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English Law System Mulled for Planned New City Lazika
- Saakashvili called for lower business loan interest rates;
- He warned banks over home loans and possible ‘anti-bank public stance’;
The Georgian authorities are considering having English law system as a dominant jurisdiction for commercial transactions in yet to be built new city Lazika on the Black Sea coast, instead of a codified civil law, which Georgia’s legal system is based on.
“British law will be introduced in Lazika for commercial transactions,” President Saakashvili on June 15.
He said it was “a huge experiment”, which aimed at “having an absolute safety and guarantee of commercial transactions for local and foreign investors.” He did not elaborate further into details.
According to a senior ruling party lawmaker Akaki Minashvili having a case law system in the planned new city was an idea and no relevant bill was yet elaborated.
Parliament passed with its first reading on June 12 a constitutional amendment according to which lawmakers will have to adopt an organic law to define special status of planned new city. The planned organic law is expected to define yet to be built city’s type of a semi-autonomous jurisdiction in details.
President Saakashvili made remarks about Lazika’s legal system while addressing a group of senior bankers when inaugurating Georgian central bank’s new cash center on June 15.
‘You May Get a Serious Anti-Bank Public Stance’
During televised speech at the event Saakashvili said that Georgia had a good chance of turning into “the region’s financial center” and reiterated plans to establish “a huge financial center close to Batumi.”
He said that Georgia’s first quarter economic growth was 7%, which indicated that this year’s growth would be at least 8%, “which is the one of the highest figure in the world.”
“If we have 8% growth this year, 10% growth in next and following years, our program of Georgia’s Singaporization will no longer seem to be utopia,” Saakashvili said. “I know that Georgia is neither Singapore nor Hong Kong yet. There is still unimaginable hardship in Georgia.”
He also told senior executive from the country’s leading banks, present at the event: “We should all work together in order to lower interest rates; it is now too high and you know it better than me.”
He said that the target was to get investment grade sovereign rating for Georgia from ratings agencies next year. In December credit rating agency Fitch raised Georgia’s sovereign-credit rating one notch to BB-, three short of investment grade.
“We should work together in order to make credits accessible especially for small and medium businesses and to have credits with lower interest rate; this is of utmost importance,” Saakashvili said.
He warned banks not to contribute to creation of, as he put it, “class of absolutely hungry, unfortunate, destroyed people” by seizing property from borrowers with defaulted mortgage loans.
“I meet a lot of people, who had one-room, two-room flat, which were seized by banks and they were left in street. Please be careful. We are starting to have a large group of people who are brought to poverty by you and don’t say now that it was their choice. Do not make something that will lead to having a whole class of absolutely hungry, unfortunate, destroyed people… Please be careful and I warn you to be careful because you may get a serious anti-bank [public] stance in Georgia. Don’t chase such meager profits greedily, because it will have an absolutely counter-affect,” Saakashvili said.