2019-05-31
Mme Deputy Speaker of the Parliament of Georgia,
Respected Members of Parliament,
Ladies and Gentlemen,
We are meeting for the second time within the format of interpellation. I wish to first of all tell you that we have transited to the parliamentary democracy and it was indeed a choice made by our political team.
Myself and every member of my Cabinet of Ministers demonstrate a great respect towards this format and stand ready to respond to any questions. I believe that visits made by Ministers at the Parliament, number of such visits and responses made to questions in recent months are a very clear evidence of this. When questions are asked from the domain of high public interest, Government is obliged to give answers to them. We do this and will continue in the same manner.
At the previous interpellation I noted that more substantial and less politicized or populistic questions would be desirable and let me state today that I will be responding to 6 questions within the first session of interpellation. In real terms they are worded within one question on two different topics in essence. I agree with presenters in this case, but later let us try to make topics specific to make sure that we have a possibility to elaborate and have a discussion to provide objective information to general public.
As for your questions, first three refer to the pension system reform and answer to it is very clear. We wish to create a decent pension system for our citizens. None of the successful countries have succeeded in creating a decent pension system in the world without pension funds. It is a common truth and economic justification. Therefore, I do not think it is worth arguing on these principles as we will be losing time in vain. We need to talk about its contextual aspect. I wish to reiterate that every country, which succeeded towards this end, has a viable market economy and all of them initiated a similar reform. We have not invented a wheel and it is the only way forward to ensure a decent pension for our citizens in future.
Moreover, if authors of these questions had a similar vision or courage to launch this reform 15 years ago, we would have had a twice as much pension and no pending issues today. At the same time, we would not have heard such populistic statements as voiced during the pre-election process, whereby some were promising a pension increase to double the monthly payments, but the entire budget would not have been enough to cater the need. After this phase is over, I wish to pledge and take political responsibility that this problem will be addressed once and for all in Georgia.
As for the specific numbers, let the society make its choice and analysis by taking into account all the factors, including the inflation. A young person, currently aged 25, who will enter the system now will be paid 2300 GEL with the current purchasing power when reaches a pension age solely from this component on top of the base pension. It is truly a decent pension and that is how we view this topic.
We are not against a voluntary system. It may not serve as an alternative to the mandatory one. Besides, draft law submitted to the parliament and supported by MPs envisages a voluntary system also as a so called 3rd Tier.
Now, as for the proceeds from social security contributions to the fund and management of the pension pool, no matter how emotionally will the question be asked, fact remains that an investment fund has been selected with your engagement by the way. I always keep objective attitude and state this. Opposition was part of this process and it was guided with objective criteria. This investment council includes people, who managed Finnish pension fund, French pension investment fund, world giants, Vice-President of the number one investment bank - JP Morgan - and many others. It is a brand name and individual names of people, who have voting seats within the board of the investment fund. You can judge yourself what is the magnitude of the endeavor and you have been engaged in the entire process.
Once again let me clarify that there are no question marks related to the pension fund. It is the only right way forward. It is the road that has been taken by every successful country: Australia, Austria, Belgium, Germany, Netherlands, Denmark, Finland, Canada, France, Japan - all the successful market economies. It is the only alternative. I stand ready to elaborate on the substance and investment of proceeds from social security contributions at any time of your choosing, however the board members and process of their appointment will evidence our spirit.
As for the following question, which is particularly vital for everyone - especially for me - relates to the Otkhozoria-Tatunashvili List. It was a very important step taken on the grounds of a Resolution issued by the Parliament of Georgia on March 21, 2018 whereby the opposition and majority have reached an agreement and issued a Resolution and Government was thus instructed with your decision to compose a list of those inhuman individuals, who committed the crime against the Georgian citizens - a severe crime. We have all agreed that we need to be guided by the principal goal, which is to make the Otkhozoria-Tatunashvili List very weighty and to equip our international partners with all the arguments to support us and make this list enforceable in real life. It is the prime reason of all these efforts.
I wish to tell you hereby that you will not see any public announcement of mine - domestically or internationally - neither any member of my Government have ever spoken without raising this issue. Anything opposite of this is a great lie and public has a very good knowledge of this. Now, as for the international activities: USA issued an Act in support of Georgia several days ago and it envisages sanctions against individuals kept responsible for the grave human rights violations in the occupied regions of Georgia. It is a very big victory and I am tremendously grateful to our friends for this. Second achievement is the Resolution issued by the European Parliament, whereby EU member states and Council of the European Union are called upon to introduce respective sanctions towards offenders. Third achievement is that our friendly nation - Lietuva - has already introduced these sanctions. Fourth achievement is that the Parliament of Ireland has already issued a similar resolution. All of these creates preconditions for making the practical implementation of this List possible through international politics. Yes, I will repeat what has been said a year ago and I bear responsibility for any and every word I utter. In the recent days I have had a consultation with respective institutions and let me confirm that a legitimate expectation exists for this List to be extended further in the nearest future. However, we all need to understand that is the purpose of this List. We should have the highest standard for accusation to make sure that our friends have all the leverages to help us in the implementation of the List in real life and we will achieve this goal by all means.
Following question relates to the NBG regulations. They are to address the financial literacy, rather than to regulate banks. Let us all recall what my original initiatives were when I served as a Minister of Finance and later as a Head of Government of Georgia. Our intention was to set a ceiling on interest rates to drop them way down from 700 and 800 percent per month. Georgia should no longer have unfair rules of game that you left as a legacy. My second point is that a cap should exist on the sanctions and interest for overdue payments to make sure that people no longer lose their housing to meet their liabilities towards creditors. We introduced a bank exposure limit at 200 000 GEL, to promote lending in the national currency and to make the effort tangible for our citizens. I wish to remind you that a a new products has been offered to its customers by the commercial banking sector of the country in the form of a 7% interest on loans denominated in GEL. I wish to remind you that back when you were in power, interest rates were as high as what? 21 percent! Refresh your minds! Interest rates have been reduced three times!
You need to get acceptive of the reality, my friends. There are achievements and challenges. I cannot not compete with some of you in the artistic performance and therefore urge you to focus on the substance if you still have substantial questions.
As for the TBC Bank issue, all the institutional shareholders, including the TBC management reached an agreement amongst them and with the National Bank of Georgia (NBG). Central banik of the country applied sanctions as a result. It was legitimate. You are talking about institutions. Measures taken by the NBG were legitimate, including those that will follow. It is the response of institutional shareholders and international investment funds. And what you are saying is a complete lie!
Let me once again repeat on the TBC Bank. An agreement was reached between the NBG and TBC Bank. It has been shared by all institutional investors and international financial institutions (IFIs). These are the circumstances and do you agree with it? If you agree with an agreement of the NBG and TBC Bank, you should agree with everything that follows this case.
If you are interested in the answer, let me say and I can send my response in writing with more details. Your question is a political speculation. Why did I explain? I did clarify that what NBG applied towards the commercial bank, steps taken towards it were consented by all. It was a legitimate measure.
Madam Vice Speaker, honorable Members of Parliament,
Once again, greetings!
As for the second interpolation question, I would like to inform you that, unlike the previous interpolation question, this issue requires substantial discussions, and society will have the real picture. Consequently, I would like to see more debates on similar issues in the future, not the cheap political speculations that unfortunately took place during the first interpolation.
In reality, it matters to citizens how much taxpayers pay to keep state structures, and secondly, what services they receive from the state structures, how their quality and relevance correspond to the price paid. These are very simple criteria.
What may be called the black hole is the very model you had. As for employing party activists, our society knows well who has done what and how. As for the content, we inherited a system with no registering, which made analysis very difficult. Last year marked Georgia's great achievement-in the Open Budget Index, which measures budget transparency, Georgia was ranked 5th, next to Norway and the US. In addition, we assumed a responsibility to set the most ambitious task of cutting the budget expenses of the state structures to the lowest possible level. I have assumed a political responsibility by promising 3.9%.
As for the budget parameters, when we took over the budget from you, it was almost 18%. This year, however, it is 13.5%. As for the numbers, almost 225,000 citizens are employed, including by LEPL and NNLE, and these are police officers, service members, those working in the penitentiary system, our firefighters, rescuers, doctors, people working for cultural and athletic organizations, and employees of preschool institutions. Setting aside every other function from these vocation, it is about 30%. Accordingly, given these numbers, criticism does not stand for being an opponent, but for speculations.
As for qualitative indicators, these are given through the mechanism based on the World Bank's methodology assessing the effectiveness of any state structure. Both Norway and Japan measure based on this methodology. You can see for yourselves the high level of effectiveness we have in this regard. It is not some expert affiliated with one political party or another, someone who may say all kinds of foolish things. This is what the World Bank says. Recently, we have had very important changes, and you know that kindergartens are now free. The demand grew, and I want us to have more budget resources to build more and employ more teachers, of whom there is a real lack.
I will not go into detail about the enhanced function of ambulances in the regions, because our citizens are already aware of that.
I would like to tell you, Irakli, sir, that yes, you should expect the budget to grow when it comes to critically important professions, like teachers, police officers, and service members. Yes, the budget will grow in this direction. Their social conditions will improve. These are key professions bearing the bulk weight in any successful state. Instead of hearing criticism as to how to improve their conditions, what can be done better, what reforms must be implemented, you are citing the presented numbers. In this regard, Georgia has the lowest expenses despite the fact that the tax burden is also lowest.
In conclusion, I would like to address the most painful issue of poverty. It is the issue about which I would like to see the most critical questions raised before me personally and everyone. It is our common challenge and our common enemy. It must be defeated. Instead, however, we hear what we heard 20 minutes ago. Look at what we inherited from you. Look at the level of poverty. It is the biggest problem, and we are talking about ways of overcoming it. Concrete projects have been presented to this end. In my summary speech, I will speak about it. But now I would like to tell you this: Georgian Dream will be the political force to ensure what matters most. Firstly, it is access to high-standard quality. Secondly, access to free medical services. Thirdly, the problem of food will be defeated in every needy household once and for all in this country. Next will be the same words said by you during the recent presidential election, when you claimed that everything, including the debt write-off, was done only for the election. Consequently, I am warning you in advance so that you can compose sentences to formulate your ideas in this regard.
At the same time, I would like once again to address the public and state that Georgian Dream will be the political force to ensure these three fundamental issues for our country. It will be access to the highest-standard education, access to healthcare services. I do not like appealing to numbers, but poverty, along with the occupation, is our greatest pain. And every needy Georgian family that requires help will no longer have the problem of food.