ISET

Executive Director of ISET Policy Institute Lasha Labadze, and Doctor of Economic Science, Professor Ioseb Archvadze, were invited to appear on radio Commersant to discuss the current situation on the Georgian labor market. The guests explained the possible reasons of and solutions for the most persistent problem facing the national economy: unemployment.

They explained the methodological differences between the calculations of various types of unemployment, and how the population perceives each of them. They also highlighted income and expenditure patterns rural and urban dwellers face, and named an inefficient labor force along with job mismatching as a major problem on the market. As a possible solution, they proposed a modification of the education system, increasing private sector involvement in the process, and the widespread introduction of the best local or international practices across the country.

Watch the video from Radio Commersant to learn more.

Giorgi Mzhavanadze, a researcher at ISET's Policy Institute, was interviewed by the “Commersant” radio station regarding the government's new “larization” program. This government initiative was implemented in January 2017 and includes the voluntary conversion of mortgage loans taken before January 2015 and do not exceed 100,000 GEL. Conversions will take place at the market exchange rate, but the government is going to subsidize 20 tetri for each dollar.

This program is one of the main tools of the government's dedollarization strategy, and the NBG will provide necessary liquidity for commercial banks. In addition, the main target of this instrument is to hedge borrowers that have incomes in Georgia's national currency and loans in US dollars. However, Giorgi claimed that the larization plan contains some risks of social injustice, as rich people that have loans will be financed by taxpayers. Finally, Giorgi stated that borrowers should be careful before making a decision to convert their loans, as the benefits of this process for borrowers strictly depend on the maturity of the loan, the current market lari interest rate, the initial dollar interest rate and the market exchange rate (taking into consideration the 20 tetri subsidy).

Watch the video from Radio Commersant to learn more.

ISET Policy Institute’s researcher Davit Keshelava was invited in the Morning Talks of Radio Tavisufleba to talk about the different aspects of the “Larization Plan” of Georgia. “Larization Plan” includes voluntary conversion of the mortgage loans that has been taken before January 2016 and does not exceed 100 thousand USD. Conversion will take place at the market exchange rate, but government is going to subsidize 20 tetri for each dollar.

Davit considered different issues related to the Larization Program. First, this program can be considered as one of the tools of the dedollarization strategy and NBG will provide necessary liquidity for commercial banks. Second, Larization Plan contains some risks of social injustice, as rich people that contains loans will be finance by poor taxpayers. Third, the main target of this instrument is to hedge borrowers that have income in national currency and loans in the foreign one. Finally, Davit claims that borrowers should be careful before making decision to convert their loans, as benefits of this process for borrowers strictly depends on the maturity of the loan, current market Lari interest rate, initial dollar interest rate and market exchange rate (taking into consideration 20 tetri subsidy).

Watch the video from Radio Tavisupleba to learn more.

A recent ruling of the Georgian Energy and Water Supply Regulatory Commission (GNERC) dictates that most electricity tariffs will be kept at their current rates, with a minor increase for the supply of firms. The ruling has raised a number of questions in society due to high expectations of a possible increase in tariffs. ISET-PI’s Senior Researcher of the Energy and Environmental Policy Research Center, Levan Pavlenishvili, answered questions raised by the host and audience of Radio Freedom. Some of the questions raised were as follows: how does the tariff setting in electricity sector works? How complex is the tariff methodology and how does it work? What can be the impact of a tariff increase on general price levels in the country?

Watch the video from Radio Tavisupleba to learn more.

ISET research fellow Daviti Zhorzholiani was also invited to speak on Freedom Radio to discuss the tax initiatives of the Georgian government. The initiatives, which come into force from the beginning of 2017, are to modify profit taxation mechanisms, and to increase excise tax on fuel, on vehicles and on tobacco.

Daviti Zhorzholiani explained exactly what excise tax is, and how the so-called “Estonian Profit Tax Model” works. He divided the effects of planned tax reforms into short- and long-term effects and said that initially budget deficit is expected to increase, while the benefits of new initiatives will be viable in the future. According to Mr. Zhorzholiani, consumers will be worse off due to increased prices in the short-run, but public health and trade balance might benefit from the modified consumer stimuli in the long-run.

Watch the video from Radio Tavisupleba to learn more.

While talking to Freedom Radio, Giorgi Mzhavanadze discussed the causes of the lari’s depreciation against the dollar, the consequences of its loss of value and future challenges related to this issue.

As the main causes of the local currency’s depreciation - which started in the late 2014 - Giorgi mentioned the external shocks of recession in Russia and Azerbaijan, economic slowdown in China and the fiscal crisis in Greece. Spillover effects through trade and remittances channel with the US dollar strengthening against almost all national currencies puts significant pressure on the Georgian lari. Giorgi supported then explained the recent policies of the National Bank of Georgia related to the exchange rate, which used interventions only for smoothing the lari’s depreciation against the US dollar.

At the end of the interview, Giorgi discussed the negative and positive effects of the lari’s depreciation on the Georgian economy, the role of the Georgian Government in this process and the budget plan for 2017.

Watch the video from Freedom Radio to learn more.

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