Deputy Minister of Finance (Ministry of Finance)

“Our effort is directed to reach European standards”

After the Rose Revolution, the government of Georgia implemented a lot of reforms drastically. As a result, Georgia has achieved economic growth, reduced procedures for setting up a business and improved tax administration.

“Our main goal is to improve sustainable tax administration, because without tax collecting there is no other way out to allocate finances necessary for social segments, such as salaries for employees working at medical institutions,” Deputy Minister of Finance concluded.

Q. First of all, could you give me an overview of the situation in Finance sector in Georgia?

A. Our area of responsibility in Finance sector covers the fiscal sector and is focused on achieving its stability and growth. Our main target is to keep financial stability. Actually, the result of our work what we can see after two years is that its this segment reached a sustainable condition in our country, we faced some challenges and problems last year, but the government of Georgia solved these problems successfully and it occurred very quickly, and when I say ‘quickly’ I mean that the mentioned problems did not affect the fiscal field. This is the measurement to assess our efforts during these two years. And I want to refer to the taxation sphere, because government drastically improved its legislative base.

Q. A lot of fields are growing up for 50 % than last year. What things have been changed in the banking sector?

A. The banking was hindered because of the shadow economy, because such economy avoids relations with banks. But the legal economy, legal business tends to have relations with this sphere. During the shadow economy the businessmen were working without cashing in Georgia. But after we improved tax administration, the demand for bank services increased. This is the main reason why banking and financial sectors boosted since last year.

Q. The budget of your ministry tripled since last year. What other projects are considered to be implemented with this money?

A. Our first priority was the rehabilitation of energy sector, and this issue was almost accomplished successfully by the state investment after we had privatized it. The second priority is the municipal infrastructure, including roads, sanitary institutions, streetlights, etc. The government will spend money in these spheres not only in Tbilisi, but also in regions as well. About 200 schools will have been rehabilitated by the end of this year, and this will continue in regions in the next year too.

Q. What about future plans?

A. We are planning to have normal access roads to every district and region by 2008. Improvement of safety and social security, that’s the issues on what government plans to spend the budget.

Q. As you say the situation has improved here, new reforms have been implemented successfully; I am wondering what role the International Community, United States of America, etc. have played in these developments?

A. If not International Organizations, government would not have been able to resolve many problems on his own. They share their experience and knowledge with us. For example, we received technical assistance from the USA as well as USAID, and Millennium Challenge organizations provide assistance to the Ministry of Finance.

Q. Could you tell us about post Soviet Union countries? Some of them had developed really fast. What experience of they have to share with you?

A. The Soviet Union countries are very different form each other, but Baltic countries are the best examples for us, because we have the same background with similar population, economy etc. That’s why we gain experience from them. For example Estonia’s former Prime Minister, the best reformer, is in the advisory board of our government.

Q. Membership of EU represents one of the most important targets for your country. What do you think, how far are you from it?

A. Our effort is directed to reaching European standards and our goal is to become the member of EU, to have the same level of law, economy, and taxation as other member states have and not just only to be a member.

Q. And how the legislative body of Georgia provides support in this process?

A. They do it with the draft laws that are close to European standards. One of the most important draft laws for us is in the process of adoption, this is the Customs Code. We asked European community to assist us in drafting the code and they sent us an Austrian advisor of customs code and we drafted it according to European law and harmonized the code with it.

Q. Imagine that I am an investor, why do you consider that I should invest in Georgia?

A. Because it is a window of opportunities, you will receive 100% support from the government. You have an access to buy some infrastructures because they really need rehabilitation which will become pretty prosperous after reconstruction and also there are a lot of unexplored fields.

Q. What has been your biggest satisfaction as a deputy minister?

A. My biggest satisfaction is to see the results of the reforms implemented by us.