About 600,000 Georgian citizens who are in debt and are on the country’s so-called financial “blacklist” will be released from their financial obligations and their debts will be cleared.
The decision was taken by the Georgian authorities just nine days before the second round of the presidential elections.
Prime Minister Mamuka Bakhtadze personally informed voters of this decision.
Bakhtadze said the amount of debt the government plans to cancel is around 1.5 billion lari ($ 560 million), and the Cartu Foundation, owned by the former prime minister and current party chairman in power, Georgian dream Bidzina Ivanishvili, will help cover the amount.
Georgia did not elect a president in its first ballot on October 28. The second round is scheduled for November 28.
The results of the first-round vote between pro-government candidate Salome Zourabishvili and United Opposition leader Grigol Vashadze were almost equal – 38.64% and 37.73% respectively.
Bakhtadze stressed that the idea of debt compensation was that of Bidzina Ivanishvili.
When will the process begin and to whom will it apply?
The debt cancellation process will begin on December 15 and end on December 31.
Most debtors owe no more than 2,000 lari. Only those who owe less than this sum will have their debts cleared.
Debts owed to organizations that issue loans online and other similar institutions will also be covered by the debt cancellation program.
However, Finance Minister Ivane Machavariani later reported that not all financial institutions accepted the idea. For example, Vivus, one of the largest online loan companies, refused to participate in the program. Debts contracted with this company will not be cleared.
Bakhtadze says that of the 600,000 people who will benefit, around 150,000 are socially vulnerable and tens of thousands of people with disabilities cannot repay small bank loans.
Credit goes to Bidzina Ivanishvili, the Cartu Foundation and UNICEF
Bakhtadze said the debt cancellation program is an important step, which will ease the heavy burden on hundreds of thousands of families.
He added that Ivanishvili was the first to speak out about the existence of the problem when he decided to return to politics earlier this year.
Bakhtadze also thanked the Cartu Foundation which belongs to Ivanishvili: “I would like to express my sincere gratitude to the Cartu Charitable Foundation, without whose support such an important initiative could not be implemented.”
Bakhtadze further justified the importance of the debt relief plan, referring to the latest research carried out by UNICEF:
“The UNICEF study directly showed the relationship between excessive debt and poverty, and that the debt burden is so heavy on many families in Georgia that it has a negative impact, including on the development of children and adolescents. “
“The banking and non-banking sectors recognize the authorities’ plan.”
Bakhtadze said long and complicated negotiations took place with representatives of the banking and non-banking sectors before approving the plan:
“Most negotiators, including the so-called debt collection bureaus, endorsed the proposed course of action, showing great social responsibility, which allowed us, at last, to adopt a plan that would alleviate the fate of hundreds of thousands of families. ”
United opposition: “The authorities took our initiative.”
United Opposition leader Giorgi Vashadze commented on the government program:
“We have been developing a similar plan for a long time and are talking about the stagnation of the national economy. In our opinion, the economy is not growing because of ill-advised state policies that have ruined and driven economically active people into debt pits. “
He believes that the authorities have taken the decision to write off the debts for fear of losing the second round of the presidential election.
“The authorities’ plan to clear the debts of people who are on the blacklist contains elements of voter corruption, and the prosecutor’s office should address this issue.”
Levan Natroshvili, employee of Transparency International Georgia, said: “The authorities’ plan to clear the debts of blacklisted people contains elements of voter corruption, and the prosecutor’s office should address this issue. Other influential NGOs support this approach. According to Georgian law, such actions are unacceptable during the election period… and we are talking about such a large number of people that the actions of the authorities are able to influence the election results. “