On December 30, 2009 at the Government Chancellery the PM of Georgia Nika Gilauri met journalists. The Prime Minister talked about the results of 2009. "The year 2009 was rather hard not only for Georgia but for all countries worldwide. The world has suffered such economical and financial crisis that it had not suffered for the last 60-70 years.
The western countries and developing countries are already overcoming this crisis. Georgia began to overcome the crisis some months ago and we have positive figures in all directions.
As to the gross domestic product, in the first quarter we had minus 5%, in the second quarter - minus 10%, in the third quarter - minus 1.2 %. Finally, the growth in 2009 will be minus 4%. Consequently, the fourth quarter by its growth is positive as we had the economic activity in October and November. At this stage we have good indicators in December as well. The final indices and figures of economic growth of 2009 will be published approximately in March-April. The Department for Statistics requires this period for publication of final data. However, I can tell that our data and data of IMF coincide with each other and this makes up minus 4%.
I have documents where all figures are given: here we see the data of economic growth of other countries placed on IMF web-site as well. Of course, minus 4% cannot be a good index 
but we shall always take into consideration those factors which accompanied the past year. In Lithuania the growth is minus 18.5%, in Latvia - minus 18%, in Armenia - minus 15.6%, in Estonia, Ukraine and Moldova - minus 9%, in Romania - minus 7.5%, in Hungary - minus 6.7%, in Bulgaria - minus 6.5%, in Turkey - minus 6.5%. The EU area makes up minus 4.2% in total.
I would like to underline that no country listed above has had two-month political crisis which has affected the economy of Georgia. The Georgian economy has lost April and May. As a rule, the second quarter shall be better than the first quarter and the third quarter shall be better that the second one. However, the situation in our economy is quite contrary. In the first quarter we had minus 5% and we should have minus 3-2 % in the second quarter but we actually had minus 10%.
Minus 4% is the negative index and it is bad, but the dynamics is positive. We are expecting the growth +2% next year and the first quarter will be positive. The International Monetary Fund backs this assumption as well.
For example I would like to bring some figures. The reserves of the National Bank are all-time high. This is due to the international cash inflows. Implementation of projects under the aegis of international financial institutions, the World Bank, Asian Development Bank, IMF, EBRD has attracted international funds in our country. Consequently, this has resulted in the growth of the National Bank reserves.
The effective activity of international institutes in Georgia and expected 4.5 billion USD dollars credit promised to Georgia by the international community in Brussels in October 2008 have promoted the national economic activity. A great part of these projects are in the process of implementation. I can state that the sum of 3.7 billion USD out of those 4.5 billion USD has been confirmed already or approved at the Board, i.e. guaranteed. This provides more comfort to the country because we have three years for restoration of private foreign inflows in the country at the level as in 2007-2006 and 2005. In frames of IMF program we have been allocated 1.1 billion USD (in addition to the approved 4.5 billion USD). 400 million USD will be the budgetary support and the remained sum will be or has been channeled for filling of the National Bank reserves.
The trade balance has been improved as well. It is negative as in all years before but in comparison with the export the import is lesser decreased and, consequently, the import-export balance is much more positive.
The rate of exchange of the national currency is rather stable and will be stable in future. As to the so called FDI (foreign direct investments), their total for three quarters is 505 million USD. The second quarter was catastrophic from the view of FDI and 230 million USD out of 505 million USD of FDI fall to the third quarter. We expect that we will get 230 million USD more in the fourth quarter and suppose that this inflow will be within 700-800 million USD in total.
The bank sector is one of the major factors which provides stability to the Georgian economy. The total deposits are all-time high. This strengthens the trust of our community in the bank sector and private companies and evidences the economic positive trend.
The real growth of credit portfolio began only two months ago. Till then the credit portfolios failed to grow monthly, and beginning from January we observed the drop in credit resources. This drop stopped in October, and in November and December we observed the most serious growth on credits provided by the bank sector.
Some months ago we issued six-month treasury bonds for the first time. What do the treasury bonds mean?! - This is when the state takes loan in the domestic market from private companies, population and banks. The average 6.2% was fixed and in December this index dropped to 4%. This is the indicator of the interest under which the Georgian private sector lends the sum to the Georgian authorities, government.
In 2002 this interest made up 43%, in 2003 - 42.9%, in 2004 - 21% and in 2005 - 12%. The same may be told about the value of Eurobond. As you should be informed, in April 2008 we issued Eurobonds par value 100 USD. In the secondary market the Eurobond was traded at 62%, I mean, in the last quarter of 2008 year and second quarter of 2009 year. Today its value is 102 USD.
As to privatization, this is one of those themes which data for the past year are not satisfactory for me. The performance was worse than the estimates. The activity has diminished. The offers of the ministry of economy to the private sector reduced in number. As a result we are facing a very unfavorable situation. I would like to state that for some weeks together with Zurab Pololikashvili we have elaborated the concrete plan related to the subject of privatization for the next year.
The sum of 250 million GEL is estimated in 2010 budget as the amount that should be received from privatization process. The current year index is 170 million GEL. We have many assets which are not necessary for the state. The state does not use them but accounts them on its balance-sheet. We have received requests for sale, development and investing in these objects from the private sector. From our side, we shall be more active, operative and effective.
I would like also to touch on the business environment. Past year the government introduced to the Parliament the Economic Freedom Act which I consider to be a very significant bill. I hope the Parliament will approve it in the nearest future. This is a bill which will prove the investors in the irreversibility of our course. The taxes will not rise and in the next ten years in our country will be created the liberal environment. This is the message we shall send to the investors in order to promote their activity.
The past year the government initiated the reform of pharmaceutical sector. I mean the drugs law adoption of which has resulted in the growth of competition and drop in prices of medications.
The bill on statistics reform has been passed already. However, adoption of this bill by the Parliament delays because the Eurostat required consideration of its recommendations thereto. Next year the department for statistics will be really independent. Its name will be changed into "Sakstati" and it will have the independent board.
Past year we implemented a new project "New Life of Old Tbilisi" This project has brought some benefits to our country. This program saved the construction sector which had faced serious problems. The second benefit was that the bank sector has got the opportunity to provide loans. And finally, more than 240 families residing at repair houses will have new apartments soon. This was the pilot project which will be prolonged in 2010 as well. Many countries have applied to us for copying of this project. Past year we signed some agreements on protection of investments and avoidance of double taxation. As a result we have signed agreements on avoidance of double taxation with 26 countries and on protection of investments with 31 countries.
A year and a half ago we have established free industrial zones. The most effective activity is observed in Kutaisi where the Egyptian investor manufactures its product already thus employing hundreds of people. The investor promises to extend its production line. As to Poti, its structure is completed and next year we will see many new companies which start its operation in the free industrial zone. Thousands of people will be employed there.
Let's pass to the agricultural issue. I am rather satisfied with this sphere. Past year the harvesting of citruses and vintage was carried out well. Everything was organized in a good manner. Many acceptance points were arranged. As a result all farmers could deliver their vintage. Past year we had experimental approach to the harvesting of citruses and exported citruses to many countries.
From January 2009 the tax rates were decreased from 25% to 20%. As to social affairs, this year the pensions were increased by 5 lari twice. Let's imagine a pensioner in Tbilisi who is below the poverty line and his score is less than 57000. The number of inhabitants who get the benefits for those below the poverty line is 9000-10000. 400 000 inhabitants get the allowances. I have assigned my assistant to make the analysis of what sum do they receive from the state: pension - 80 lari, long service increment - 10 lari, allowance - 30 lari, medical insurance in amount of 21 lari. In Tbilisi, beginning from 2010, the increment to the pension will be 10 lari. The single utility benefit will be 6 lari, communication benefit -2.1 lari, municipal transport - 12 lari and medication voucher - 2 lari. In total, the pensioner who lives below the poverty line and resides in Tbilisi receives 174 lari in different form and from different institutions: a part from the municipality, from the ministry of health, a part in kind of voucher and a part in kind of cash allowance.
Let's stop on the low-rate insurance program. This program was the most effective. We have involved the maximum population in this program. In 2006 45000 residents of Georgia were insured. In 2009 - more than 1 million 500 thousand. 120000 persons were insured under the low-rate insurance program. This program will be prolonged next year as well.
This year we had also another new program - the master's scholarship. Any citizen of Georgia could receive almost the whole financing, if s/he entered one of 50 top universities. This year the state financed 130 enrolees without any commitments.
Out of the current programs noteworthy is the village support program which was implemented for the first time. The amount was not very large but it had a good feedback. A village could dispose the amount allocated to it by itself. As a result in 2009 20 million GEL were allocated for this program and next year this amount will be doubled.
I would like to note that I am not satisfied with the project of 100 hospitals but we have elaborated a new approach. We can call it a new health care reform which will be presented together with the minister of health in January.
Some words about power engineering. This year for the first time we exported energy to four neighboring countries: Russia, Azerbaijan, Armenia and Turkey. The amount of export made electricity one of five most exported products in August-September. This was the first year when Inguri HPP operated all five units and minimum amount of water wasted. This year we began construction of 500 kV power transmission line which will be completed in 2012. This year we began construction of some HPPs: the foundation of Bakhviskhevi was laid and construction of Paravan-Ani and Mtquari HPP started. In total the capacity of those HPPs will attain to 126-130 MW.
The second stage of installation of electricity meters in the cities and towns was completed. This year were installed 58000 individual meters. Next year this number shall be 120000 whereupon we will start the third stage of installation of meters.
Also, we have progress in line of gasification. In 2009 we delivered gas to those villages where it had not been ever and as a result now we have 87000 new users.
From the aspect of road laying and rehabilitation, the past year was record. There are total 7000 km roads in Georgia, this year 1000 km were laid and rehabilitated. Next year we will complete MCG road to Armenia and Turkey border. In addition, next year will be completed the Gombori road. We will start construction of Zestafoni-Samtredia road and Ajara bypassing roads. Also, this year we started construction of Mestia road but we will need one more year for completion of it," -the Prime Minister stated within the meeting with the journalists devoted to the results of 2009.
The Prime Minister Press Service