The Chair of the Budget and Finance Committee, Mr. Irakli Kovzanadze held the meeting with the EU Ambassador to Georgia, Mr. Janos Herman.
Mr. Kovzanadze introduced the activity and the functions of the Committee. The parties discussed cooperation of the Committee with the Government, the National Bank and the State Audit Service. I. Kovzanadze spoke about the practice and future plans of cooperation with international fiscal institutions.
“It was an interesting meeting. We expressed commitment for future cooperation and exchanged information about various issues. We are committed to further develop there directions with EU involvement”, - I. Kovzanadze stated.
The Committee heard the report on efficiency of management of state debt, introduced by the State Audit Service. The sitting was attended by the Sub-Committee on Audit of German Bundestag. The Deputy-Chair, Nodar Ebanoidze thanked the guests and spoke about the experience of the Committee in terms of Parliamentary oversight. He underlined assistance by German colleagues. “When we started the Parliamentary oversight, it was not easy to make first steps but it was important that we started with the best practice learning from the countries with centuries of experience and high standard. The list of achievements of the Parliament includes our success in this direction”.
He spoke about the report by SAS and introduced the remarks and the recommendations of the Committee. The Deputy-Finance Minister, Giorgi Kakauridze introduced the position of the Ministry regarding the report, stating that the reports are important, facilitating to the Ministry in planning of the budget. As to the remarks, the Ministry works on them and shares some of the remarks. “Though, there are some principal issues that we disagree with”. The SAS representatives introduced the position of the SAS and answered the questions.
“The issue we consider is regulated in general, though we move to the new level and we want to comply with the international standards in this sphere. I think, cooperation between the Parliament, Ministry and SAS is on a normal level and soon we will have accounting according to the world and European standards”, - David Onoprishivli stated. The recommendations by the member of German Audit Sub-Committee, Bettina Hagedorn were concerning the relations between the Parliament, Government and the SAS and the result-oriented policy. The Committee supported the report.
The Committee considered the draft by Free Democrats Faction on Tax Code, introduced by David Onoprishvili. The draft envisages exemption of the person from income tax on profit upon pardon of financial liabilities.
The financial institution shall deduce the liability value from gross income. The initiative applies to the natural persons failed to cover the debts and implement obligations under bank-client contract. The bank categorizes these liabilities as bad debts. “During the last 10 years, Georgian citizens encounter financial liabilities to the banks. It was entailed with 2008 war and post financial crisis followed with GEL devaluation. Thousands of citizens became insolvent. In some cases, debt coverage is totally or partially impossible or levied sums do not comply with the costs and time spent by banks. The banks classify the liabilities as bad debts which needs some procedures and costs and in case of pardon, the loan is subject to taxation due to which the banks abstain from pardon. Thus, the draft will establish some preferences”.
The draft will specify the banks – commercial banks and micro-financial institutions. The draft defines the term of January 1, 2014 as for pardon. “The preferences shall apply to the debts categorized as bad debts”.
MPs, the representatives of the Finance Ministry, National Bank and Bank Association expressed their positions that they agree with the main principles, though to prevent unreal expectations, the draft shall conclude specifications and elucidations.
The Deputy-Finance Minister, Giorgi Kakauridze introduced the documents for ratification. TheFinancial Agreement between Georgia and EIB on East-West Highway II envisages allocation of 49,45 ml EURO to be consumed on Zemo Osiauri-Chumateleti 5.8 km section. The loan term is 30 years, 5 of which are preferential and the interest rate varies depending on LIBOR or EURIBOR.The Loan Agreement between Georgia and IBRD on East-West Highway Corridor Improvement project envisages allocation of 140 ml USD for Zemo Osiauri-Chumateleti 8.3 km section. Loan term is 25 years, 10 of which are preferential and interest rate is based on Libor. The Committee supported the documents.
The majority and the Budget and Finance Committee organized the presentation with support by BEC, of the report of the survey held by Smart Campaign and BFA.The project stages were managed by the leading team of Smart Campaign, International Advisory Board composed of the organizations: WB, Inter-American Development Bank, Center for Financial Inclusion at Action, George Mason University, Fletcher School at Tufts University and the National Advisory Board composed of: Parliament of Georgia, National Bank of Georgia, IFC, IFAD, Micro-Financial Association of Georgia and other fiscal institutions.
The presentation was introduced by the leading specialist of Smart Campaign on Eastern Europe, Caucasus and Central Asia, Daniel Bolson. He spoke about survey grounds. As he stated, the Vote of the Client has been developed to study four markets: Benin, Georgia, Pakistan and Peru, in terms of consumers. “The survey aimed at study of the problems of the clients of micro-financial organizations and their positive evaluation in regards with MF organizations”.
The report concerned qualitative and quantitative survey conclusions and customer protection issues. Other than problem analysis, the report includes the recommendations how to encourage functional eco-system of consumer protection. As the Deputy-Finance Minister, Giorgi Kakauridze stated, “the topic is very important and we have many times discussed this issue. The main problem concerns financial education of the consumers. Unfortunately, the greatest part of consumers of financial sector do not hold due knowledge in this sphere. It entails when often debtors do not know the terms of the agreement and cannot analyze risks. Thus, it is important to jointly provide the population with better accessibility to this information and the state shall provide better protection of their rights”. He spoke about the drafts by the National Bank to be soon initiated to the Parliament.
According to the Deputy-Chair of Budget and Finance Committee, Nodar Ebanoidze, regulations for MF organizations are to be improved. He emphasized several issues and elucidated that there are three key issues: regulation of customer protection and oversight, financial education and skills, and standards and norms of the sphere. “I hail the initiative to discuss this issue. Establishment of customer protection principles is the greatest challenge. Georgian Government and the Parliament has repeatedly expressed interest to improve MF ecosystem”.
MP, David Onoprishivli spoke about importance of the survey and relevant recommendations. There are lots of problems in this direction but 1-year survey revealed the real picture. “Surveys are held on high level, allowing moving forward”. The event was attended by MPs, executive officials, representatives of the National Bank, diplomatic corps, international organizations and private sector.
The Committee considered the draft on Road Traffic with the I reading. The changes envisages prohibition of registration of the right-wheeled vehicles and establishment of point system on driver’s licenses. Besides, the draft puts the vehicles of 3-6 years old into the preferential taxation excise regime and increases excise fee for the vehicles of 8 and over years. Mopeds and motorbikes are to be put in preferential taxation regime as well. As the Deputy-Interior Minister,Shalva Khutsishvili stated, all the drivers will be granted with 100 points for 1 year. If the points are expired, the license shall be deprived to be revoked in 2 months. The points shall not be deduced for administrative penalties recorded on video or photo footage.
The Committee considered with the III reading the draft by Free Democrats on Tax Code, introduced by David Onoprishvili. As he stated, the draft envisaged exemption of hybrid vehicles from import tax and excise fees, though according to the remarks after the I reading, the excise fee shall be reduced with 50% for the vehicles of 0-6 y.o. and the draft shall be effective of May 1, 2016.
The Committee considered the drafts by Gedevan Popkhadze on Civil Acts; and on Code of Administrative Offenses. As he stated, the draft envisages substitution of the trustee of the Governor (Mayor) authorized to register the fact of decease and application to the Civil Acts Register on birth registration with the authorized person of the municipality Governor (Mayor) and imposition thereof with administrative responsibility for failure to due notify about decease of the person.
The Committee considered the draft by Gedevan Popkhadze on Georgian Citizenship, establishing the certificate on presence/living of the person on the municipal territory, being one of the basis for citizenship, to be issued by the respective Commission. The draft eliminates gap as this function was imposed on the trustee of the municipal unit and after abolishment of this position in 2014, the gap appeared in the law.
The Committee considered the draft by Giorgi Tsagareishvili on Welfare of Pet Companions. The draft aims at establishment of quality of living environ for pets, provision of their welfare and creation of safe environ in urban zone, definition of risks, as well as protection of rights of humans and pets and provision of reasonable balance for health and life of the pet. “The draft regulates the legal status of pet companions and establishes the standards for their welfare”, - G. Tsagareshvili stated. The Committee supported the drafts.
The meeting of the Budget and Finance Committee and the Budgetary Office with the Scottish Parliament representatives
The parties spoke about activities, functions and legislative processes of the two Parliaments.
Georgian MPs spoke about the ongoing and future activity of the Committee and the Office as of the independent fiscal institution.
Scottish MPs shared their experience. The parties agreed on future cooperation.
The meeting was supported by the Westminster Foundation for Democracy.