PM Says Georgia Also ‘Suffers’ from Falling Oil Prices

Speaking during a panel discussion at the World Economic Forum in Davos on January 21, PM Giorgi Kvirikashvili named falling oil price among the challenges the region is facing and said that it was also hitting the Georgian economy.

“For our region challenge is falling oil price, because for a country like Georgia, which is less industrialized and which is focused more on trade and commodities, falling of oil prices means falling of investment appetite in the oil countries, which are the most important FDI providers for Georgia. That’s why we are not benefiting from this process, we are suffering along with the oil countries,” PM Kvirikashvili said.

“That means that we have to do more extraordinary things inside Georgia, like cutting further budget cost and giving more oxygen to the private sector, liberalizing tax system,” he said and reiterated plans to introduce zero tax on reinvested profit.

Kvirikashvili made the remarks while speaking at the panel discussion on “Eurasia and the Modern Silk Road”, which also included chief executive of Russia’s VTB bank Andrey Kostin; chairman of DP World Sultan Ahmed Bin Sulayem, and chairman of the Eurasian Resources Group Alexander Mashkevich.

The Georgian PM said that China’s One Belt-One Road initiative to rebuild Silk Road trade links “brings new momentum for development of economic ties on the Eurasian continent.” 

He, however, also said that without better coordination among countries in the region, as well as without improved customs and border crossing procedures and unified tariff systems Silk Road will “not be as effective as it should be.”

“We are working very closely with our neighbors in order to develop holistic approach in managing South Caucasus corridor together with Kazakhstan and Central Asian countries,” Kvirikashvili said, noting about that railway link from China through this corridor is significantly cutting journey time.

“I want to mention that this is not a rivalry between different roads – this is a friendly competition and I think it increases economic dynamism on the whole Eurasian continent and brings peace and understanding,” he said.

PM Kvirikashvili said that with its free trade treaties with the EU and with its neighbors, Georgia, which has already launched free trade talks with China, “is becoming one of the most open economies in the region with very liberal regulations, relatively low energy and labor costs.”

He also said that Tbilisi tries to “improve” relations with Russia.

“We need to decrease political tensions and allow ourselves and all other countries to develop in less tense environment,” Kvirikashvili said.

During the same panel discussion, Andrey Kostin, chief executive of VTB, Russian bank which entered Georgia over a decade ago, said that “despite of all the political difficulties my bank has been working in Georgia throughout this time quite successfully and had support from the Georgian government.”

Kvirikashvili, who is on his first foreign trip since taking PM’s office in December, met on in Davos with his Dutch counterpart Mark Rutte, whose country holds EU’s rotating presidency, as well as U.S. Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland; Switzerland’s President and economic affairs minister Johann Schneider-Ammann. The Georgian PM also met President of European Investment Bank Werner Hoyer, and President of the European Bank for Reconstruction and Development Suma Chakrabarti.

This post is also available in: ქართული (Georgian) Русский (Russian)