13.Feb .2019 00:37

Why Georgia Refused EIB’s €100 Million – Government’s Explanation

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100 million Euros worth of funds for Agricultural sector was given back to European Investment Bank (EIB) from Georgia.

According to the Parliament of Georgia, MPs discussed the bill on Exemption of the Financial Agreement (Georgian Agrarian Production/Recycling/Realization Chain) between Georgia and European Investment Bank (EIB) during the hearing of Agrarian Issues Committee.

Financial Agreement between Georgia and the EIB “Georgian Agrarian Production/Recycling/Realization Chain” was signed in 2016. As part of the agreement, EIB gave Georgia a loan worth 100 Million Euros for the implementation of the activities noted in the project. Georgian Government thinks that the aims of this loan cannot be reached that is why they are planning to modify it.

The beneficiaries of this loans were Georgian commercial banks which gave loans to the farmers. According to Giorgi Kakauridze, deputy Minister of Finance despite the efforts of the Ministry of Agriculture, the loans provided by banks had unreasonably high interest rates, reachin 8%-9%.

Kakauridze also added that the negotiations with the EIB are ongoing. Government plans to redirect the funds provided by EIB from farmers to irrigation infrastructure.

“It is a fact that agriculture is not the field which can be developed or can be self-sufficient with loans which have 8-9% interest rates. I think that these percentages, which have to be as low as possible, are quite high. We should have more solidarity and responsibility”, stated the chair of the Agrarian Issues Committee, while expressing the hope for finding the solution.

Agreement on exemption was signed by Georgia and European Investment Bank in 2018. According to the signed agreement, loan that was given to Georgia will be annulled. Moreover, Parliament needs to ratify the agreement on exemption.

Taking this into account, the committee has voted in favour of discussing this topic at the plenary session of the Parliament.

Agrarian Issues Committee also approved its 2019 action plan. Chairman of the committee, Otar Danelia presented the action plan at the committee hearing. According to Danelia, action plan includes new legislative packages, as well as the overseeing activities, thematic issues, which are included in the new version of the Rules of Procedure of the Parliament of Georgia.