Experts criticise the allocation of credits from the state budget
By Messenger Staff
Tuesday, February 23The Finance Ministry cannot only receive loans but also give out credits. This is done on the basis of an order by the Georgian President or the Government. The order establishes the identity of the creditor, the aim and amount of the credit, the date of returning the money, the interest rate, the source of the credit and so on.
According to the Budget Code of 2010 credits from the state budget will be allocated for funding projects of state importance. Some experts suggest however that allocating credits from the state budget contradicts the terms of the Economic Freedom Act promulgated by the Government and market principles.
“Allocating credits from the state to a private company is interference by the state in the market, contrary to the principles of free trade and competition,” economic analyst Davit Narmania has said. Following these principles is one of the key directives of the European Union, set out in the European Neighbourhood Policy document, Narmania noted.
According to Government officials many countries allocate credits from the state budget, and Georgia has previously done so too. The Government says that the funds will not be allocated to promote specific companies and thus will not hinder the establishment of a competitive environment.