Development Bank – a breakthrough in our investment environment?

Reportedly, Development Bank is set to be founded in Georgia in the near future. Parliamentary majority leader Davit Saganelidze has recently visited China, where he met with Vice-President of the Local Development Bank, Chiao Xiaomi, who offered him recommendations regarding the new bank planned to be founded in Georgia.

The Chinese side emphasized the importance of Development Bank for Georgia and its economic advancement, also expressing his readiness to get involved in the bank’s foundation process.

We sat down with the parliamentary majority leader and a member of the working group, Davit Saganelidze, to discuss all key issues connected with the bank they intend to found here soon.

- Why has the necessity to create Georgian based Development bank emerged and who raised this initiation?

- As early as last year, while in office, former Prime Minister Bidzina Ivanishvili underscored that a national bank should be founded in Georgia since similar structures were paramount for our advancement. Soon afterwards, they created a working group one of the members of which was me. We launched talks regarding this issue early last spring. The fact that a similar bank has never existed in Georgia sincerely surprised the Chinese authorities. Believe it or not, Development Banks operate in a number of countries, including England, France, Germany, Poland, Ukraine, Greece etc.; however, in Georgia, it has not been founded thus far. In a nutshell, we negotiated a verbal agreement and shortly after this, the Bank of China opened a Transcaucasian office involving three countries: Azerbaijan, Armenia and Georgia. The Chinese top officials donated 500 million USD to Georgia and promised the Georgian authorities to allocate much more financial resources for them after the bank is opened here.

-- Why has China shown interest in this issue? Why does it want this bank to emerge in Georgia?

- Development Bank of China is one of the largest banks throughout the world. In addition, China’s president raised an initiation on creating a new route “Silk Road – Economic Zone” passing through a number of countries including Georgia. Obviously, we could not pass up this unique opportunity. China’s Development Bank is elaborating a project on financing Georgia’s electric trains and railway cars. Plus, they are sharing their experience with us. Vice-President of the Chinese Development Bank even declared that if a Development bank is founded in Georgia, he is ready to become a member of the consultation Council of the body. The first meeting between the two parties regarding this issue was convened last year; we have met with some obstacles since then; though we have never stopped work in this direction.

-- Could you tell us who placed these obstacles on your path?

- Mainly commercial banks tried to foil our plans. They just did not want us to create a bank that would become their rival on the market. The partnership fund also tried to put a stick in our wheel.

- Will the partnership fund become functionless?

- On the contrary, I would say that it will be expanded soon.

- What kind of a role will the Development Bank of Georgia play in the country’s advancement?

- It is expected to play a paramount role in our development. This bank has been termed as a breakthrough in our investment environment. It will finance some spheres that have never been funded by the commercial banks due to several reasons.

-- What could you say regarding the start-up expenses necessary to found the bank?

- Development Bank of Georgia will be a national bank the co-founder and co-investor of which could be a foreign bank. We have expanded on this issue with a number of states, including China and KFW, a delegation of which is in Georgia now. If you take a look at our country’s export and import history, you will see that Georgia re-exports cars, raw materials, mineral waters and wine. However, neither of these products is manufactured in Georgia today; neither has it increased employment in the country.

Therefore, it’s clear that the national bank must exploit all local resources and reserve them for long-term usage. We are simply obliged to find spheres not being financed by private business.

-- Why have we decided to follow China’s lead?

- Today, China is a huge country with its boundless financial resources and economic potential. However, the structure of the bank will not be similar to that of China’s. On the bases of the recommendations we get from KFW, World Bank and IMF, our team will soon present them with our initiations regarding the bank.

- Do you stand any chance of becoming the leader of team working on the bank project?

Frankly speaking the only thing that concerns me is to found the bank in the immediate future. I don’t even think regarding other issues now.