More Financial Organizations Get Involved in Debt Annulment Initiative

Georgia’s Deputy Finance Minister, Lasha Khutsishvili, says that more financial institutions have expressed a wish to participate in the loan annulment initiative of the government, which envisages the pre-New Year abolition of the loans of around 600,000 Georgian citizens who have been blacklisted by the banks.

Khutsishvili explained that around 10 more lending institutions, which refused to participate in the initiative at the initial stage, have now got involved in the process and will provide a list of people to Cartu Foundation, which has expressed its readiness to buy the debts of people and pay them off.

He stated the process will be launched from December 15, as initially stated, and will conclude on December 31.

The Deputy Minister explained there will be a special website where people can check if their debts will be written-off.

In addition, people can address the financial institutions to include them on the list of people who are incapable of paying their loans.

The main criteria for a person(s) to be included on the list are that the debt not be more than GEL 2000 and the person is on a black list, which includes those who have not met their financial responsibilities for at least one year.

As stated by Georgian Prime Minister Mamuka Bakhtadze in mid-November, the total amount for debts, amounting to 1.6 billion GEL, would be covered by the Cartu Foundation, which is a fund owned by ruling Georgian Dream (GD) founder and chair, billionaire Bidzina Ivanishvili.

Cartu Foundation and commercial institutions had negotiations and reached an agreement whereby Cartu will take responsibility for the loans of black-listed people in banks whose loans do not exceed GEL 2000. Of the total 600,000 people, 150,000 are socially vulnerable.

The non-governmental sector stated the initiative of the ruling party contains signs of vote-buying ahead of the November 28 elections, adding it was directed in favor of Salome Zurabishvili, the candidate supported by the ruling party, who won. They also called on the Prosecutor’s Office to launch investigation into the case, which is already underway.

The opposition also shares the position of the NGOs regarding alleged vote-buying. They say the authorities “pressure private banks and micro-finance companies to sell the debts of people to Cartu Foundation for 1% of the total amount.”

Koba Gvenetadze, the President of the National Bank of Georgia (NBG), stated in late November that the borrowers should not think their debts will be annulled again in future.

“We declared from the very beginning that this is a one-time measure and it will not happen in the future,” he said.

He added the Cartu Foundation and commercial institutions had had negotiations and reached an agreement about the process of the initiative.

By Thea Morrison

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03 December 2018 17:31