IFC, World Bank and Finance Ministry launch series of discussions

The Georgian Ministry of Finance, International Finance Corporation and World Bank have launched a series of discussions on key policy issues with a broad spectrum of shareholders in Georgia. The first such meeting was held in the Courtyard Marriott Hotel on Monday, where discussion focused on investment climate issues based on the findings of the Doing Business 2010 rating, which ranked Georgia 11th out of 183 economies worldwide in terms of ease of starting a business.

The primary author of the Doing Business rating, Svetlana Bagaudinova, told journalists after the meeting that achieving 11th place in it would not have been possible “unless the Government had a long term, comprehensive reform policy.” However she said there had been three areas identified in which “continuous improvements could be still achieved.” She listed these as tax payment systems, bankruptcy regulations and disclosure, saying that “further” reforms were needed here.

“One of the areas is paying taxes and this morning the Minister outlined in detail the further efforts the Government is making to simplify the filing of the tax returns and general tax administration. Here we are talking about 100 percent electronic filing by companies, and the Government is striving to achieve over the next couple of years,” Bagaudinova stated. “Another area is bankruptcy regulations. Here a new law was introduced two years ago and we are watching the situation quite closely to see how the bankruptcy and liquidation process become more efficient. Practical steps here would be providing continuous training for bankruptcy professionals and trustees to enable the bankruptcy process to be expeditious,” she stated, adding that “We also identified couple of areas in the field of disclosure. Here we are talking about protecting investors.”

Georgian Finance Minister Kakha Baindurashvili said that the Government is already tackling the issues outlined by the Doing Business team. He said that the Finance Ministry is planning to improve the tax filing system by introducing the electronic system which he said has already been used by some 20 companies in Georgia. “We will undertake one initiative to encourage companies to start using the e-filing system. Starting from next year we are planning to automatically make the appropriate refunds to companies using e-filing, whereas under the current system they have to apply for them. I think this will be a good stimulus and motivation,” Baindurashvili stated.

As for the bankruptcy law and disclosure of information to a third party, Baindurashvili said that some amendments have already been made. He pointed out that “all these issues have been reflected in the new package of amendments to be offered in October”. The Minister said that the reforms will be carried out not only in the abovementioned three fields but also “in all directions where they are needed.”

The participants of the meeting said the Doing Business report was not the only issue discussed. “We also talked about a lot of other issues which affect the decisions of private investors,” World Bank Regional Director for the South Caucasus Asad Alam said after the meeting. “We talked about the importance of the country being more closely integrated with the rest of the world, taking advantage of the economic opportunities that more trade and more investment actually offer. We discussed how to make the country much more competitive in international markets and how to respond to the global economic crisis and support the efforts of the Government in doing so,” he stated, adding that the aim of the discussion was to try and help Georgia become the “destination of choice” of private investments so that “we can see faster job creation and improve the lives of people.”

The Georgian Finance Minister said that the aim of the Government is to reach the top ten of the Doing Business ratings next year. “We are sure that we can achieve first place in the future,” Baindurashvili said.