geor- Georgian market. licized service that probably de- What’s even more impressive “Georgian universities send us gians went on to completely shock “We have managed to become serves the most appreciation. about Nexia TA is that they have very enthusiastic youngsters, who the world with their next award - the 6th ranked company on the lo- From the beginning of 2019, Nexia never lost a lawsuit, maintaining have the ability of critical thinking IAB’s Accounting Capacity Build- cal market in just 5 years, three TA off ers a free service for those a 100% winning rate, which again and all the necessary qualities to ing Champion. years from now we plan to be in companies and citizens who have highlights the expertise of the staff . have a bright career; however they International Accounting Bul- the top 5,” Davit Lomidze told The had taxes imposed on them unfair- The company counts 150 full- lack experience and deep under- letin (IAB), the number one ac- FINANCIAL. ly, and lack the expertise or human time employees, and its recruit- standing of the business sectors counting magazine, certainly has Currently the services of Nexia resources to appeal this in court. ment criteria are very progressive. which we compete in. At Nexia TA tough criteria when it comes to TA consist of: Assurance services, For the price of just GEL 1, the Qualifi cations and degrees from Academy, we make sure that these picking winners. Tax services - including Transfer team of experts will take care of fi nancial schools are of course re- talented people will get the traits “No Georgian auditory repre- prices; Accounting services; Con- your taxation problems. spected within the company, how- they lack to become very produc- sentative company had ever been sulting services; Legal services and “People come to us in confusion ever a desire for personal develop- tive employees.” nominated, let alone been given software. asking if we really do off er such a ment and critical thinking are the Nexia TA as a team has every an IAB award, which makes Nexia “We are not just an auditory service for the cost of just GEL 1, traits that a perfect Nexia TA em- necessary trait to dominate the TA’s achievement that much more company; we off er varied services and we don’t blame them. Some- ployee must possess. market. The company holds a very impressive,” Nexia TA representa- at the highest quality. In fact, we times it really does sound too good “Sometimes there are cases optimistic view of the future, and tives told The FINANCIAL. are so confi dent of our expertise, to be true, especially in an industry where we meet a young, very tal- they believe that their best is yet to “We were confi dent that we had that we guarantee our partners where it seems as if every action is ented person, who doesn’t have a come. 6 HEADLINE NEWS & ANALYSIS fi nancialnancial nnewsews 18 MARCH, 2019 | FINCHANNEL.COM Jesper Black, the Six Millionth Tourist of Georgia, is leaving the country

The FINANCIAL

fter being welcomed by the Former Prime Minister Giorgi Kvirikashvili to din- ner, the video of his arrival was watched over 7.5 mil- Alion times in 3 diff erent languages on Facebook, doing a great service to the promotion of Georgia’s tourism world- wide. Jesper quickly become a celebrity in Georgia, and moved from his home in Barcelona to Tbilisi to become a partici- pant of the 7th season of Dancing with the Stars, where he was partnered with Verka Jajanidze. The dancing was not a great success though, and Jesper and Verka were eliminated in the 4th round, leaving the show in favour of Aleksan- dra Paichadze and her partner. After the show, Jesper loved Georgia so much that he decided to stay and live in Tbilisi to make it his home, and start- ed working for the First Channel as a director and scriptwriter for Eurovision Junior, under the supervision of Sergi Gvarjaladze. During his two years in Georgia, Jes- journey here in Georgia. I came in April That and the wine… Everyone wins. Zwart means black in Dutch. Seeing per displayed his love for the country 2017 to participate in Dancing with the Q. What are the most negative things Q. What would your suggestion be how many people already have so much very often, travelling to all of the diff er- Stars, and was planning to move back to you have encountered in Georgia? for the local authorities? trouble with my fi rst name (it’s Jesper, ent regions and making beautiful videos Barcelona after that fi nished, but loved A. The traffi c, and the way people A. If I could say one thing to Kakha not Jasper), I’ve taken Black as my stage and publishing them both on Facebook Georgia so much that I decided to stay. drive. It’s a funny thing, Georgians Kaladze, it would be this: Please fi x name. and YouTube, where they became very In my 2 years here I have travelled all all over the world are known for their the traffi c problem, Kakha. It’s time… So right now, I have about two weeks popular. over the country and have experienced warmth and hospitality, but somehow Tbilisi has both a traffi c and a parking left in Georgia and I am using this to He writes: “For the last two years, so many great things, people have been manage to forgot all about that the mo- problem: there are too many cars on the work on a documentary about fame. you have been my warm, beautiful, wel- very kind and welcoming. I do feel ment they step into their car. People roads, too little parking places, too little Some people chase it and would love to coming home. It has been very strange though that it is time for the next adven- drive very dangerously, I have seen so enforcement of the rules, and too many be in the spotlight. Other people don’t at times. It has been very great at times. ture, and I am looking forward to every- many accidents that wouldn’t have hap- people not caring about it. As a result, care and would rather stay anonymous. Now though, it is time to leave and say thing on the road ahead. pened had people driven more slowly or people park their cars on the pavements, Me, I happened to get famous by acci- goodbye to Georgia, with all of these Q. What did you like most during considerately. Just today I have friends on the road, and wherever they can, dent, and it made me pose the question great memories, adventures, and experi- your stay in Georgia? telling me that their friend just died in an blocking traffi c even further. The al- what fame really means. What is the ences in my pocket, and move on to the A. The freedom and adventure. The accident, and this happens so often. It is ready heavily polluted city air of Tbilisi value of it, what are the things that are next adventure. Didi Madloba, Sakart- sense of freedom and adventure that this not necessary, and it needs to stop. Geor- gets dirtier and dirtier every day, and in truly important, is fame something we velo. Miyvarxar.” country off ers is unparalleled to any- gia has to somehow regulate and enforce the long run the people are going to pay should be chasing as a society? Part of After his announcement, Jesper also thing and any place I have ever lived. more fi rm driving regulations in order to the price with their health for breathing the fi lm will be recorded here, in Geor- stated that he is making a documentary To get out of Tbilisi and drive a couple stop people dying. in exhaust fumes everyday. It is not a gia, and part of it will be recorded in The about what it is like to become famous, of hours into the complete wilderness, Q. What is your suggestion for the good legacy to have as a mayor. It needs Netherlands. and that he is looking for funding for the beautiful nature and the great food travel industry? to be fi xed. One last thing: although I am look- this on a fundraising website Indiegogo. is truly a wonderful thing. I grew up in A. Smile. Service is king everywhere Q. Do you have dual citizenship? ing forward to moving back home to my Details can be found below. The Netherlands, a very densely popu- you go. Many restaurants here in Geor- (Georgian?) family and my friends in The Nether- lated country with no mountains, so to gia have no idea what (good) service is. A. I do not. lands, I am extremely grateful for what Q. Why have you decided to leave the be here and be able to basically do what- A smile on the face of the waiter makes Q. What is your real name and sur- Georgia has done for me. I have my country? ever you want is something that I have all the diff erence. Customers leave hap- name? Jesper Zwart? family here, and Georgia will always be A. I have had a very great but strange really cherished over the past two years. py and most likely leave a tip as well. A. Jesper Zwart is my Dutch name, in my heart. Also… I will be back!

Christchurch Attacks: Why Are The Names Of A Georgian King And A Ukrainian Extremist Written On The Guns?

Mike ECKEL er Seljuk forces in 1121, and led the way for Georgia to expand its own RFE/RL kingdom between the Caspian and Black seas. The victory is called nvestigators piecing together the “miraculous” in Georgian, and its motivations of the suspected gun- literature and culture is littered man behind New Zealand’s worst with references to the event. terrorist attack are poring over The second name was David So- the 87-page hate-fi lled manifesto slan, who was a military leader and Ihe published, and the memes, cul- husband of the Georgian queen at tural references in his online rant- the time, Tamar. He played a key ings, and musical allusions con- role in leading Georgian forces tained in the video he took of the in battles several decades later, deadly incident. against Islamic forces at Shamkor Then there is the multilingual let- -- in what is today’s Azerbaijan -- tering scrawled on his guns, with and Basian- in what is today’s Tur- references to various fi gures from key. history, past and more recent: Ser- David Soslan is not nearly so well bian, Italian, Hungarian, Ukrainian. known in Georgian culture, possi- And then there’s the Georgian king bly because he wasn’t considered as and Georgian consort from the 12th royal as his wife, but also because, century. according to some sources, he was In all, 49, people were killed and ethnically Ossetian, another ethnic more than 20 wounded in the March group living in close proximity to 15 attack on two mosques in the Georgia and Russia. New Zealand city of Christchurch. How the two Georgian leaders An Australian man who claimed re- became associated with the white sponsibility for the shootings said nationalism of the New Zealand in a manifesto that he came to New from the gunman. was ruler of the Christian kingdom gunman wasn’t immediately clear. Zealand only to plan and prepare for What appears to link the names David The in the 12th century when it was at- However, in his online mani- the attack. together, Georgian or otherwise, tacked by the armies of the Seljuk festo and other writings, the gun- For Georgians, the references are is the figures were all participants Builder Empire, an empire of various Mus- man, who identifi ed himself as an perplexing and worrying. in major battles or military con- lim communities that, at its height, Australian called Brenton Tarrant, A spokesman for the country’s flicts with Islamic armies from One of the two Georgian names is stretched from the Aegean Sea to expresses extreme hatred for Mus- State Security Service told the Geor- history: variously called Otto- a king known to nearly all Georgian what is today northern Afghani- lims. gian news agency Agenda.ge that the man, Persian, Seljuk, or Turkish, schoolchildren: David IV, or David stan. service was cooperating with part- depending on the era and the au- the Builder. Formally known as Da- At the Battle of Didgori, the ners regarding the weapons seized thor. vit Aghmashenebeli in Georgian, he Georgian army defeated much larg- Continued on p. 15 HEADLINE NEWS & ANALYSIS 7 FINCHANNEL.COM | 18 MARCH, 2019 ppublicityublicity

Advertiser: m2. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com 8 HEADLINE NEWS & ANALYSIS fi nancialnancial nnewsews 18 MARCH, 2019 | FINCHANNEL.COM Georgia in top 10 asylum seekers in the EU

The highest number of regis- Syrians, tered first-time applicants in 2018 relative to the population of each Member State was recorded in Cy- Afghans prus (8 805 first-time applicants per million population), ahead of and Iraqis Greece (6 051), Malta (4 276) and Luxembourg (3 694). In contrast, continued to the lowest numbers were record- ed in Slovakia (28 applicants per be the top million population), Poland (63), Hungary (65), Estonia (68) and citizenships Latvia (91). In 2018, in the EU as a whole, there were 1 133 first-time The FINANCIAL -- In 2018, 580 asylum applicants per million pop- 800 fi rst-time asylum seekers ap- ulation. plied for international protection in the Member States of the European Union (EU), down by 11% compared Less than 900 with 2017 (654 600) and less than half of the number recorded in the 000 asylum peak year 2015 when 1 256 600 fi rst-time asylum applicants were registered. The number of asylum applications applicants in 2018 is comparable to the level recorded in 2014, before the pending at the peaks of 2015 and 2016. Syrian (80 900 fi rst-time appli- end of 2018 cants), Afghan (41 000) and Iraqi than 5 000 fi rst-time asylum seekers Syrian (14% of the total num- Iraqis seeking asylum protec- Pending applications for interna- (39 600) continued to be the main in 2018, the number of fi rst time ap- ber of first-time applicants) tion for the first-time in the EU tional protection are applications citizenships of people seeking inter- plicants, rose most compared with the was the main citizenship of asy- in 2018, more than 41% applied that have been made at any time and national protection in the EU Mem- previous year in Cyprus (+70%, or 3 lum seekers in the EU Member in Germany (16 300). Iraqi was are still under consideration by the ber States in 2018, together account- 100 more fi rst-time asylum seekers in States in 2018, a position it has the main citizenship of asy- national authorities at the end of the ing for almost 30% of all fi rst-time 2018 than in 2017) and Spain (+60%, held each year since 2013. Of the lum seekers in two EU Member reference period. In other words, applicants. or 19 700 more), ahead of Belgium 80 900 Syrians who applied for States. they refer to the “stock” of applica- (+29%, or 4 100 more), the Nether- asylum for the first-time in the tions for which decisions are still lands (+27%, or 4 400 more), France EU in 2018, more than half were pending. This statistic is intended (+20%, or 18 500 more) and Greece registered in Germany (44 200, Almost 3 in to measure the workload of the na- (+14%, or 8 000 more). In contrast, or 55%). Syrian was the main Highest tional authorities. the largest relative decreases were re- citizenship of asylum seekers in At the end of 2018, 878 600 ap- 10 applied for corded in Italy (-61%, or 77 400 few- eight EU Member States. number of plications for international pro- er), Austria (-49%, or 11 100 fewer), With 41 000 first-time ap- tection in the EU Member States asylum in Sweden (-19%, or 4 100 fewer) and plicants (or 7% of the EU total) first-time were still under consideration by Germany (-18%, or 36 400 fewer). in 2018, Afghan was the second the national authorities (exclud- main citizenship of asylum seek- Germany ing Finland, as data not avail- ers in the EU Member States. Al- applicants able). At the end of 2017, this fig- With 161 900 fi rst-time applicants Syrian, most 29% of Afghans applied in ure was slightly higher (927 000). registered in 2018, Germany account- Greece (11 800). Afghan was the relative to the Germany had the largest share of ed for 28% of all fi rst-time applicants Afghan and main citizenship of asylum seek- applications pending in the EU in the EU Member States. It was fol- ers in five EU Member States. population in at the end of 2018 (384 800, or lowed by France (110 500, or 19%), Iraqi (7% of the total number Iraqi – main 44% of the EU total), ahead of Greece (65 000, or 11%), Spain (52 of first-time applicants) was the Italy (103 000, or 12%), Spain (78 700, or 9%), Italy (49 200, or 8%) and third main citizenship of asy- Cyprus, lowest citizenships of 700, or 9%) and Greece (76 300, the United Kingdom (37 300, or 6%). lum seekers in the EU Member or 9%). Among Member States with more asylum seekers States in 2018. Of the 39 600 in Slovakia IFC, Georgian Stock Exchange, and UN Women “Ring the Bell” for Gender Equality in Tbilisi

TThehe FINANCIALFINANCIAL ––AcceleratingAccelerating thethe GGroup,roup, thethe GeorgianGeorgian StockStock ExchangeExchange ooverallverall progressprogress inin internationalinternational ddirection,”Georgeirection,”George Paresishvili,Paresishvili, CEO,CEO, ““IncreasingIncreasing thethe participationparticipation ofof ppaceace ofof reformsreforms toto ensureensure gendergender aandnd UNUN WomenWomen hostedhosted a “Ring“Ring thethe rrankings.ankings. IInn tthehe WWorldorld EEconomicconomic GGeorgianeorgian StockStock Exchange,Exchange, said.said. wwomenomen asas entrepreneurs,entrepreneurs, employeesemployees eequalityquality couldcould yieldyield enormousenormous ben-ben- BBellell forfor GenderGender Equality”Equality” eventevent inin FForumorum GlobalGlobal GenderGender GapGap ReportReport ““Economically,Economically, womenwomen inin GeorgiaGeorgia aandnd businessbusiness leadersleaders isis notnot onlyonly a efi ts,ts, withwith thethe potentialpotential toto increaseincrease TTbilisi—anbilisi—an iinitiativenitiative linkedlinked withwith 22018,018, GGeorgiaeorgia rrankedanked 8855 amongamong 149149 aarere notnot yetyet onon anan equalequal footingfooting withwith mmoraloral iimperativemperative butbut a smartsmart busi-busi- ggloballobal grossgross domesticdomestic productproduct (GDP)(GDP) IInternationalnternational WWomen’somen’s DDayay tthathat ccountriesountries forfor parityparity inin economiceconomic par-par- mmen,”en,” saidsaid TamarTamar SSabedashvili,abedashvili, DDep-ep- nnessess strategy,”strategy,” saidsaid JanJan vanvan Bilsen,Bilsen, bbyy $12$12 trilliontrillion inin thethe nextnext sixsix years,years, ppromotesromotes increasedincreased women’swomen’s par-par- tticipationicipation andand opportunity.opportunity. uutyty CountryCountry RepresentativeRepresentative forfor UNUN IIFCFC RRegionalegional ManagerManager forfor thethe SouthSouth aaccordingccording toto a McKinseyMcKinsey GlobalGlobal In-In- tticipationicipation inin thethe globalglobal economyeconomy toto ““AtAt thethe nexusnexus ofof companycompany andand in-in- WWomen.omen. ““ToTo aachievechieve gendergender equal-equal- CCaucasus.aucasus. “Research“Research hashas highlightedhighlighted sstitutetitute report.report. WithWith gendergender equality,equality, ccatalyzeatalyze sustainablesustainable andand inclusiveinclusive vvestorestor interaction,interaction, a stockstock exchangeexchange iity,ty, wewe needneed toto seesee notnot onlyonly govern-govern- tthathat correctingcorrecting gendergender imbalancesimbalances GGeorgiaeorgia couldcould experienceexperience economiceconomic pprivaterivate sectorsector growth.growth. iiss uniquelyuniquely positionedpositioned toto ininfl u-u- mmentent actionaction butbut strongstrong privateprivate sectorsector ccouldould leadlead toto importantimportant economiceconomic ggainsains equivalentequivalent toto aroundaround 1111 per-per- DDespiteespite Georgia’sGeorgia’s signisignifi cantcant eencence capitalcapital marketsmarkets toto progressprogress iinvolvement.nvolvement. IIt’st’s eencouragingncouraging toto seesee ggains.ains. TToday’soday’s eeventvent inin TbilisiTbilisi isis a ccentent ofof GDP,GDP, accordingaccording toto thethe WorldWorld sstridestrides inin creatingcreating anan enablingenabling envi-envi- iinn closingclosing thethe gendergender gap.gap. WeWe areare mmoreore andand moremore companiescompanies takingtaking cclearlear signsign ofof ourour jointjoint commitmentcommitment BBank.ank. rronmentonment forfor gendergender equality,equality, thesethese ccommittedommitted toto continuingcontinuing ourour workwork sstepsteps toto helphelp empowerempower womenwomen inin thethe ttoo helphelp breachbreach thethe gendergender gapgap andand IIFC,FC, a mmemberember ofof thethe WorldWorld BankBank mmeasureseasures havehave notnot translatedtranslated intointo ttoo achieveachieve tangibletangible resultsresults inin thisthis wworkplace.”orkplace.” ppushush forfor change.”change.” Georgia in NATO Secretary Tajikistan, Georgia agree to open direct fl ights General’s Annual Report The FINANCIAL -- The aviation author- The company carries out regular ities of Tajikistan and Georgia reached fl ights to fi ve cities of Russia (Moscow, ATO Secretary General Jens mechanism is designed to strengthen ous training events to military and an agreement on the establishment of St. Petersburg, Yekaterinburg, Surgut, Stoltenberg released on Georgia’s defense capacities and help civil students,” according to the docu- direct fl ights between the cities of the Novosibirsk), as well as to Kyrgyzstan March 14 his Annual Report it “prepare for eventual NATO mem- ment. two countries, according to Azernews. (Bishkek), Kazakhstan (Almaty), Iran for 2018, which outlines the bership.” The report also says in 2018, NATO Designated companies have the right to (Tehran), India (Delhi), China (Urumqi Alliance’s responses to se- According to the report, six of the Allies expressed their readiness to fl y to any point of Georgia and Tajiki- ). On local airlines, regular fl ights are Ncurity challenges and the Secretary 15 SNGP initiatives “are on track enhance their support to Georgia, in- stan. operated to Khujand and Khorog. General’s vision for reforms. to achieve all of their objectives in cluding in the areas of counter-mobil- Regular fl ights in Georgia were car- In the near future, the airline intends The report includes a section on 2019.” ity, training and exercises, and secure ried out by 58 airlines in 2018, which is to open fl ights Dushanbe-Beijing-Du- Georgia, which refers to the country “Georgia has made signifi cant communications. 9.4 percent more compared to 2017. In shanbe, Kurgan-Tyube - Ekaterinburg, “as a critical partner for the Alliance,” progress on aviation and air defence, Jens Stoltenberg referred to Geor- general, the airports of Georgia served Kurgan-Tyube - Novosibirsk, Kurgan- civil Georgia reported. in developing transparent acquisition gia at a press conference following the more than 5 million passengers in 2018, Tyube - Kazan. “Georgia aspires to NATO member- legislation, in improving its cyber de- launch of his Annual Report. which is 23.6 percent more than in 2017. Diplomatic relations between Tajiki- ship, and Allies have consistently reaf- fence and logistics capabilities, and in Responding to the question of Ime- To this day, more than 500 aviation stan and Georgia were established on fi rmed their commitment to Georgia’s bolstering the strategic communica- di TV, SG Stoltenberg said Georgia is specialists are working at Tajik Air. August 4, 1994. eventual membership. Georgia is also tions capacity of the Ministry of De- a “highly valued partner,” and that Most of the pilots, navigators and fl ight The main areas of cooperation be- a signifi cant contributor to NATO’s fence,” reads the report. NATO welcomes the reforms imple- operations and missions,” it says. Other initiatives, such as the Joint mented for modernizing the country’s engineers of the company are highly tween the two countries are agricultural The report also touches upon the Training and Evaluation Centre and security and defense institutions, as qualifi ed and have extensive experience and mining industries, tourism devel- Substantial NATO-Georgia Pack- the Defence Institution Building well as its support of NATO’s Reso- in fl ying in the most diffi cult mountain opment, education and pharmaceuti- age (SNGP), saying the cooperation School, “are already off ering numer- lute Support Mission in Afghanistan. conditions of the Pamir Mountains. cals. HEADLINE NEWS & ANALYSIS 9 FINCHANNEL.COM | 18 MARCH, 2019 ppublicityublicity

Advertiser: ProCredit Bank. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com 10 HEADLINE NEWS & ANALYSIS FFactCheckactCheck 18 MARCH, 2019 | FINCHANNEL.COM STATEMENT:

GIORGI VOLSKI: “The ministers’ salaries have decreased signifi cantly as compared to 2012. The total administrative expenses to GDP ratio has decreased.” VS NIKA MELIA: “Administrative expenses have increased by GEL 685 million since your coming to power. The amount of employees was 101,000 and in 2018 it is 116,000.” VERDICT:

FACTCHECK CONCLUDES THAT GIORGI VOLSKI’S STATEMENT IS TRUE WHILST NIKA MELIA’S STATEMENT IS MOSTLY FALSE.

Egnate SHAMUGIA public sector has increased as Graph 1: Consolidated Budget’s Administrative Expenses (GEL Million, %) compared to 2012. FactCheck ANALYSIS RESUME: During a TV debate on air on Rustavi 2, MPs Giorgi Vol- In order to analyse the ski and Nika Melia discussed trend of changes in adminis- administrative expenses. As trative expenses over time, it stated by Mr Volski: “The is appropriate to use relative salaries of the ministers have fi gures vis-à-vis the gross signifi cantly decreased as domestic product or budget compared to 2012. The total assignments instead of using administrative expenses to nominal fi gures. A compari- GDP ratio has decreased.” In son of the nominal fi gures response to the aforemen- Source: Ministry of Finance of Georgia for expenses in a seven-year tioned statement, United period is incorrect because, National Movement parlia- on the one hand, the nominal mentary faction member, of administrative expenses. The state budget’s admin- 2017 when the administrative 7,080. In March 2013, a per- fi gures for budget revenues Nika Melia, stated: “Ad- The consolidated budget istrative expenses include expenses to state budget ratio manent monthly supplement and expenditures increase in ministrative expenses have includes the consolidated the bureaucratic expenses of decreased by 0.8 of a per- for ministers of GEL 4,335 this period and, on the other increased by GEL 685 million fi gures of the state budget the state government bodies. centage point followed by 0.6 was introduced in accordance hand, the infl ation factor since your coming to power. as well as the budgets of Similar to the consolidated and 0.4 of a percentage point with a decree of the Prime is not excluded. Therefore, The number of employees autonomous republics and budget, the relative fi gures of decreases, respectively. In the Minister of Georgia. Giorgi Volski’s approach under the previous govern- self-governing bodies. The a state budget’s administra- same period, the indicators Therefore, the monthly when he speaks about rela- ment was 101,000 whilst in administrative expenses of the tive expenses have a tendency for self-governing bodies labour remuneration for min- tive fi gures is correct whilst 2018 it is 116,000.” Given consolidated budget are the of decrease. In accordance remained the same. isters was GEL 7,875 (GEL Nika Melia’s comparison of the fi gure of 116,000 in Mr expenses for labour remuner- with the 2019 plan, the nomi- Prior to 2018, the labour 3,540 salary and GEL 4,335 nominal fi gures is incorrect. Melia’s statement, this refers ation and purchasing goods nal amount of administrative remuneration for ministers supplement). The amount of The consolidated budget’s to the number of employ- and services. In the 2019 con- expenses is GEL 2,688.8 included a salary, a supple- the aforementioned supple- administrative expenses to ees working in state budget solidated budget, the planned million which constitutes ment and a bonus. Labour ment decreased to GEL 2,710 GDP ratio has decreased in spending institutions. amount of administrative 6.0% of the estimated GDP. remuneration for minsters in 2014. As a result, ministers 2019 as compared to 2012. In order to analyse the expenses is GEL 3,334 million The same fi gure in 2012 was includes only a salary begin- received GEL 6,250 as their In particular, the admin- trend of changes in admin- (of this amount, labour remu- GEL 2,110.4 million; that is, ning in 2018. Since 2018, sal- labour remuneration (GEL istrative expenses to GDP istrative expenses over the neration is GEL 1,762 million 8.1% of the GDP. Therefore, ary supplements and bonuses 3,540 salary and GEL 2,710 ratio dropped from 9.6% to years, it is appropriate to and the purchase of goods the state budget’s administra- have been legally banned supplement) in 2014-2017. 7.4% whilst the administra- compare relative fi gures and services is GEL 1,572 mil- tive expenses to GDP ratio for government offi cials and the monthly labour remuner- tive expenses to current instead of analysing nomi- lion) which constitutes 7.4% decreased by 2.1 percentage for those holding a political ation for Georgian ministers expenditures ratio dropped nal indicators. The reason of the estimated GDP and points in 2012-2019. In addi- offi ce. Therefore, a minister in 2014-2019 is GEL 6,250 from 38.5% to 32.7%. In for this is that the nominal 32.7% of the budget’s current tion, the state budget labour gets only a salary because he which is less as compared to addition, the share of funds fi gures of the state budget expenditures in the same remuneration to GDP ratio is a government offi cial. Be- their labour remuneration in allocated for labour remu- amount increase over the year. The nominal amount of decreased from 4.0% to 3.3% ginning in November 2007, 2011-2013. neration decreased both years and, therefore, the administrative expenses in whilst the goods and services labour remuneration for In regard to the number in the consolidated budget nominal fi gures for admin- 2012 was GEL 2,500.3 million to GDP ratio decreased from minsters increased to GEL of employees, the number of and in the state budget in istrative expenses increase which was 9.6% of the GDP 4.1% to 2.7% in the same 3,540. Ministers received this employees working in state the same period. In regard as well. The second rea- and 38.5% of current expendi- period. The decrease in case amount of salary until 2018. budget spending institu- to the salaries of the minis- son behind the growth in tures. Therefore, the admin- of the consolidated budget’s In the same period, ministers tions was 103,000 in 2012 ters specifi cally, the average administrative expenses is istrative expenses to consoli- administrative expenses is were able to receive bonuses whilst this number is 112,100 monthly salary for ministers infl ation. In particular, given dated budget ratio decreased mostly related to cutting and supplements which had according to the plan for in 2011-2012 was GEL 7,080 the annual increase in the in the period of 2012-2019. administrative expenses in no ceiling prior to 2013. the 2019 state budget. In which has decreased since level of prices, less money In particular, the administra- the state budget because In 2011-2012, a minister’s the aforementioned period, 2014 with a minister’s salary was needed to purchase the tive expenses to GDP ratio the administrative expenses labour remuneration in the the number of employees currently at GEL 6,250. In same amount of goods and decreased by 2.2 percentage of self-governing bodies to form of bonuses and supple- increased by 9,100 according 2012, the number of employ- services in 2012 as compared points and the administrative GDP ratio decreased by only ments was on average equal to state budget fi gures. Of ees working in state budget to the present day. The la- expenses to current expen- 0.1 of a percentage point to the salary. In the afore- note is that the aforemen- spending institutions was bour remuneration of public ditures ratio dropped by 5.8 in 2012-2019 whilst the mentioned period, ministers tioned growth in the number 103,000 whilst this number servants cannot be kept percentage points, including administrative expenses of received bonuses and supple- of employees is not caused was 113,600 in 2018. In ac- unchanged and together with a 0.7 of a percentage point the state budget to GDP ratio ments equal to their salary. by the growth in employees cordance with the 2019 state changes in macroeconomic decrease in the labour remu- decreased by 2.1 percentage Consequently, the average in the central offi ces of the budget, the number of these parameters, a salary increase neration to GDP ratio and a points. An important de- monthly labour remuneration ministries but is instead aforementioned employees is is an objective necessity and 1.5 percentage point decrease crease in the relative fi gures for a minister in 2011-2012 related to the LEPLs which 112,100. Therefore, the num- this is something which also in the goods and services to of administrative expenses (salary, bonus and supple- were legally created within ber of people employed in the increases the nominal volume GDP ratio. in the state budget started in ment) amounted to GEL the same period. GALT & TAGGART Successfully releases two- years long obligations, worth 15 million GEL

By GELA MEGENEISHVILI Georgian stock market. and as well as to the GEOR- The noteworthy portion of GIAN NATIONAL BANK for The FINANCIAL the earned revenue on bonds, their support. It is very note- will be spend to off er reasonable worthy that the revenue gained ALT & TAG- loans to female customers, to in- from releasing the notes will GART has ac- crease the awareness and skills be spend to incentivise the cepted the of- suitable for the business world economic prosperity of female fer to issue and on development of their entrepreneurs, and to enlarge two-years long own businesses. Female play a their businesses.” Stated Archil Gbonds of MFO CRYSTAL, signifi cant role into the develop- Bakuradze, the head of the su- worth of 15 million GEL. The ment of the Georgian economy, pervisory board of CRYSTAL. annual coupon rate on the CRYSTAL as the participant of “I would love to congratu- mentioned bonds was set at 4% the Georgian economy would be late to CRYSTAL, for success- over the refi nancing rate. eager to support the women. fully issuing the new bonds, Earning the highest cred- With the introduction the the second issue is the symbol it evaluation, by the rating second release of the corpo- that highlights the trust of the company FITCH, (FITCH rate bonds, CRYSTAL is glad to investors towards our organ- RATINGS), CRYSTAL as a continue their doings, that they isation. My congratulation as non-banking fi nancial organ- consider stands benefi cial both well as goes to GALT & TAG- isation, alongside with their for the company and the mar- GART, who became one of the astonishing results, has earned ket on bonds. “we would love leading investment manage- a trustworthy name among in- to give props to the fi nancial ment services company on the vestors, and therefore created investment management ser- Georgian market.” Stated Otar a demand for corporate bonds, vices company GALT & TAG- Sharikadze, the chief executive which will be traded on the GART with their amazing team of GALT & TAGGART HEADLINE NEWS & ANALYSIS 11 FINCHANNEL.COM | 18 MARCH, 2019 fi nancialnancial nnewsews TBC Bank CEO Vakhtang Butskhrikidze Wins Special Award for Responsible Capitalism in Adversity TThehe FINANCIALFINANCIAL ---- TTBCBC BBankank Equal Rights Are Not Just for Women: Are We iiss delighteddelighted toto announceannounce tthathat itsits CEO,CEO, VakhtangVakhtang BButskhrikidze,utskhrikidze, hhasas wwonon tthehe Ready for New Paternity Leave Policies in Georgia? SSpecialpecial AwardAward forfor Respon-Respon- ssibleible CapitalismCapitalism inin AdversityAdversity es the gender pay gap (GPG). ffromrom thethe prestigiousprestigious FIRSTFIRST Continued from p. 2 Thus, an increase in the take- oorganisationrganisation – a multidisci-multidisci- up rate of leave by fathers re- pplinarylinary internationalinternational aff airsairs Paternity leave – available duces the “child penalty” for oorganization,rganization, wwhichhich aaimsims toto only for fathers and usually women and, consequently, eenhancenhance dialoguedialogue betweenbetween taken soon after the birth of a shrinks the GPG by allowing lleaderseaders inin industry,industry, fi nancenance child. The purpose of the leave mothers to return to full-time aandnd government.government. is to enable fathers to spend work. Furthermore, the poor VVakhtangakhtang BButskhrikidzeutskhrikidze more time with their partners take-up rate of paternal leave wwasas nominatednominated forfor thethe awardaward and newborn children. creates a gender pension gap bbyy SirSir SumaSuma Chakrabarti,Chakrabarti, Parental leave – is avail- - the diff erence between male PPresidentresident ofof thethe EuropeanEuropean able equally for mothers and and female accumulated pen- BBankank FForor RReconstructioneconstruction andand fathers. This leave off ers all sions, which is estimated to be DDevelopmentevelopment (EBRD).(EBRD). parents an equal opportunity 40% in the EU. The increased I aamm hhonoredonored toto receivereceive thisthis to take care of and spend time uptake of leave by fathers can pprestigiousrestigious award.award. Corpo-Corpo- with young children. More- also further reduce the ex- rrateate socialsocial responsibilityresponsibility hashas over, parental leave may be tent of career interruptions aalwayslways beenbeen oneone ofof ourour corecore either transferable or non- amount of total and paid days month in Poland to €1,778 only the current “discrimi- and part-time employment of vvaluesalues andand isis anan integralintegral partpart transferable, an individual or remains the same. However, per month in Luxembourg). nating” legislation and the women, and potentially cut ooff TBCTBC BanksBanks successsuccess story.story. a family right, which may be the main diff erence is the re- Compared to Georgia, where lack of available information the GPG (all leading causes of SSinceince TBCTBC BanksBanks iinceptionnception divided between the parents. imbursement ceiling of 1,000 leave payments are fi nanced on leave, but also cultural the gender pension gap), by 2266 yyearsears ago,ago, wewe havehave alwaysalways It is notable that neither the GEL, which implies that an solely by the government mentality and fathers’ fears reducing the uptake of moth- ssoughtought toto provideprovide sustainablesustainable Labour Code of Georgia nor employee on leave is paid a budget, and additional com- regarding “traditional” be- er’s leave (European Commis- rreturnseturns toto ourour sharehold-sharehold- the Law on Public Service rec- full salary, although the total pensation for private sector haviors are responsible for sion, 2014). eers,rs, aass wellwell asas supportsupport ourour ognizes the terms “materni- amount of compensation for employees is dependent on keeping the number of fathers It is noteworthy that an in- ccustomers,ustomers, employeesemployees andand ty”, “paternity” or “parental” the entire leave is limited to a the good will of companies, who have used leave within crease in the uptake of father’s tthehe widerwider communitycommunity toto suc-suc- leave. There is only one term - maximum of 1,000 GEL. This leave payments by EU mem- just one-digit. leave also positively aff ects cceed,eed, commentedcommented VakhtangVakhtang “Pregnancy, childbearing and leave is paid by the govern- ber states originate primarily certain social outcomes. First- BButskhrikidze,utskhrikidze, CChiefhief Execu-Execu- childcare, and the adoption of ment, and the private sector from contributory insurance ly, it equalizes the division of ttiveive Offi cer.cer. newborns leave of absence”, is not obliged to pay any ad- funds, fi nanced by both em- Why Does It paid employment, unpaid RRupertupert Goodman,Goodman, Chair-Chair- which is a priori, associated ditional compensation to its ployers and employees, and at care and housework between mmanan aandnd FFounderounder ofof FIRST,FIRST, with a leave available only employees. times from general taxation. Matter? men and women, leading to ssaid:aid: VVakhtangakhtang BButskhrikid-utskhrikid- for mothers. Even Google The indistinct defi nitions Despite the existing leave an improved work-life bal- zzeses contributioncontribution toto Respon-Respon- translate returns a stereo- of the terminology within the policy for fathers, the average Nevertheless, it is impor- ance. Secondly, fathers’ addi- ssibleible CapitalismCapitalism inin GeorgiaGeorgia typical phrase- “დეკრეტული leave policies of the existing take-up rate of male parental tant to ask, why is the promo- tional involvement in paren- iiss toto bebe applauded.applauded. UnderUnder შვებულება” (“decree leave” legislation are perhaps a key leave is only 10% in the EU, tion of paternity and father’s tal activities positively aff ects hhisis leadership,leadership, TBCTBC BankBank in word-for-word transla- reason behind poor societal ranging from 0.02% in Greece parental leave so important? cognitive relationships, bond- hhasas alwaysalways soughtsought toto provideprovide tion), which is informally awareness. Furthermore, to 44% in Sweden (data for pa- It is notable that there are ing fathers with their children ssustainableustainable returnsreturns forfor itsits used to describe working par- the system presently creates ternity leave does not exist). diff erent studies emphasizing (Huerta et al., 2013, Cools et sshareholders,hareholders, whilewhile creatingcreating ents who take leave for child- overwhelming diffi culties for These rates can be explained the positive economic, social, al., 2015). Furthermore, the cchallenginghallenging andand rewardingrewarding care, such as maternity leave. fathers to obtain all the docu- by several factors, such as low and demographic eff ects for in- active involvement of fathers ccareersareers forfor employees.employees. OverOver The leave policy in Geor- mentation required for leave. levels of compensation for pa- creasing the uptake of father’s in childcare may also encour- tthehe pastpast nearlynearly threethree de-de- gia is slightly diff erent for the As a result, Georgia has prac- ternity and parental leave; a leave. By promoting paternity age women to have more chil- ccades,ades, MrMr ButskhrikidzeButskhrikidze hashas public and private sectors. In tically zero fathers utilizing lack of fl exibility in the timing leave and parental leave tak- dren, which raises fertility ssoughtought toto preservepreserve andand pro-pro- the public sector, a maximum leave. of leave; restricted eligibility en by fathers, policy-makers rates and can lead to positive mmoteote GeorgiasGeorgias uniqueunique cultureculture of 730 days are allocated to The leave policy in the Eu- (for self-employed fathers, or typically aim to facilitate an demographic forecasts (Du- wwhilsthilst enablingenabling economiceconomic in-in- “pregnancy, childbearing and ropean Union varies by coun- those with a short or unstable equal division of housework vander & Andersson, 2006). nnovation.ovation. TTBCBC BBanksanks ssupportupport childcare, and the adoption of try. Only 18 of the 28 EU coun- work history); and the cul- and childcare between women Such positive socio-eco- fforor importantimportant socialsocial projectsprojects newborns leave of absence” tries off er paternity leave, tural norms and perceptions and men, thus supporting the nomic and demographic out- “ includingincluding supportingsupporting youngyoung (this de jure leave can be tak- with the average length of 12.5 regarding gender division. return of mothers to employ- comes behind the increased ppeopleeople throughthrough sportssports andand en either by the mother or the days (from 1 day in Italy to 64 The role of gender is per- ment and equalizing the con- uptake of father’s leave seem tthehe artsarts programmesprogrammes – cre-cre- father), of which 183 days are working days in Slovenia). haps the most important ob- ditions in which both women quite relevant in Georgia. It is aatestes grassrootsgrassroots opportunitiesopportunities paid.1 Additionally, the public The compensation is usually stacle behind increasing the and men enter the labor mar- possible to reduce the rather tthathat contributecontribute toto thethe sustain-sustain- sector payment rate is 100% linked to the duration of the uptake of male leave in Geor- ket. An increased uptake of large gender wage diff erence aableble developmentdevelopment ofof thethe widerwider of the parents’ current salary. paternity leave, with shorter gia. According to the study father’s leave also reduces the (the average female wage GGeorgianeorgian community.community. Under the current law, there periods being fully compen- “Men and gender relations so-called “motherhood pen- equals 64.3% of the male is no clear division of days be- sated - 13 countries compen- in Georgia” (UNFPA, 2014), alty” – where women exit em- wage); diminish the risks of tween maternity or parental sate 100% of the previous in- 30%-42% of fathers never ployment, more so than men, facilitating gender equality, leave. Thus, de facto, mothers come. While parental leave prepare food, change diapers, after the birth of a child (Miani utilizing the newly introduced TBC Bank decide how to distribute the is provided by all EU member or bathe children aged 0 to & Hoorens, 2014). Moreover, pension system; and improve days of leave between preg- states, with an average length 6, and the percentage of men often when women manage the weakened demographic Non- nancy, the stage after birth, of 87 weeks (from 18 weeks in who take care of a child on a to return to the labor market situation in the country. and the time needed to take Cyprus to 2 years per parent daily basis is below 18%. The immediately after birth, they Finally, I wish to ask a Executive care of a child. in Greece). The compensation same study reveals that 89% often take poor quality part- simple question to potential The current legislation for rates vary between 25% and of the respondents (an equal time jobs with lower salaries fathers – would you take pa- Director leave in the private sector, 100% of previous earnings, number of men and women) and limited opportunities for ternity or father’s leave in or- almost, duplicates the law for with only six countries not of- consider the main responsi- career development (Cromp- der to take care of your child? the public sector – there is fering any compensation at all bility of women to be taking ton, 2006). This concept is Eric no division between mother’s (some countries provide a fl at care of their families. There- known as the “child penalty”, 1 200 days are paid in the and father’s leave, and the rate, ranging from €139 per fore, it is possible that not which frequently also increas- case of multiple births. Rajendra Resigns Due Highest proportions of innovative enterprises in To Health ONDON (Alliance News) - TBC Bank Belgium, Portugal, Finland, Luxembourg and Germany Group PLC said Friday Non-Executive Direc- The FINANCIAL reported innovation activ- countries are now amongst tor Eric Rajendra has ity during the period 2014- the top fi ve countries. Lresigned from the Georgian 2016, slightly more than in During the period 2014- bank due to “health reasons” he full results of the the period 2012-2014 (49 2016, the highest propor- with immediate eff ect. Community Innova- %). The share of innova- tions of enterprises with “The board of TBC Bank is tion Survey 2016, tive enterprises increased innovation activity were re- deeply saddened by the news which contains a or stayed the same in 20 corded in Belgium (68 % of that Eric Rajendra is unable broad set of indica- EU Member States and de- enterprises), Portugal (67 to continue as a director due Ttors on innovation activi- to health reasons,” TBC Chair creased in eight. Particular- %), Finland (65 %), Luxem- ties of enterprises, are now ly strong increases were re- bourg (64 %) and Germany Mamuka Khazaradze said. available in the Eurostat on- ported for Estonia, Portugal, (64 %). In the same period, “Eric has had a long asso- line database. Finland and Croatia. With the share was below 30% ciation with the bank, and we In a nutshell, in the Eu- increases from 54 % to 67 % in Romania (10 %), Poland wish him a speedy recovery.” ropean Union (EU) around in Portugal and from 55 % (22 %), Bulgaria (27 %) and Shares in TBC closed 3.3% half (51 %) of the enterpris- to 65 % in Finland these two Hungary (29 %). higher at 1,642.00 pence on es of 10 employees or more Friday. 12 HEADLINE NEWS & ANALYSIS ppublicityublicity 18 MARCH, 2019 | FINCHANNEL.COM OPIC, a US-based Private Investment Corporation, is to finance PACE Group’s new port and terminal with by $50 million port, hence PACE Group’s develop- Dutch and Turks expressing inter- ing 25-hectare of port infrastructure. est. Obviously, the selected com- Over 700 meters of berth construc- pany will need subcontractors and tion is planned. The project will be we will make recommendations implemented in two phases. Within of those Georgian companies with the fi rst phase, 260 meters will be whom we have successfully cooper- built of a depth of around 12m. The ated before. We have a very strict Opic is Spending $50 mln $93 million includes transportation schedule; the works should end 18 on Construction of the Ma- infrastructure, such as rail- ways and months after it begins, and at the rine Terminal. How did PACE open and closed warehouses. This end of 2020 we will have a deep- GROUP Manage to Attract is not a new project: PACE Group water terminal. In the second stage Such a Large Investment? started in 2015 and the fi rst phase of the project, not only OPIC, but partially fulfi lled, with $28 million other fi nancial institutions have ex- OPIC’s trust in PACE Group and spent so far. The PACE terminal is up pressed their willingness to cooper- Georgia is so high that this unprec- and running, we are starting up car- ate. We plan to develop a warehouse edented loan has been allocated. go, and the terminal is busy enough infrastructure, including liquid car- OPIC has been active in the Cauca- to necessitate a deep-water port. We go (we now focus on bulk cargoes). sus region for 20 years, however, have an open warehouse of about The PACE terminal has a 27-year this is its fi rst investment in trans- 10 hectares and a 30-thousand-ton history and I can name a number port infrastructure, distinguished by capacity in closed ones. We add 50 of examples where we were able to a volume that clearly demonstrates thousand tons of closed warehouses attract new cargoes by our own ef- this project is real. OPIC expressed due to the demand and these are al- forts. Aluminum oxide, which is inter- est in the project in 2014 and ready full. We have Carbamide, min- a raw aluminum production, was studied PACE Group activities dur- eral fertilizers to arrange and need carried from Russia by a Tajik fac- ing this period. A lot of time has been additional infrastructure. These tory. We managed to convince them spent on engineer- ing expertise, warehouses and infrastructure will to move 35 thousand tons through marine-nautical navigation, envi- carry about 1.5 million tons of cargo. the Poti Port, and then upped it to ronmental protection of high stan- Depending on the size of cargo, we 150 thousand tons annually. Poti dards, as well as labor safety condi- need to be able to receive big ships, Port became a hub for that Tajik tions, and, on seeing the convincing otherwise we will lose cargo. PACE factory and aluminum realization results, they agreed to off er a $50 Group employs over a thousand peo- was made from here thanks to the million low- interest loan, which we ple and this number will increase as proximity to the European market. IRAKLI KERVALISHVILI, PACE Group co-founder have 15 years to pay back. a result of this project. The PACE terminal was the fi rst in Georgia to craft cargoes that could tilizers produced in Central Asian 2018 was fi nancially hard for the The Project Cost Amounts Tell us Anout the Second not be obtained by any other port of countries. By means of our ter- company. Our annual cargo turn- to $ 120 Million, at the First Stage of the Project our country. Among them is Turk- minal, we transported BP pipelines over amounts to about 3 million Phase $93 Million. What menistan Mineral Fertilizer - Carb- within the Shah Deniz 2 project, tons, but last year it decreased to Works are Planned Within the We have already prepared ten- amide, which has been transferred which is so important for our region, 2.6 million tons. In 2018, we signed First Phase? der documentation. In two-three to Poti since 2016. Prior to that, in 2015-2017. The relevant infra- a number of important agreements months we will announce the tender transportation went through Rus- structure was not in the country, we and we are expecting to increase In order to maintain and enhance to choose the company that will per- sia and Iran. Also, PACE Group was allowed these pipes to be transport- the cargo by 700 thousand tons this Georgia’s importance as a transport form the second- phase construction the fi rst to implement a modern ed and stored here. year. Russian coal, Turkmen sulfur, corridor, it is essential to develop works. Presumably, Georgian com- reverse-type wheat terminal, which and wheat fl ows will increase. Dur- infrastructure, and development of panies will not be able to participate is the only one in the country. Last Sum up Last Year and Give ing the past year, PACE Group has transport infrastructure should fi rst in the tender because OPIC’s year we dealt with 100 thousand us an Insight Into what to Look taken an important step, as many begin with marine infrastructure. requirements are quite high, so tons of Russian-Kazakh wheat. The Forward to from PACE GROUP companies have promised to cooper- The country needs a deep-water sea most likely we will see Norwegians, terminal also processes mineral fer- in Future ate with us. Advertiser: Alta OK. Contact FINANCIAL Ad Dep at marketing@ fi nchannel.com HEADLINE NEWS & ANALYSIS 13 FINCHANNEL.COM | 18 MARCH, 2019 HHealthealth Highest proportion of government expenditure goes to social protection and health

the functions have a natural ten- Total government dency to be counter-cyclical, even without a change in policy. For ex- expenditure ample, government expenditure continued to on unemployment benefi ts (part of social protection) is more prone to decrease have a natural counter-cyclical evo- lution than other functions, such as The FINANCIAL government expenditure on edu- cation. During an economic crisis, more people become unemployed, n 2017, total government expendi- whereas the number of pupils and ture in the European Union (EU) students is more aff ected by de- amounted to 45.8% of gross do- mographic changes. Between 2007 mestic product (GDP). This share and 2009, expenditure on unem- has steadily decreased since 2012, ployment in the EU increased from Iwhen it stood at 48.9% of GDP. 1.4% of GDP to 1.8%, decreasing Among the main functions of gen- ever since to stand at 1.2% in 2017. eral government expenditure in the Social protection expenditure as a EU, ‘social protection’ is by far the whole increased from 17.0% of GDP most important, equivalent to 18.8% (2007) to 19.4% (2009), standing at of GDP in 2017. The next most im- 18.8% of GDP in 2017. In the same portant areas are ‘health’ (7.0%), period, government expenditure on ‘general public services’ (5.8%) such education in the EU rose from 4.9% as external aff airs and public debt of GDP (2007) to 5.2% (2009), and transactions, ‘education’ (4.6%) and then gradually decreased to 4.6% ‘economic aff airs’ (4.0%). The func- (2017). tions ‘public order and safety’ (1.7%), ‘defence’ (1.3%), ‘recreation, culture and religion’ (1.1%), ‘environmental Social protection protection’ (0.8%) and ‘housing and and health community amenities’ (0.6%) have more limited weights. Malta, Latvia, Romania, Czechia and (8.3%) and Italy (8.2%). For educa- expenditure Bulgaria each spent less than 13% of tion, the highest shares were regis- government total increased in Share of social GDP on social protection. tered in Sweden (6.8%), Denmark expenditure Social protection expenditure can (6.5%) and Belgium (6.3%). comparison to protection be further broken down into a number The highest shares of government of detailed groups. The group ‘old age’, expenditure on economic aff airs During the fi rst three years of other general expenditure which includes pensions, accounted in 2017 were recorded in Hungary the economic and fi nancial crisis for 10.1% of GDP in the EU in 2017. (7.1% of GDP) and Belgium (6.3%). (2007-2009), government expen- government related to old age It made up the largest part of social For public order & safety, shares diture as a percentage of GDP grew protection expenditure in all Member were highest in Bulgaria (2.5%) and in the EU. It increased from 44.6% expenditure highest in Greece States, with the highest shares be- Hungary (2.4%). of GDP in 2007 to 50.0% in 2009, ‘Social protection’ and ‘health’ ing registered in Greece and Finland In 2017, at least 2% of GDP was which was partially due to a lower and Finland and are the only two functions whose (both 13.8%), followed by France and spent on defence in Greece (2.5%) GDP. Apart from an increase be- shares in total government expen- Italy (both 13.4%) as well as Austria as well as Estonia and Cyprus (both tween the years 2011 and 2012 lowest in Ireland diture increased during the period (12.5%). In contrast, Ireland (3.4%), 2.0%). The highest shares of gov- (from 48.5% of GDP to 48.9%), it from 2007 to 2017. In the EU, social Social protection represented Lithuania (5.7%) and Cyprus (6.0%) ernment expenditure on recreation, has steadily decreased ever since, protection expenditure increased the most important area of general recorded the lowest shares. culture & religion were recorded in standing at 45.8% of GDP in 2017. its share in total expenditure from government expenditure in 2017 in Government expenditure on Hungary (3.5%) and Estonia (2.1%), This gradual decrease was partly 38.2% to 41.1%, while expenditure all EU Member States. The ratio of health highest in Denmark, on edu- on environmental protection in the result of the fi scal consolida- on health increased from 14.5% to government social protection ex- cation highest in Sweden the Netherlands (1.4%) and Greece tion measures, renewed economic 15.3% of total expenditure. At the penditure to GDP varied across EU With shares of at least 8% of GDP (1.3%), and on housing & communi- growth and counter-cyclical reac- same time, the share of all other Member States from less than 10% in 2017, Denmark (8.4%), Austria ty amenities in Bulgaria and Cyprus tions of government expenditure. functions decreased. Government in Ireland (9.5%) to nearly a quar- (8.2%) and France (8.0%) recorded (both 1.6%). In recent years, one-off expenditure expenditure on education, for ex- ter in Finland (24.9%). Six Member the highest ratios to GDP devoted to to support fi nancial institutions has ample, fell from 10.9% of total ex- States – Finland, France, Denmark, health among EU Member States. been decreasing. penditure in 2007 to 10.2% in 2017. Italy, Austria and Sweden - devoted The highest ratios to GDP of govern- Evolution Not all the functions of govern- This pattern appears unaff ected by at least 20% of GDP to social pro- ment expenditure on general public ment expenditure evolved the same economic cycles. tection, while Ireland, Lithuania, services were observed in Greece of general between 2007 and 2017. Some of Industrial production Annual inflation up by 1.4% in euro area up to 1.5% in the The FINANCIAL – In January 2019 In the euro area in January 2019, In the euro area in January 2019, compared with December 2018, sea- compared with December 2018, compared with January 2018, pro- euro area sonally adjusted industrial produc- production of energy rose by 2.4%, duction of capital goods fell by tion rose by 1.4% in the euro area non-durable consumer goods by 3.0%, intermediate goods by 1.8% (EA19) and by 1.0% in the EU28, ac- 2.0%, durable consumer goods by and durable consumer goods by rregisteredegistered inin IrelandIreland (0.7%),(0.7%), cording to estimates from Eurostat, 1.1%, capital goods by 0.9% and in- 1.2%, while production of non-du- Up to 1.6% in GGreece,reece, CroatiaCroatia andand CyprusCyprus the statistical offi ce of the European termediate goods by 0.2%. rable consumer goods rose by 0.7% ((allall 0.8%).0.8%). TThehe highesthighest annualannual Union. In December 2018, industrial In the EU28, production of ener- and energy by 4.0%. the EU rratesates werewere recordedrecorded inin RomaniaRomania production fell by 0.9% in the euro gy rose by 1.4%, durable consumer In the EU28, production of capi- ((4.0%),4.0%), HHungaryungary ((3.2%)3.2%) aandnd area and by 0.4% in the EU28. goods by 1.3%, non-durable con- tal goods fell by 2.4%, intermediate The FINANCIAL LLatviaatvia ((2.8%).2.8%). CComparedompared wwithith In January 2019 compared with sumer goods by 1.0%, capital goods goods by 1.2% and durable con- JJanuaryanuary 22019,019, aannualnnual iinnfl ationation January 2018, industrial production by 0.9% and intermediate goods by sumer goods by 0.1%, while pro- ffellell inin sevenseven MemberMember States,States, decreased by 1.1% in the euro area 0.3%. duction of non-durable consumer hhee euroeuro areaarea annualannual rremainedemained stablestable inin oneone andand roserose and by 0.4% in the EU28. Among Member States for which goods rose by 1.4% and energy by iinnfl ationation raterate waswas 1.5%1.5% inin iinn nnineteen.ineteen. data are available, the highest in- 2.9%. FFebruaryebruary 2019,2019, uupp ffromrom IInn FFebruaryebruary 2019,2019, tthehe hhighestighest Monthly creases in industrial production Among Member States for which 11.4%.4% iinn JJanuaryanuary 22019.019. A ccontributionontribution toto thethe annualannual euroeuro were registered in Ireland (+15.1%), data are available, the largest de- yyearear earlier,earlier, thethe raterate waswas Croatia (+9.6%) and Slovenia creases in industrial production aarearea ininfl ationation raterate camecame fromfrom comparison by T11.1%..1%. EEuropeanuropean UUnionnion annualannual sserviceservices (+0.61(+0.61 ppercentageercentage (+5.9%). The largest decreases were were registered in Ireland (-6.2%), main industrial observed in Denmark (-8.6%), Lat- Luxembourg (-4.2%) and Germa- iinnfl ationation waswas 1.6%1.6% inin FebruaryFebruary ppoints,oints, pp),pp), followedfollowed byby food,food, via (-3.6%) and Romania (-1.5%). ny (-3.4%). The highest increases 22019,019, uupp ffromrom 11.5%.5% iinn JJanuaryanuary aalcohollcohol & tobaccotobacco (+0.44(+0.44 pp),pp), grouping and by Annual comparison by main in- were observed in Slovakia (+7.2%), 22019.019. A yyearear eearlier,arlier, tthehe rrateate eenergynergy (+0.35(+0.35 pp)pp) andand non-non- dustrial grouping and by Member Poland (+6.1%) and Lithuania wwasas 1.4%.1.4%. eenergynergy industrialindustrial goodsgoods (+0.09(+0.09 Member State State (+5.9%). TThehe lowestlowest annualannual ratesrates werewere ppp).p). 14 HEADLINE NEWS & ANALYSIS fi nancialnancial nnewsews 18 MARCH, 2019 | FINCHANNEL.COM “NATO: fit for the future”, Secretary General’s Annual Report

The FINANCIAL

n 14 March, NATO Secretary General Jens Stoltenberg pre- sented his An- Onual Report for 2018. The Report, he says, “shows that NATO continues to moder- nise”. The story of NATO in 2018 is one of an Alliance respond- ing to the the challenges of to- day, adapting to the challeng- es of tomorrow, and investing in the future. To keep us all safe, Allies are “doing a lot more together – in more ways and in more place – than ever before”, said the Secretary General. They are strengthening NATO’s de- terrence and defence posture, boosting their cyber defences, nchannel.com fi ghting international terror- fi ism, deepening partnerships, spending guideline, up from ghanistan and Iraq to Kosovo, and much more. three in 2014. A majority of the Baltic countries, and Po- The Report shows that de- Allies is also spending more land.” fence spending among Eu- than 20% of their defence Looking ahead to the ropean Allies and Canada expenditure on major equip- events marking NATO’s 70th increased by almost 4% from ment and according to 2018 anniversary – the meeting of 2017 to 2018, and that in the national plans, 24 Allies will Foreign Ministers in Wash- period from 2016 to 2018, meet the 20% guideline by ington D.C. in April, and the they have contributed an ad- 2024. Leaders’ Meeting in London ditional cumulative spending The Report also shows that in December, the Secretary of over 41 billion dollars. “We Allies continue to make valu- General stressed that “we expect that fi gure to rise to able contributions to NATO’s must continue to stand strong 100 billion dollars by the end operations, missions and together”. “Standing with of next year”, said Jens Stol- other activities. The Secretary unity and resolve”, he added, tenberg. General indicated that there “NATO will remain a pillar In 2018, seven Allies are “more than twenty thou- of stability for generations to reached the 2% defence sand troops serving from Af- come”. Advertiser: Radui Commersant. Contact FINANCIAL Ad Dep at marketing@ New York, London and Hong Kong expected to remain as top listing destinations in 2030

The FINANCIAL (LSE) (24%), and Hong Kong Stock Hunter, PwC Global IPO Centre er in the future of public companies. private funding option, selected by Exchange (24%), according to Capi- leader, comments. Increasing eff orts by leading fi nan- 55% of respondents, is private eq- tal Markets in 2030, new research Looking at the IPO pipeline, Chi- cial centres to win over technology uity. ompanies from China by The Economist Intelligence Unit na (55%) is the country predicted and ‘new economy’ companies will Ross states: “Private equity has and India expected to on behalf of PwC. The survey asked to generate the most new issuers by continue to intensify competition been signifi cantly infl uencing capi- dominate issuance in nearly 400 executives at companies 2030 followed by India (45%), the between the New York and China tal markets in recent years, leading 2030, although growth from across the globe for their views US (41%), Brazil (21%) and, despite (mainland China and Hong Kong) to fewer, larger, later IPOs - par- of exchanges in emerg- on the factors that are defi ning the Brexit concerns, the UK (18%). Chi- exchanges in particular. ticularly with technology and ‘new Cing markets has been more subdued development of global equity capital na and India also led in this category It is clear that in recent years com- economy’ companies.” than anticipated. Seventy per cent markets, following up from a 2011 in our previous survey. Both have panies’ options for raising capital Ultimately, therefore, rather than of respondents expect businesses to report. been taking steps to develop their have increased. Some 76% of re- simply being seen as rivals to public consider going public at some stage, This marks a change from 2011 equity capital markets, with a num- spondents believe that there are now equity markets, companies increas- notwithstanding public equity be- when respondents predicted that ber of recent initiatives in China in more choices of both public and pri- ingly consider private markets to be coming a less important source of Shanghai market would be the lead- particular. vate fi nancing routes in both devel- complementary sources of capital funding. The range of fi nancing al- ing exchange by 2025, followed by Liquidity remains the top prior- oped and emerging markets. that they can tap into when appro- ternatives has increased, with private NYSE, the Indian exchanges and ity (selected as most important by Although 70% of respondents priate. equity being the preferred option. Brazil’s Bovespa. 49% of respondents) when choosing believe a public listing is becoming “For companies, the choice of London, 11th March 2019: The “Excessive optimism about emerg- a listing location. There is also an a less important source of funding credible exchanges for public list- top four exchanges that issuers will ing markets has been tempered by increase in the focus on valuations globally, a similar proportion of sur- ings, as well as the range of private consider beyond their home ex- political and market realities. Expec- (32%) and concern about the costs vey respondents think it would be funding options, will continue to change in 2030 are the New York tations are now for a more closely of listing (29%). advantageous for successful compa- expand, adding to the alternatives Stock Exchange (NYSE) (37%), Nas- run race between developed and PwC anticipates that technology nies to go public over some point in when they seek to raise capital,” daq (26%), London Stock Exchange emerging markets exchanges,”Ross will continue to be a signifi cant driv- their life cycle. The most attractive Ross Hunter concludes. HEADLINE NEWS & ANALYSIS 15 FINCHANNEL.COM | 18 MARCH, 2019 fi nancialnancial nnewsews Fitch Rates More female and older workers Bank of Georgia’s have boosted Japan’s labour market Upcoming The FINANCIAL Perpetual

espite a shrinking and AT1 Notes ageing population, Japan is continuing to add to its ‘B-(EXP)’ workforce through greater female and older worker TThehe FINANCIALFINANCIAL – FFitchitch RatingsRatings Demployment. PwC’s latest Global hhasas assignedassigned BankBank ofof Georgia’sGeorgia’s Economy Watch explores how Ja- ((BOG)BOG) upcomingupcoming issueissue ofof USD-USD- pan is counteracting its challenging ddenominatedenominated perpetualperpetual additionaladditional demographics and whether this can TTierier 1 ((AT1)AT1) nnotesotes anan eexpectedxpected long-long- continue. ttermerm ratingrating ofof ‘B-(EXP)’.‘B-(EXP)’. TheThe fi nalnal Japan’s population is contracting, rratingating isis contingentcontingent uponupon receiptreceipt ofof since its peak at 128 million in 2010, fi nalnal documentsdocuments conformingconforming toto in-in- it has declined by 1.3 million people. fformationormation alreadyalready received.received. Additionally, its population is old: TThehe notesnotes shouldshould qualifyqualify asas AT1AT1 28% are over 65, compared with 18% ccapitalapital inin regulatoryregulatory accountsaccounts duedue in the UK and 15% in the US. Yet the ttoo a fullfull couponcoupon omissionomission optionoption atat number of people working in Japan BBOG’sOG’s ddiscretioniscretion andand fullfull oror par-par- continues to rise, up by 1.7% in 2018. ttialial write-downwrite-down inin casecase ofof eithereither This growth was not enabled by a re- BBOG’sOG’s ccoreore equityequity TierTier 1 (CET1)(CET1) duction in high unemployment; job- rratioatio fallingfalling belowbelow 5.125%5.125% (versus(versus lessness has been low and falling for 44.5%.5% regulatoryregulatory minimum,minimum, exclud-exclud- years. iingng bubuff ers)ers) oror duedue toto regulatoryregulatory Japan’s female employment rate iinterventionsnterventions byby thethe NationalNational BankBank is a key contributor. In 2002, there ooff GeorgiaGeorgia (NBG).(NBG). FitchFitch believesbelieves was a ten percentage point gap be- tthehe latterlatter isis onlyonly possiblepossible ifif BOGBOG tween female employment rates in bbreachesreaches minimumminimum regulatoryregulatory capi-capi- the US and Japan, but Japan has ttalal oror liquidityliquidity requirements,requirements, oror now overtaken the US. A higher pro- llocalocal regulationregulation inin anyany otherother form.form. portion of women are also returning JAPAN HAS CONTINUED TO GROW ITS WORKFORCE DESPITE A TThishis isis currentlycurrently notnot expectedexpected byby to work sooner after having children SHRINKING AND AGEING POPULATION. FFitch,itch, givengiven a PositivePositive OutlookOutlook onon than they were previously. BBOG’sOG’s ‘‘BB-’BB-’ LLong-Termong-Term IIssuerssuer DDe-e- Government policy in Japan has ffaultault RatingsRatings (IDRs).(IDRs). aided this, by increasing the num- TThehe expectedexpected ratingrating assignedassigned toto ber of nursery places and making and boost the public pension for and a lack of fl exibility have shifted “But the remarkable performance BBOG’sOG’s forthcomingforthcoming perpetualperpetual AT1AT1 provision for all 3-5 year olds free by those that opt to defer drawing from thanks to government interven- of Japan’s labour market will re- nnotesotes isis threethree notchesnotches lowerlower thanthan 2021. A law passed in 2015 demands it. Japan is already leading the world tion. This has enabled parts of the quire more births and more immi- tthehe bank’sbank’s ‘bb-’‘bb-’ VViabilityiability RRatingating that larger fi rms set targets for hir- by retaining so many older workers; population previously deterred from grants to be sustained.” ((VR).VR). AAccordingccording ttoo oourur BankBank RRatingating ing and promoting women. Other its rate of around 25% is higher than working, such as women and older If Japan’s decline in unemploy- CCriteriariteria (Criteria),(Criteria), tthishis isis thethe highesthighest legislation caps overtime at 100 that in the US (18%) and the UK people, to participate”, Mike Jake- ment rate continues at its average ppossibleossible ratingrating thatthat cancan bebe assignedassigned hours a month, a move designed to (10%). man, senior economist at PwC, com- rate of the past eight years, the econ- ttoo deeplydeeply subordinatedsubordinated notesnotes withwith both prevent over-work and gener- “Japan’s already strong labour ments. omy would hit zero unemployment ffullyully discretionarydiscretionary couponcoupon omissionomission ate new roles where demand clearly market has found a way to strength- “There’s a reluctance to embrace in 2027. It is possible that this date iissuedssued byby banksbanks withwith a VRVR anchoranchor ofof exists. en further despite it’s unfavourable higher immigration in Japan, but could be deferred if the labour force ‘‘bb-’.bb-’. TThehe nnotchingotching ccomprises:omprises: The Japanese government is also demographics. Former barriers to parliament has approved the cre- continued to grow, but the even- - TwoTwo notchesnotches forfor higherhigher lossloss se-se- aiming to push up the retirement entry, such as a culture of long of- ation of two new visas, which could tual impediment to this will be its vverityerity relativerelative toto seniorsenior unsecuredunsecured age for state workers from 60 to 65 fi ce hours, entrenched gender roles see immigration increase. shrinking population. ccreditorsreditors duedue toto a write-downwrite-down trig-trig- ggerer (CET1(CET1 ratioratio ofof 5.125%),5.125%), meaningmeaning tthathat AT1AT1 nnotesotes maymay startstart toto absorbabsorb llossesosses beforebefore BOGBOG breachesbreaches itsits 4.5%4.5% mminimuminimum CCoreore TierTier 1 capitalcapital ratioratio ((excludingexcluding bubuff ers).ers). Christchurch Attacks: - OneOne notchnotch forfor non-performancenon-performance rrisk,isk, aass BBOGOG hhasas aann ooptionption toto cancelcancel Why Are The Names Of tthehe couponcoupon paymentspayments atat itsits discre-discre- A Georgian King And ttion.ion. TThishis iiss mmoreore likelylikely ifif combinedcombined PPillarillar 1 aandnd PPillarillar 2 ccapitalapital ratiosratios fallfall A Ukrainian Extremist bbelowelow thethe combinedcombined bubuff erer require-require- mmentsents establishedestablished byby thethe regulator.regulator. Written On The Guns? TThishis riskrisk iiss ssomewhatomewhat mitigatedmitigated byby BBOG’sOG’s rreasonableeasonable internalinternal capitalcapital Many more of the ggenerationeneration capacitycapacity andand thethe bank’sbank’s Continued from p. 6 names written on Tar- iintentionntention toto buildbuild upup itsits combinedcombined rant’s guns focus on the ccapitalapital ratiosratios toto aboutabout 200bp200bp overover history of the Balkans, tthehe minimumminimum requiredrequired levels.levels. Breivik and confl ict, past and TThehe notesnotes willwill havehave nono estab-estab- present, between Chris- llishedished redemptionredemption date.date. However,However, ‘Inspiration’ tian and Muslims there. BBOGOG willwill havehave anan optionoption toto repayrepay That includes the leg- tthehe notesnotes afterafter thethe fi rstrst couponcoupon re-re- One other obscure endary Serbian knight ssetet datedate (in(in 2024)2024) subjectsubject toto NBG’sNBG’s name scrawled on Tar- Milos Obilic and Ser- aapproval.pproval. rant’s guns also caught bian Prince Lazar Hre- BBOG’sOG’s rregulatoryegulatory CoreCore TierTier 1 andand the attention of online beljanovic, who both TTierier 1 rratiosatios werewere bothboth 12.2%12.2% atat observers trying to fi g- fought against the Otto- eend-2018.nd-2018. TThehe rrequiredequired statutorystatutory ure out his motivations: man Turks at the Battle mminimumsinimums fforor BOG,BOG, iincludingncluding capi-capi- the name of Pavlo Ser- of Kosovo in 1389. ttalal conservationconservation bubuff erer (2.5%),(2.5%), ssys-ys- hiyovych. The names of several ttemicemic importanceimportance bubuff erer (1%)(1%) andand Formally known other Balkan fi gures sseveraleveral PillarPillar 2 bubuff ers,ers, werewere 9.4%9.4% as Pavlo Lapshyn, he who fought against the aandnd 11.4%,11.4%, rrespectively.espectively. TheThe coun-coun- hailed from the Ukrai- Turks over the centu- ttercyclicalercyclical bubuff erer alsoalso applies,applies, butbut nian city of Dnipro, and ries are also scrawled on iiss currentlycurrently setset atat 0%.0%. BOG’sBOG’s regu-regu- traveled to England in Tarrant’s weapons. llatoryatory totaltotal capitalcapital ratioratio waswas 16.6%16.6% early 2013 on a tempo- In his manifesto, Tar- aatt end-2018end-2018 vs.vs. a 115.9%5.9% mminimuminimum rary work visa, accord- rant wrote that he “only rrequirement,equirement, iincludingncluding bubuff ers.ers. ing to a report in the really took true inspi- FFitchitch maymay widenwiden thethe ratingrating online publication Open ration” from Anders nnotchingotching ifif non-performancenon-performance riskrisk Democracy. Breivik, the Norwegian iincreases.ncreases. ForFor example,example, thisthis couldcould Five days after ar- far-right terrorist who aariserise fromfrom BOGBOG failingfailing toto main-main- riving, he stabbed an killed 77 people in a ttainain reasonablereasonable headroomheadroom overover thethe 82-year-old man named bomb-and-gun attack mminimuminimum ccapitalapital adequacyadequacy ratiosratios Muhammad Saleem around Oslo in 2011. ((includingincluding thethe bubuff ers)ers) oror fromfrom thethe to death as he walked Before his attack, iinstrumentnstrument becomingbecoming non-perform-non-perform- home in Birmingham. Breivik published a iing,ng, ii.e..e. iiff tthehe bankbank cancelscancels anyany cou-cou- Lapshyn later confessed 1,500-page treatise with pponon paymentpayment oror atat leastleast partiallypartially to the crime, telling in- hundreds of references wwritesrites off thethe principal.principal. InIn thatthat case,case, vestigators he killed Sal- to the confl icts in the tthehe issueissue willwill bebe downgradeddowngraded basedbased eem because he hated Balkans. oonn Fitch’sFitch’s expectationsexpectations aboutabout thethe “non-whites.” fformorm andand durationduration ofof non-perfor-non-perfor- He also admitted mmance.ance. planting bombs at Mike Eckel UUpsidepside forfor thethe notesnotes isis limitedlimited asas mosques in three towns pperer Fitch’sFitch’s criteriacriteria thethe minimumminimum in central England. Mike Eckel is a senior nnotchingotching ofof deeplydeeply subordinatedsubordinated He was sentenced to correspondent for RFE/ iinstrumentsnstruments willwill increaseincrease upup toto fourfour 40 years in prison in RL based in Washing- nnotches,otches, shouldshould thethe VRVR bebe upgradedupgraded October 2013. ton. ttoo ‘bb’‘bb’ fromfrom ‘bb-’.‘bb-’. 16 HEADLINE NEWS & ANALYSIS ppublicityublicity 18 MARCH, 2019 | FINCHANNEL.COM

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Continued on p. 22 20 HEADLINE NEWS & ANALYSIS ppublicityublicity 18 MARCH, 2019 | FINCHANNEL.COM