Georgian Prime Minister Giorgi Gakharia together with Tbilisi Mayor Kakha Kaladze unveiled a plan worth of GEL 434 million (USD 136 million) to help battered construction business amid COVID-19 pandemic.
At a meeting with the representatives of construction companies on May 28, PM Gakharia stated that given the share of the construction sector in GDP (9%) and the number of employees – 120,000 direct employees – in the sector, the support for the construction companies is of a vital importance for the recovery of the economy as a whole.
The government plan includes allocating GEL 70 million for subsidizing the mortgage loans; GEL 14 million for guaranteeing the mortgage loan; GEL 150 million for providing the internally displaced persons (IDPs) with apartments; and GEL 200 million for the state to guarantee completion of unfinished constructions.
According to the plan, the government will subsidize the mortgage loans not exceeding 200 000 GEL (USD 63,000) – taken from June 1, 2020 to January 1, 2021 – with 4% for the next five years. However, if the key rate falls below 5%, the government will stop subsidizing the loan.
At the same time, the state will issue a 20% guarantee on mortgage loans (not exceeding 200,000 GEL) taken during the same period, where the initial contribution will not be less than 10%.
The Prime Minister also stated that the Government will allocate GEL 150 million to build homes for 1,800 IDP families (approximately 6,000 persons). This, Gakharia said, will ensure providing the IDPs with the homes three years ahead of the deadline planned earlier.
In addition, under the plan, the state will guarantee the completion of construction, which means that if the construction company can not sell 30% of the residential space, the state will buy this space. The government will use the purchased apartments for the IDP housing program.
In addition, the government will introduce benefits for the unfinished constructions permitted prior to 2013. The government will extend the deadline for relevant applications for a year.
The government will also launch the so-called Escrow system step-by-step – a bank account that will insure the buyer against the risks of completion of construction. In particular, the amount deposited by the buyer in the account will be accumulated and the constructing company will be permitted to withdraw it during the construction process or after its completion.