WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 60 
 
 
IV. TRADE POLICIES BY SECTOR 
(1) SECTOR OVERVIEW  
1. At Independence, shares of agriculture, industry, and services in GDP were more or less 
evenly split.  The share of agriculture has since d eclined significantly, to an estimated 10.3% of GDP 
in 2008, although the sector remains critical for the Georgian economy with over half the labour force 
depending on agriculture for their livelihood.  While agriculture accounts for 18% of exports, 
Georgia's net trade in agriculture a nd food products remains negative.   
2. During the review period, real agricultural output declined by 1% whereas overall GDP 
growth averaged 9.7% between 2003 and 2007, led by a number of sectors, including trade services, 
construction, financial interm ediation and manufacturing.  According to the World Bank, 
productivity, measured in terms of value added per employee, has improved in industrial and service 
sectors but not in agriculture, which accumulated an  excessive labour force while showing a stagnant 
growth pattern (Table IV.1).  The Government and the international donor community have devoted 
considerable resources and efforts to improve productiv ity in agriculture, but the benefits have so far 
been negligible on overall productivity, for which Georgian data appears to be lacking.   
Table IV.1 
Real value added per employeea, 1998 and 2003-07 
(GEL '000) 
 1998 2003 2004 2005 2006 2007 
Agriculture 1.6 1.7 1.7 1.8 1.6 1.7 
Services 3.3 6.5 7.5 9.1 12.0 15.8 
Industry 6.2 13.6 15.1 17.0 19.0 22.2 
a Value added figure ba sed on national accounts. 
Source:  World Bank (2009), Georgia Poverty Assessment , p. 27.  Viewed at:  http://www-wds.worldbank.org/ 
external/default/WDSContentServer/ WDSP/IB/2009/04/29/0003 50881_20090429111740/Rendered/PDF/444000E
SW0P1071C0Disclosed041281091.pdf. 
3. Among the reasons for agriculture's decline are:  a shortage of credit, which has prevented 
farmers from purchasing high-quality seeds and fertilizer s, and the small size of land plots, which 
prevents economies of scale and discourages mechani zation.  According to the latest World Bank 
study, rural areas account for 59% of the total poor  and 62% of the extreme poor in the country.1  
With a widening rural-urban income gap, agricult ure's performance is critical for reducing poverty, 
which continues to be prevalent in rural areas left behind by the economic growth of recent years.  To 
reduce poverty in the longer term, the report reco mmends the introduction of measures to revitalize 
the agriculture sector where livelihoods continue to rely on low-productivity subsistence agriculture.  
4. Industry, comprising mining, manufacturing, ut ilities and construction, contributed 21.7% of 
GDP in 2008 and provided 10.5% of the total employed labour  force in 2007.  Agri-processing and 
energy are the most significant industries.  C onstruction work on two international pipelines 
contributed to significant expansion in the construc tion, industrial, and services sectors in the early 
2000s.  The principal minerals extracted are manganese ore, petroleum, and coal, but reserves of high-
grade manganese ore are largely depleted.  There are also deposits of copper, gold, and silver. 
5. Before 2004, electricity blackouts were common throughout the country, but since late 2005, 
distribution has been much more reliable, appr oaching consistent 24-hour service.  Improvements 
                                                      
1 World Bank (2009b), p. 52. Georgia WT/TPR/S/224/Rev.1 
 Page 61 
 
 
have resulted from increased metering, better billi ng and collection practices, reduced theft, and 
management reforms.  Investments have also been made in infrastructure.  Through conservation, new 
hydroelectricity sources, and the availability of ne w sources of natural gas in Azerbaijan, Georgia's 
independence in energy supplies is increasing.   
6. The services sector has grown rapidly, accounting for over 69% of GDP in 2008, up from 
56% in 2002, and engaging over one-third of the employ ed labour force in 2008;  trade, transport, and 
financial services have been the main contributions.  Transport is a key sector for Georgia, which is 
the shortest transit link from Azerbaijan and Central Asia to Europe.  It also serves as a north-south 
transport link between the Russian Federation and Tu rkey and, via Armenia, to Iran.  Georgia is 
staking its future on the revival of the ancient Silk  Road as the Eurasian energy transportation corridor 
and as a bridge for transit of goods between Europe and Asia. 
(2) AGRICULTURE  
(i) Sector developments 
7. During the review period, the agriculture sector  has failed to benefit directly from Georgia’s 
otherwise impressive economy-wide growth, with real GDP falling by 1% between 2003 and 2007, 
and with considerable volatility in growth from year to year due mainly to adverse weather conditions 
in 2004 and 2006), exacerbated in 2006 by the eff ect on production of the Russian trade embargo 
(Table IV.2).  According to the World Bank, in the decade up to 2007, real agricultural GDP 
increased by only 2.5%, compared with an 89% increase in real overall GDP.2  The structure of 
agricultural production has also changed relatively little, with the shares of crop production and of 
livestock production staying relatively stable, and the composition of crop production also remaining 
relatively stable.  The World Bank noted that:  "this stable pattern of productio n, with the emphasis on 
food and forage crops, is typical of subsistence agriculture".3 
8. With an initially sharp decline in exports, Ge orgia became a large net importer of food and 
beverages in the early to mid 1990s and, with the combination of stagnant agricultural production and 
rising domestic demand for food products, food import s have continued to increase.  Exports have 
also grown relatively rapidly but were adversely a ffected by the impact of the Russian trade embargo 
on wine, spirits and mineral water in 2006.  From  2005 to 2006, beverages and spirit exports fell by 
27% from US$164 million to under US$120 million.  The Russian ban on these major export commodities particularly affected the wine industry;  export revenues fell, and the grape cultivating industry suffered as sales prices dropped significantly.  Since then, Georgian winemakers, with 
Government support
4, have taken steps to di versify exports, improve pr oduction quality, and reduce 
dependence on the Russian market.  The loss of Russia as the main export market for Georgian 
agricultural products (80% of Georgian wine was so ld there) had a negative effect on local exporters, 
but Georgian wine producers are intensively trying to enter new markets, mainly in east and west 
Europe, the CIS, the United States, and China.  The situation is similar with regard to vegetables and 
fruits.   
9. In the FSU, Georgia was a major producer and source for a wide variety of foods and 
beverages.  Since Independence, production of high-value tea, citr us, and grape crops, which were 
once the basis of Georgian agriculture, is still only a fraction of pre-independence output;  only grapes and citrus have shown signs of recovery (Table IV.3). 
                                                     
 
2 World Bank (2009b), p. 54. 
3 World Bank (2009b), p. 54. 
4 In the 2008 budget, GEL 600,000 were assigned to measures to promote the development of Georgian 
wineries, and GEL 150,000 were allocated to improving the quality control system for alcoholic beverages. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 62 
 
 
Table IV.2 
Trends in agricultural performa nce, selected indicators, 2003-08 
(Per cent and US$) 
 2003 2004 2005 2006 2007 2008 
National and agricultural output 
Real GDP % change (annual) 11.1 5.9 9.6 9.4 12.3 2.1 
Real agricultural GDP % change 
(annual) 10.3 -7.9 12.0 -11.7 3.3 -2.1 
Composition of agricultural output (%)  
Livestock production 47.3 50.2 47.2 57.1 44.9 51.6 
Crop production 50.8 48.0 51.0 41.3 53.7 46.0 
Agricultural services  1.8 1.9 1.8 1.5 1.4 2.4 
Crop composition (% area)  
Cereals and pulses 66.0 66.6 65.8 68.9 69.3 .. 
Potatoes 6.7 7.2 7.5 7.1 7.2 .. 
Vegetables 8.8 9.1 10.0 10.0 12.6 .. 
Industrial crops 8.6 7.4 7.3 8.6 7.6 .. 
Forage crops 9.8 9.7 9.4 5.4 3.2 .. 
Agricultural trade (US$ million)  
Total imports 208.8 390.6 437.5 606.3 832.5 942.5 
Food imports 124.7 214.0 237.1 343.2 491.0 .. 
Total exports 164.7 202.4 303.9 234.9 298.6 250.5 
Food exports 65.2 89.1 123.4 102.2 134.5 .. 
Beverage and spirits 88.6 101.3 164.4 119.6 143.4 138.4 
.. Not available. 
Source:  Government of Georgia (2005), ( 2007) and (2009), Statistical yearbook. 
Table IV.3 
Trends in perennial crop production, selected years 
('000 tonnes) 
 1990 1997 2000 2003 2007 
Tea 501.7 33.2 24.0 25.5 7.5 
Citrus 283.1 57.1 40.0 59.2 98.9 
Grapes 691.0 309.1 210.0 200.0 227.3 
Source:  Government of Georgia (2005), (2007)  and (2009), Statistical yearbook. 
(ii) Main structural features 
10. Georgia has favourable production conditions for a variety of annual and perennial crops, and 
agriculture has traditionally been one of the mo st significant sectors in the Georgian economy.  
Among the most developed agricultural sub-sectors ar e viticulture, tea, citrus fruits, vegetables, 
horticulture, and tobacco;  and stock breeding includ es cattle, pigs, sheep, and poultry.  However, the 
sector presently accounts for under 10% of GDP, down from over 30% in 1990, but employs more 
than half of the country's labour force;  in 1990 this share was only 25%.   
11. Far-reaching structural changes have occurred in Georgian agriculture since independence.  In 
the Soviet era, large farms using plantation-style labour produced most basic crops for consumption 
and industry (grains, oilseeds, tea, and fruits and vegetables).  Small household lots produced much of 
the livestock products and family subsistence and some  surplus for sale in the cities.  Under the land 
reform programme begun in 1992, the large collec tive farms were phased out and over one million Georgia WT/TPR/S/224/Rev.1 
 Page 63 
 
 
small farms created with an average size of under one hectare.  Such household plots now account for 
the bulk of national production of most cereals, fruit s, and vegetables.  While the distribution of land 
for subsistence is credited with averting a collapse of rural living standards following the break-up of 
the FSU, the small and fragmented land plots have since become a constraint to raising rural 
productivity and to developing a functioning land market.  
12. Deeply rooted supply-side constraints severely hamper the ability of the small family farms 
that now occupy 85% of arable agricultural land to  raise output in response to increased domestic and 
foreign demand.  Small farm sizes and limited acces s to credit for farm inputs and investment severely 
limit the resources to which producers have access.5  The reasons include small farmers’ inadequate 
use of improved crop varieties and new technologi es necessary for intensifying and diversifying 
production, poor quality of agricultural inputs such as fertilizers, low rate of machinery use, and 
limited market access.  On the other hand, accordin g to the authorities, the majority of irrigation 
system channels have been rene wed and repaired thanks to a GEL 16.2 million allocation under the 
State Budget.  Georgian banks have been reluctan t to issue loans to farmers because of the risks 
associated with farming, and insu rance companies still do not insure crops.  Thus farmers are unable 
to purchase agricultural machinery, and renting ser vices are not developed.  Commercial banks are 
reluctant to lend to small farmers as they are cons idered high risk and, as a result, farmers lack 
working capital and resources for making on-farm inv estments to raise productivity.  However, the 
"Cheap Credit" programme, launched in 2008, has he lped to improve access to credit for small and 
medium-size operators in ag riculture and agri-business. 
(iii) Government policies 
13. In the Ministry of Agriculture's Agricultura l Development Strategy 2009-2011, the main 
goals are defined as:  increasing incomes in the ag ricultural and food sector;  providing food security 
for the country;  and eliminating poverty in the ru ral areas.  To achieve these aims, several priorities 
have been identified in the areas of food safet y and quality, veterinary and plant protection,  
mechanization, upgrading of the processing indus try, increasing soil productivity, and conservation 
and bio-farming.  This is expected to contribute over the medium term to an enabling environment for 
agri-businesses and enhanced competitiveness of Geor gian agricultural products in international 
markets.  However, the State budget expenditure for agriculture and forestry is low (only 0.5% of 
GDP in 2006).  As a result, activ ities that are known to have high returns to investment remain under-
funded (for example agricultural research and extensi on).  Key policies carried out during the review 
period include land reform, privatization of farm s and agri-industry, facilitating access to finance, 
attracting investment, and open trade policies.  
(a) Land reform and privatization  
14. Until 2005, the State held legal title to all ag ricultural land.  Farmers leased land from the 
State, which prevented them from using land as collate ral against loans to expand their operations.  A 
law on privatization of state-owned agricultural la nd was passed in July 2005 allowing 360,000 ha of 
agricultural land that was still state owned to be priva tized in plots of no less than 3 ha.  The objective 
was to promote economically viable land plots for farming and facilitate th e development of a land 
market.  So far, only about 25% of privatized arab le agricultural land and around 30% of state-owned 
land is leased out.  A new stage in the privatizat ion of agricultural lands is under way;  private 
ownership of land remains fragmented and the aver age size of private farms remains very small. 
                                                      
5 Agriculture, by far the single biggest employer in the Georgian economy, only attracted 0.8% of total 
FDI in 2007 and 0.5% in 2008. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 64 
 
 
(b) Financing 
15. In 2008, the Cheap Credit programme was launched with the aim of promoting SME 
development by improving access to credit resources for small and medium-sized enterprises involved 
in agriculture (as well as handicrafts and touris m).  The credits are issued on concessional terms 
(lower interest rates, longer maturity and gr ace periods).  The programme was allocated about 
GEL 64 million in 2008, from which GEL 27.6 million were issued to 37 companies operating in the 
agriculture sector;  the authoriti es estimate approximately 25,800 direct and indirect beneficiaries in 
the agricultural sector.  The pr ogramme has continued in 2009 financed with GEL 20 million 
allocated from the State Budget. 
(c) Attracting investment  
16. Taxation is one of the main determining fact ors of the quality of the business environment 
and has a significant influence on the performance of ag ri-business.  To this end, important steps have 
been made to liberalize the taxation system.  Propert y taxes have been abolished on plots of land less 
than 5 ha.  The new Tax Code also provides for th e abolition of tax on transactions in property, 0% 
profit tax and 0% VAT;  0% VAT on primary supply of agricultural products;  and 0% import duty on 
agricultural and other equipment. 
17. In 2007, the Government launched a na tional programme – 100 New Agro-Industry 
Enterprises – to stimulate the establishment of new agri-processing enterprises and support job  
creation in rural areas.  Under the scheme, an entrep reneur can purchase state-owned agricultural land 
at concessional prices with the obligation to cr eate processing infrastructure and employment.  The 
authorities note that four projects have been deve loped under the programme with total investment of 
over GEL 15 million, a little over half of which is foreign investment. 
(d) Trade policies in agricultural products  
18. Imports of agricultural products are subject only to tariffs (zero, 5% or 12%) and sanitary and 
phytosanitary measures.  All agricultural lines are bound, and Georgia has quite low tariff rates on 
most agricultural products, exception of sugars  and confectionary, beverages, and tobacco 
(Table IV.4).  There is no special export regime applicable to agricultural goods, no export credits 
other than those available from commercial banks , and no system of export credit guarantees or 
insurance arranged by the Government.  Georgia bound its agricultural export subsidies at zero when 
it acceded to the WTO, and there are no export subsidy measures in place. 
19. Georgia has adopted a number of laws covering food safety, veterinary and plant protection 
matters.  The authorities maintain that minimum in ternational standards for food safety have been 
satisfied at the legislative level and that the Government is in the process of elaborating a 
comprehensive food safety strategy in line with EU st andards.  Challenges that need to be met include 
the gap between the quality of inspection and testing and the requirements of international standards, 
the organization and responsibilities of  inspection bodies and laboratori es, the risks for consumers due 
to food-borne diseases, and the lack of slaught erhouses, which undermines food safety and meat 
production. Georgia WT/TPR/S/224/Rev.1 
 Page 65 
 
 
Table IV.4  
Tariffs by agricultura l product group, 2009 
(Per cent) 
  2009 MFN applied rate  Bound rates 
    Average 
rate Maximum rate Duty free 
lines  Average 
rate Maximum rate Duty free 
lines 
WTO agricultural products 6.9 12.0 37.1  13.0 30.0 6.5 
 Animals and products thereof 9.8 12.0 17.7  11.6 12.0 3.2 
 Dairy products 5.5 12.0 37.5  12.6 25.0 0.0 
 Fruits, vegetables, plants 10.3 12.0 13.1  15.4 30.0 0.0 
 Coffee, tea 0.5 12.0 95.9  11.5 20.0 0.0 
 Cereals and preparationsa 7.5 12.0 36.9  14.0 25.0 0.9 
 Oilseeds, fats and oils 0.0 0.0 100.0  3.0 12.0 73.0 
 Sugars and confectionary 11.3 12.0 4.3  11.7 12.0 0.0 
 Beveragesb 10.9 12.0 3.6  23.3 25.0 0.0 
 Tobacco 12.0 12.0 0.0  21.4 30.0 0.0 
 Cotton 0.0 0.0 100.0  8.2 12.0 0.0 
 Other agricultural products 0.0 0.0 0.0  10.3 15.0 1.6 
a Calculations of averages exclude four  tariff lines that bear specific rates. 
b Calculations of averages only include non-alcoholic beverages and beer.  Other al coholic beverages bear a specific rate. 
Source: WTO calculations, based on data provided by the Georgian authorities.  
(3) INDUSTRY  
20. Prior to independence, the Georgian economy was closely integrated with that of the Soviet 
Union;  trade accounted for an estimated 40% of GDP, and nearly all exports were directed to, and 
three quarters of imports were from, the Soviet republics.  The industrial sector accounted for about one third of the economy and although Georgia lacked cheap sources of energy, it produced energy-intensive products, such as steel pipes and locomo tives, for export.  The competitiveness of Georgia's 
heavy industry was dependent on the supply of natu ral gas from Turkmenistan at artificially low 
pieces, and on the inflated prices of its final products .  The dissolution of the FSU had a serious effect 
on the Georgian economy:  the prices of gas and oil rose dramatically in the early 1990s, making 
Georgia's heavy industry non-compe titive and halting production in its  industrial centres.  Georgia's 
industrial sector currently accounts for around one fifth of GDP and comprises mining, manufacturing, energy, and construction.  
(i) Manufacturing 
(a) Main features 
21. The manufacturing sector experienced a sharp c ontraction in output during the initial phase of 
the transition, but aggressive privatization by St ate authorities has created a favourable environment 
for the restoration of industrial production.  Under the Soviet central planning system, SOEs accounted for a large share of industrial production,  such as energy production and distribution, water 
supply, oil refinery, ferrous metallurgical manufacturing, mining of manganese ore deposits, 
mechanical engineering, chemicals, and food processing.  After independence, a number of these 
industries were no longer financially viable and ha d to shut down.  After 2003, the new Government 
began a competitive privatization process, helping to attract domestic and foreign investors.  During 
most of the review period, the performance of ma nufacturing industry, led by food, beverages and 
tobacco manufacturing, has shown double-digit growth .  Growth in manufacturing has been driven WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 66 
 
 
both by external demand for certain goods mainly fo r metals, cement, and fertilizers, and by increased 
domestic demand for processed foods, soft dr inks, building materials, and timber.  
22. A 2009 World Bank study points out that there has been very limited investment in export-
oriented agri-business and manufacturing.6  It identifies a number of sectors that seem to offer the 
most potential for local and foreign investors:  wine, fruit and vegetables; construction materials;  
apparel;  and pharmaceuticals and medical devices. 
(b) Policies 
23. To enhance productivity growth and competitiven ess, the Georgian authorities have pursued 
structural reforms on several fronts:  privatizati on; enterprise, business regulatory, and institutional 
reforms;  trade liberalization;  the finance sector;  infrastructure and utilities;  standardization;  and 
public-sector management.  There is considerable evidence that the Government's economic reforms have created a favourable investment climate for the development of industry.  Reforms in labour 
regulations and licensing have helped  to facilitate Georgia's integration into international markets; in 
particular, a licensing and permit system, one of the most significant preconditions for ensuring the proper functioning of a liberal market economy.  Th e authorities maintain that the Government has 
not prioritized any sectors with regard to industria l policy; its overall policy is to minimize state 
intervention in the market and to promote a business-friendly environment through economic and 
institutional reforms. 
(ii) Energy sector  
24. During the review period, Georgia, a net ener gy and fuel importer, has made good progress in 
energy sector reforms to address chronic power shor tages and the poor financial state of electricity 
and gas companies.  Reforms have addressed electricity sector debt, improvement in payment collection, better reporting of electricity services, a nd diversification of supply in the gas sector.  
Government implemented large tariff increases in 2006, helping to bring about a financially 
sustainable energy sector, while well-targeted electri city and gas subsidies helped protect the most 
vulnerable.  Significant investment in the ener gy sector, both by the Government and private 
investors, including the rehabilitation of hydro and th ermal power plants, electricity transmission lines 
and distribution networks, gas and electricity me tering systems and better regulation of the entire 
sector, has made it more efficient and stable.  The el ectricity and gas markets for industrial users were 
liberalized in 2006 and 2008 respectively.  The Gove rnment has completed the privatization of assets 
in power generation and distribution.  
(a) Electricity  
25. According to the authorities, Georgia produced  about 8.6 billion kilowatt-hours (kWh) of 
electricity in 2008 and consumed about 8.4 billi on kWh.  Currently, around 85% of Georgia’s 
electricity demand is met from hydropower plants locat ed in the western part of the country and the 
rest from thermal units located in the east.  In creased hydropower capacity would better satisfy 
demand and also reduce Georgia's dependence on imported natural gas for power generation in 
winter.  
26. According to the World Bank, in 2003, th e average electricity service was for only 
seven hours per day per household, and collections averaged 35%;  by 2008 electricity was being provided almost 24 hours a day to paying customers and collections rose to 95%.
7  The reliability of 
                                                      
6 World Bank (2009c). 
7 World Bank (2008). Georgia WT/TPR/S/224/Rev.1 
 Page 67 
 
 
electricity services has improved greatly due to invest ment in energy infrastructure and maintenance.  
Financial viability has strengthened with tariff re forms, implementation of consumer re-metering 
programmes, improved revenue collection, and reduc tion in the quasi-fiscal deficits in the sector. 
Privatization of power generation and distribut ion has improved management of operations.  
Generation is now mostly private, transmission is a mix of public and private, and distribution is 
private.  With the completion of the 2007 pr ivatization programme in power generation and 
distribution, the private sector has become the ma in operator, with the state shifting towards policy 
development and regulatory functions. 
27. A significant issue for Georgia's electricity sector is that despite improvements in supply, the 
system is overly dependent on one large hydropower plant, Enguri, located in a conflict zone:  the 
dam is in Georgia and the turbines and generators in  Abkhazia.  The plant is jointly managed with a 
Russian company.8  
(b) Gas 
28. Unlike electricity, most of which is generated through hydroelectric power, gas is entirely 
imported.  In 2007, 60% of this gas was imported from Russia and the remaining 40% from 
Azerbaijan.  Supplies of natural gas from Azerba ijan have been increasing and in December 2008 an 
agreement was signed with Azerbaijan to supply Geor gia with gas for five years using a pre-defined 
price scheme.  The Georgian authorities maintain that Russian gas now re presents an insignificant 
share in the national gas balance and the August 2008 armed conflict demonstrated the need for 
Georgia to build underground natural gas storage, which would reduce the risk of interruptions in 
supplies. 
29. In 2008, the gas market was completely deregul ated, and all private companies have the right 
to purchase the volume of gas they require at the pr ice they can negotiate with producers.  According 
to the authorities, market deregulation should be viewed positively as it can foster competition 
between different importers.     
(c) Regulatory framework  
30. The Ministry of Energy is the main energy po licy body.  The main objectives of energy policy 
are:  diversification of supply sources (to incl ude harnessing the full potential of domestic hydropower 
resources);  liberalization and deregulation of the ma rket to attract competitive private investment;  
and the maximization of Georgia's benefits as an  energy transit corridor.  Moving towards more 
energy independence is critical given that energy  imports, mainly oil and gas, have accounted for 
nearly one fifth of the total annual import bill during the review period, and are a significant 
contributory factor to the country's large trade deficit. 
                                                      
8 The Georgian Government had to sign a memorandum of understanding with the Russian Inter RAO 
(the subsidiary of the state-ow ned electricity monopoly Inter RAO UES) in December 2008 on joint 
management of the power plant.  According to the authorities, the final agreement has not yet been signed by the parties so the plant is managed only by Georgia.  Russia's Inter RAO UES owns and operates the electricity 
distribution company that supplies electricity to the Georgian capital Tbilisi;  overall, around 25% of electricity 
generation and 35% of distribution is controlled by that company.  See Phillips (2008), p. 11. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 68 
 
 
31. The 1999 Laws on Electricity and Natural Gas9 and on Oil and Gas constitute the basic 
legislative framework for the sector, which is over seen by the independent National Energy and Water 
Regulatory Commission.  The Commission is responsible for regulating competition, dispute settlement, and issuing/withdrawing licences, as we ll for adopting rules and conditions related to 
electricity, gas, and water supply.  Anti-monopoly regul ations in the energy sector are provided in the 
1999 laws. One of the main objectives is facilitation of competition, setting up transparent and equal 
mechanisms for economic agents, and elaboration of  a tariff system to avoid monopolistic prices in 
energy and water supply. 
(iii) Construction 
32. Construction is one of the most dynamic sectors in the Georgian economy.  In 2005 the sector 
grew by an estimated 14.1% (year-on-year), driven by the building of two hydrocarbons pipelines;  the BTC oil pipeline became fully operational in mi d-2006, and the gas pipeline followed in early 
2007.  Growth in construction slowed in 2006, but rebounded to 14.3% in 2007, as demand surged for private housing and development of the tourism sect or in centres such as Batumi, on the Black Sea 
coast, and Tbilisi.  The increase in building activit y has had spillover effects into services such as 
telecommunications, and hotels and catering, with a c onsequent increase in employment and, with it, 
domestic demand.  However, by 2008 there were signs  that the boom in real estate had peaked, even 
before the military conflict with Russia.  
33. The construction industry contributed around 7. 8% of GDP and employed over 4% of the 
country's workforce in 2007.  Between 2004 and 2007 , growth was driven largely by expansion in the 
residential and commercial real estate market and in frastructure.  According to the MoED, there are 
currently 88 real estate companies operating whic h are responsible for architectural design and for 
obtaining construction permits.  On ce a permit is obtained, the real estate company can begin to sell 
space in the planned residential/commercial building. 
34. The 2005 Framework Law on licences and permits also applies to construction permits. It 
governs the regulatory framework of licences/permits and stipulates the rules and procedures for their 
issuance, amendment, and revocation. In additi on, the Government adopted Resolution 140 on 
Construction Permit Issuance Procedure and Permit Times in August 2005.  The resolution, amended 
several times, is part of an on-going effort to consolidate all construction regulations, starting from 
planning issues through to building commissioning.  Resolution 57 on Construction Permit Issuance 
Procedure and Permit Times, a single legislative act , replaced Resolution 140 as of March 2009.   
35. Since 2005, the Government has undertaken a comprehensive construction sector reform 
programme to simplify and streamline land-use regulations and the administrative procedures for issuing construction permits and occupancy certificates.   This has doubtless been a factor in Georgia's 
rise from 152
nd position in 2005 to 10th in 2009 in the "dealing-with-licenses" category of the World 
Bank Doing Business rankings.  Changes in th e construction industry regulatory framework 
significantly reduced the number of procedures re quired for obtaining a construction permit, on 
                                                      
9 The Georgian Law on Electricity and Natural Gas es tablished the legal base for regulating relations 
and activities of sole proprietors, physical persons, and le gal entities in the areas of electricity system operation, 
wholesale electricity (capacity ) trade, electricity generation, transmission, dispatch, distribution, import, export, 
and consumption, as well as in natural gas supply, import,  export, transportation, dist ribution, and consumption, 
and promoting the functioning and development of the electricity and natural gas sectors in Georgia, based on 
market economy principles.  The present law does not apply to exploration, production, processing and storage 
of natural gas, or to relations between the producer and supplier of natural gas or to electricity or natural gas transit through the territory of Georgia. Georgia WT/TPR/S/224/Rev.1 
 Page 69 
 
 
average from 29 to 12, while the average time required for obtaining permits was reduced from 
285 days to 113 days.  
(4) SERVICES  
36. Services accounted for approximately 69% of Georgia's current GDP in 2008, up from 56% in 
2002 and from an estimated 32% in 1998.  Employment in the services sector remained more or less 
constant at around 37% of total employment during the period under review.  Many of the services 
sold in Georgia are labour-intensive, low-tech ser vices, and these are likely to fall in importance as 
the economy develops.  Georgia has a small surplu s on the balance of services within the current 
account, mainly reflecting income relating to oil and gas pipelines. 
37. The financial sub-sector has expanded rapidly, and telecommunications, real estate and rental, 
and restaurants and hotels have benefited from in creasing FDI resources, helping them to realize 
above-average growth rates.  High domestic demand contributed to grow th of domestic trade services  
because most locally consumed products are imported.   In this sense, both the wholesale and retail 
trades are to a considerable extent dependent on ex ternal trade transactions that have intensified 
through Georgia's highly liberalized tariff regime. 
(i) General Agreement on Trade in Services (GATS) 
38. In preparation for accession to the WTO, Geor gia adopted new laws and amended existing 
legislation related to trade in services to make  the legislative basis consistent with the WTO 
Agreements.10  As part of its WTO accession process, Georgia offered mostly liberal access in the 
services sector with no discrimination against forei gn suppliers across the modes of supply in a broad 
range of business services, financial services, te lecommunication services, construction and related 
engineering services, professional services, tourism, and transport services. Georgia's Schedule of Specific Commitments on Services (GATS/SC/129) contains its legally binding market access 
commitments in respect of services.  Notably, Georgia's commitments  opened the way for foreign 
investors in virtually all sectors. Georgia took undertook commitments in 123 sub-sectors (out of 155) 
in 11 sectors.  Under Georgia’s WTO accession agreement energy-related services are largely 
liberalized.  Georgia maintained restrictions in a few cases, especially in transportation, 
construction
11, and insurance but through reforms im plemented during 2004-09, the authorities 
indicate that these have been liberalized.  Geor gia took MFN exemptions for measures in three 
sectors:  transport services, fishing related servi ces, and motion picture or video tape production 
services (GATS/EL/129).   
39. In the services negotiations in the Doha Round, Georgia's position is that it has unilaterally 
liberalized its services sector and theref ore it has not made an initial offer. 
                                                      
10 General laws related to services included the Constitution of Georgia;  the Law on promotion and 
guarantees of investment activity;  the Law on entrepreneur ship;  the Law on the legal conditions of foreigners;  
the Law on temporary entry, residence and exit of foreigners from Georgia;  the Law on monopoly activities and 
competition;  and the Bankruptcy Law of 25 July 1996. 
11 In the construction sector, not less than 50% of the entire staff of a service supplier of another 
member who wishes to establish a commercial presence in  Georgia are required to be Georgian citizens.  The 
Georgian insurance sector  remains subject to some restrictions, mainly in relation to presence of natural persons, 
but these do not appear to be onerous. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 70 
 
 
(ii) Financial services 
(a) Main features  
40. In 2008, financial intermediation comprised 2. 4% of GDP, up from 1.6% of GDP in 2003, as 
the banking sector expanded rapidly.  The credit to  GDP ratio increased from 8% in 2002 to 32% in 
2008 and total assets of the banking system grew from 16% of GDP to over 46% of GDP.  The 
number of individuals with bank accounts grew more than ten-fold, from an estimated 200,000 to over 
2.2 million between 2003 and 2008.  However, the fina ncial sector is among the smallest relative to 
GDP in the Europe and Central Asia region, a nd remains dominated by banks. According to the 
Central Bank, nearly 99% of financial intermediation takes place through the banking system, 
meaning that the mobilization and transformation of  financial resources into investment resources is 
carried out by banking institutions and not through the securities market , a situation that "is unlikely 
to change in the foreseeable future".12  Apart from banking, the other sub-sectors comprise insurance, 
securities, microfinance institutions, and credit union s.  According to the IMF, access to financial 
services and to credit is insufficient in particular  in rural areas where banks are unlikely to open a 
branch unless they are sure of its profitabilit y;  this can make access to banks difficult.13  T h e  
Georgian authorities indicate that four of the tw elve regions in Georgia have less than one bank 
branch per 10,000 citizens.  
(b) Banking sector  
41. Georgia completed the privatization of its  banking sector in 1995 and since then has 
maintained no restrictions on foreign ownership of  banks.  The NBG instituted bank consolidation and 
reform, imposing increasingly stringent reporting and capital requirements.  Consequently, the 
number of banks fell sharply, from 247 in 1995 to 17 at the end of 2006, but rose to 21 in mid 2008, of which 16 are Georgian private banks.  Although the banking sector has begun to consolidate in 
recent years, commercial banks remain risk-averse;  most loans are still issued to finance trade and 
consumption, whereas access to loans for the industr ial and agricultural sectors remains limited.  
42. The financial sector is growi ng rapidly and there are no entr y barriers to banks. Foreign 
investment, accounted for 36.4% of total bank capital in 2005, 61.7% in 2006, and 74.7% in 2009.  
Foreign participation in the banking system is sign ificant with majority foreign ownership in ten 
banks, including private foreign investors, banks from the former Soviet Union, and international 
financial institutions and development agencies.
14  The six largest banks (Bank of Georgia, TBC 
Bank, Société Générale, Prokredit, VTB, HSBC) hold around 87% of the total assets of the sector, 
90% of the total outstanding loans, and about 89% of deposits.  Pressure for consolidation in the 
sector comes from the new minimum capital requirement  regulation, which requires all banks to have 
                                                      
12 National Bank of Georgia (2006), p. 5. 
13 IMF (2007), p. 3. 
14 In 2005 Russian, Kazakh, U.S., and German cap ital was invested in Georgian banks.  In 
September 2006, the French bank Société Générale acquired 60% of one of the leading Georgian banks, Bank 
Republic.  Société Générale holds about 11% of the market in terms of deposits and over 30% of the plastic 
cards in circulation in Georgia through its subsidiary.  The Austrian Creditanstalt bought the EBRD’s 11.8% stake in the Bank of Georgia, the second biggest bank, in  2006, on behalf of a range of institutional investors.  
The Russian Vneshtorgbank (VTB), the German Procred it, the Kazakh Turan Alem Bank and the Armenian 
Cascade Bank are also present, in addition to a num ber of multilateral funding organizations.  There are 
branches of the Turkish Ziraat Bank and the Azeri Develo pment Bank of the Caucasus in Tbilisi.  According to 
the authorities, foreign investment has intensified with f our new banks established with foreign capital since the 
beginning of 2007:  the International Bank of Azerbaijan-Georgia (Azerbaijan), HSBC Bank Georgia (UK), Halyk Bank (Kazakhstan), and KOR Standard Bank (owned by the Dhabi Group base d in the UAE). Georgia WT/TPR/S/224/Rev.1 
 Page 71 
 
 
paid-up capital of at least US$6.5 million by 20 08.  At the same time, the National Bank lists 
maintenance of competition in the banking sector as a priority in its Strategy for 2006-09. 
43. Banks have been reluctant to lend to small fa rmers because small fragmented parcels of land 
are considered inadequate collateral.  As a resu lt, the small farm and small agri-business sectors 
remain under-served by the banking system and bank lending tends to be concentrated in trade and 
construction.  The microfinance sub-sector compri ses credit unions, non-government microfinance 
operators, and banks. 
44. In the weeks after the August 2008 conflict, ther e was a temporary withdrawal of deposits but 
remedial measures, including the provision of liquidi ty, helped to return some deposits. Deposits and 
net loans at the end of June 2009 were considerab ly down compared with a year before, and while 
overall loan demand has remained low, banks have been unwilling to lend to other than their most 
reliable customers. 
(c) Bank performance  
45. The banking system is generally sound but the inte rest rate spread remains relatively high due 
to a number of factors, including high operating costs, risks associated with collecting against 
collateral, and lack of good credit information (T able IV.5).  Average spreads between lending 
(currently around 35%) and deposit rates have genera lly been declining but increased to 13.9% (in 
domestic currency) and remained at 9% (for foreign currency) in mid 2009. 
Table IV.5 
Performance indicators of commercial banks, 2004-09 
 2004 2005 2006 2007 2008 2009 
(June) 
Capital adequacy ratio (%) 18.8 17.5 20.6 16.0  13.9 17.5 
Non-performing loans (% of total loans) 6.2 3.8 2.5 2.6  12.7  18.7 
Loans in foreign exchange (% of total loans) 86.7 76.2 73.8 68.6  73   77 
Net open foreign exchange positiona 7.4 7.5 3.7 5.0  1.7  8.8 
Liquidity ratio (%) 45.0 33.3 41.5 37.2  28.3  31.4 
Return on equity 10.0 14.9 15.3 9.6  -14.2  -4.14 
Interest rate spreadb (%)       
- in domestic currency 13.3 9.2 11.0 11.0  12.0  13.9 
- in foreign currency 19.4 17.0 11.0 9.0  9  9.0 
a Percent of total regulatory capital. 
b Spread between reference lending and deposit rates. 
Source:  National Bank of Georgia. 
46. Liquidity and solvency ratios have deteriorated but remain satisfactory overall, partly due to 
liquidity support from the NBG.  A ccording to the central bank, the d ecrease in the liquidity level can 
be explained by efforts of large banks to direct  resources at their disposal to more profitable 
operations (loans), leading to a lower grow th rate of liquid assets than of liabilities.15  The authorities 
indicate that the FSA has decreased the prudential liqui dity ratio from 30% to 20% as part of a set of 
counter-cyclical measures;  however, banks continue to maintain high liquidity to safeguard against 
increased volatility of liabilities.  Although bank s oundness indicators are broadly adequate, the recent 
sharp increase in non-performing loans and the dec line in profitability are concern.  Asset quality 
risks seem to have been covered through adequa te reserves for loan losses, and additional capital 
                                                      
15 National Bank of Georgia (2008), p. 5. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 72 
 
 
injections from investors and parent groups a llowed banks to increase the CAR to 17.6% in 
June 2009.  The Georgian banking sector was modera tely profitable during 2004/08, with a rate of 
return on equity (ROE) of between 10% and 14.2% ;  however, there has been a severe decline in 
profitability due to an increase in the expected loan loss reserve. 
47. There was rapid expansion of credit between 2004  and 2007 at an average annual rate of 
around 57%, possibly due partly to increased efficiency in the system, and to improvements in the (still unsatisfactory) legal environment, especially with respect to the recovery of bad loans. 
(d) Non-bank financial institutions 
The insurance sector  
48. The insurance market is still quite small with  13 licensed insurance companies in Georgia. 
Private pension insurance is provided by seven private pension funds.  Total written premiums 
collected in 2008 amounted to 1.46% of GDP;  while th is is small, the insurance market is growing 
dynamically, conditioned, according to the authoriti es, by the development of corporate health 
insurance products including life insurance. 
49. The process of aligning Georgian legislation in the insurance sector with international 
standards began in 1997.  Up to  2008, the insurance sector was re gulated by the 1997 Law on 
Insurance, amended in 1998 to abolish restricti ons on foreign ownership of insurance companies, 
effective upon Georgia's accession to the WTO.  U nder the Ministry of Finance, supervision was 
carried out by the Insurance State Supervision Service of Georgia, an independent governmental body that coordinated insurance activity, secured the so lvability of insurance co mpanies, supervised  
insurance activity, and participated in the re vision process for insurance policy and in its 
implementation.  Since April 2008, the insurance sect or is regulated by the FSA, which introduced a 
number of new rules, including increased solvency  requirements for operators in the insurance 
market.  The FSA is a member of the Internationa l Association of Insurance Supervisors (IAIS), and 
its main objectives are to establish a legal and regulatory environment that takes into account 
internationally recognized standards, and to fac ilitate the development of a solvent, fair, and 
competitive insurance market in Georgia. 
Capital markets  
50. The Georgian stock exchange is tiny, and acc ounts for less than 1% of total financial 
intermediation in the country.  About 157 companie s are listed on the exchange but only a few stocks 
are regularly traded.  The volume of trading w as only US$24 million in 2007, and the capitalization of 
the market was around GEL 1.7 billion, 70% of whic h is due to one stock (the Bank of Georgia).
16  
The Government is anxious to develop the exchange , and the Banking Strategy for the Period 2006-09 
includes an ambitious programme of legislation, in cluding electronic means of payment.  But even on 
the most optimistic assumptions, the Georgian stock market will remain a minor element in the Georgian financial system for the foreseeable future.   
51. Until 2008, the primary legislation governing the securities market in Ge orgia was the Law on 
Securities Market adopted in December 1998 and amended in August 2003.  Pursuant to the law, the National Securities Commission of Georgia (NSCG) was established in 1999 as an independent body in charge of supervising, licensing and regulating the securities market.  As of 2008, the Financial 
Supervision Agency (FSA) took over these duties.  In order to improve liquidity in the market, recent 
amendments to the securities law allowed the demu tualization of the stock exchange and remote 
                                                     
 
16 Nadibaidze (2008), p. 3. Georgia WT/TPR/S/224/Rev.1 
 Page 73 
 
 
trading in securities listed in so-called recognized stock exchanges without the need to establish a 
local presence. 
(e) Financial regulatory framework 
52. Prior to 2008, banks were required to hold a banking licence issued by the National Bank of 
Georgia (NBG).  The National Bank based its administrative decisions on the 1995 Law on the 
national bank and the 1996 Law on commercial banks' activities.  Foreign banks operated in 
accordance with Georgia's common banking legislati on and were not subject to any special or 
additional requirements.  A new law – the Global Competitiveness of the Financial Services Sector Act – was approved by Parliament in March 2008 to modernize the financial sector including:  
(i) establishing a single Financial Supervision Ag ency (FSA) for the banking and non-banking sectors 
(capital markets and insurance);  (ii) strengthening  the independence of the Central Bank, with first 
steps towards inflation targeting;  (iii) demutualiz ing the stock exchange;  and (iv) developing an 
international financial centre to attract forei gn funding by offering tax exemptions to large 
international financial companies whose activity in  Georgia does not exceed 10% of their financial 
turnover (Box IV.1). 
53. Amendments to the central bank law now make price stability the primary objective of the 
National Bank of Georgia (NBG), requiring it to targ et single-digit inflation by imposing a targeted 
inflation policy, in line with the authorities’ commitment to keeping inflation to less than 10%.  The 
NBG has been assigned the duty of the lender of l ast resort:  if any commercial bank encounters 
financial difficulties that may lead to its bankruptcy and put the financial sector in jeopardy, the NBG 
is authorized to extend a loan of last resort to this  bank in order to prevent a crisis.  Usually, a loan of 
last resort is short term (up to three months), issued at a higher than market interest rate and is collateralized. However, under special circumstan ces the NBG may also extend longer-term and 
unsecured loans. 
54. The FSA was created as a fully independent  agency with its own supervisory board, 
responsible for the consolidated supervision of ba nks, insurance companies, and securities firms, and 
for issuing licences to commercial banks and other pa rticipants of the financial sector, granting them 
the authority to conduct relevant business activities.   Until 2008, three different entities regulated the 
financial sector in Georgia:  in particular, the S upervision Department of the NBG was responsible for 
regulating activities of commercial banks, microf inance organizations, credit unions and foreign 
exchange bureaus;  the National Securities Comm ission monitored the securities market;  and the 
State Insurance Supervisory Service monitored the insurance companies.  Pursuant to the 2007-08 
amendments to the respective laws, the FSA was se t up (merging the three entities) to regulate the 
financial sector.
17  The FSA of Georgia is an independent bod y;  it is not subordinated to any other 
body or government official;  it has a balance sheet a nd a seal of its own.  The Agency is accountable 
to its Board and reports annually to Parliament.  To carry out its activities, it receives funds from the 
NBG.  Under Georgian law, the FSA has full author ity to supervise the activities of commercial banks 
and other financial intermediaries.  The aim of banking supervision, according to the Georgian 
authorities, is to balance safety and efficiency of the financial system (to avoid inappropriate or over-
regulation) with being forward-looking in det ecting and managing risks, thus protecting bank 
depositors' and other creditors' funds while upholdi ng the principles of competition in the banking 
system.   
                                                      
17 National Bank of Georgia online information.  Viewed at:  http://www.nbg.gov.ge/index. 
php?m=109. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 74 
 
 
Box IV.1:  Global competitiveness of the Financial Services Sector Act 2008  
The Act, adopted in March 2008, amends 17 laws regu lating the financial services to enhance the stability 
and global competitiveness of the Georgian financial sector.  The key changes include:   
National Bank of Georgia, the Financial Services Authority (FSA) and streamlining of bank 
governance 
The preservation of price stability is the main objec tive of the National Bank of Georgia.  The NBG is 
required to declare annually its thre e-year rolling inflation (CPI) target, which cannot be higher than 10%. 
A band of 2% will be allowed for both over-shooting a nd under-shooting the target. In the event of either 
for four consecutive quarters, the NBG President will have to face a parliament ary vote of confidence. 
The FSA was created under the auspices of the NBG to function autonomously as the sole regulator and 
supervisor of the financial services sector, includ ing banking, securities, insurance and other areas.  
However, as of August 2009, draft legislation was being prepared for the merger of the FSA and the central bank to create a consolidated regulato r/supervisor of the financial system. 
To streamline the governance of commercial banks, executive directors will be allowed to serve on the 
supervisory board, creating a single-board governance regime.  The banks are no longer be required to have 
an audit commission separate from the supervisory board. 
Enhancement and streamlining of th e anti-money laundering and "fit and proper" regulations 
This includes improving the efficacy of the Financia l Monitoring Service, the anti-money-laundering 
watchdog operating as a unit of the FSA, and increasin g the transparency of the banking sector. The "fit 
and proper" criteria with regard to owners of significan t (greater than 10 %) stakes in Georgian banks are to 
be streamlined, with the burden of  disclosure and compliance placed pr imarily on the bank shareholders, 
rather than on the banks themselves. The "see-through"  procedures, enabling the regulator to assess and 
evaluate the identities of beneficial owners, will also be enhanced.  
Taxation of financial instruments 
Effective 1 January 2009, the act abolished tax on in terest income received fr om deposits placed with 
licensed deposit-taking institutions and publicly-traded fixed income securities;  capital gains on the 
securities admitted to trading on a local stock exch ange with a free float exceeding 25%;  and tax on 
dividend income from equities admitted to trading on a local stock exchange with a free float exceeding 
25%. 
International Financial Institutions (IFIs) 
The status of IFI is to be introduced, enabling foreig n and local investors to establish such institutions (in 
banking, insurance, reinsurance, se curities, fund management and admini stration, custody, trust, and other 
areas) and avail themselves of the favourable tax regime. In addition, given that the IFIs are prohibited 
from deriving more than 10% of their revenues from domestic (Georgian) sources and from soliciting the business of local residents (except for high net worth individuals), they will be exempt from the local 
prudential regulations and supervision by the FSA (but will be subject to the local AML regulations).  The 
concept of Experienced Investor Funds will be introduced, in order to establish Georgia as an attractive jurisdiction for fund administration and wealth management. Local stock exchanges will be allowed to 
quote securities in any currency (with the settlement ta king place in Georgian lari).   In order to attract 
qualified individuals to reside and establish business practice in Georgia, IFIs are required to employ a 
director who is a Georgian tax resident (but not citizen).  
Stock exchange demutualization and ot her changes in the securities law 
Changes are made in the securities law, allowing for the demutualization of local stock exchanges. Remote 
foreign membership of stock exchanges will be allo wed, facilitating access to locally traded securities for 
broker-dealers licensed in any of the OECD countries without the need to establish a local subsidiary or be 
licensed and regulated by the FSA (provided they do not solicit business from local residents).   
Source:   WTO Secretariat, based on informati on provided by the Georgian authorities. 
 Georgia WT/TPR/S/224/Rev.1 
 Page 75 
 
 
55. Effective prudential regulation of the banking sect or has contributed significantly to its rapid 
growth.  For a decade or more, Georgia has main tained a simple bank licensing regime, under which 
there is only one type of bank licence, allowing licen sed banks to engage in all banking activities and 
preventing excessive fragmentation of the sector.  Geor gian banks are allowed to pursue a universal 
banking model and the leading banks became invol ved through acquisitions in insurance, broker-
dealer activities, wealth management, pens ions, card processing, and related activities. 
56. Georgian banks are still primarily regulated on the basis of the Basle-1 rules of risk 
assessment.  However, the regulatory framework is  based on higher capital standards, which makes 
the Georgian banking system highly capitalized, allo wing the FSA to decrease capital charges during 
a downturn as part of its counter-cyclical measu res.  The January 2004 Law on facilitating the 
elimination of legalisation of illegal incomes pr ovides the basis for the work of the Financial 
Monitoring Service of the National Bank in coun tering money laundering.  Société Générale,  which is 
supervised by the National Bank of Georgia but also  reports to the French Commission Bancaire, is 
regulated on the basis of Basle-II (as is HSBC), whic h is more self-regulatory than Basle-1 but better 
suited to the operations of highly sophisticated fi rst-tier banks. According to the authorities, the 
FSA does not intend to fully adopt Basel-II any time s oon, due to perceived inherent problems such as 
pro-cyclicality.  
57. The law on commercial bank activities was am ended to improve the transparency of 
ownership and corporate governance of banks.  In  March 2006, the restriction under which one 
shareholder or a group of joint shareholders could hold no more than 25% of voting shares in a bank 
was abolished. A new law regulating the activity of microfinance organizations entered into force in 
August 2006.  All joint-stock companies with mo re than 50 shareholders – currently about 
1,800 companies in Georgia – are required to submit annual, semi-annual, and current reports 
prepared in accordance with inte rnationally accepted accounting standa rds.  Other developments in 
the Georgian banking sector include the creation of a credit information bureau in 2006, to help banks 
with risk assessment.  Measures have also been ta ken to strengthen the process of bank audit.  The 
Government originally proposed to introduce a deposit insurance scheme  in 200718;  the idea was 
dropped but remains an element in the Banking Strategy for the Period 2006-09. 
(iii) Telecommunications 
(a) Main features  
58. All market segments including local, domestic long-distance, international long-distance, 
mobile, data, and internet are formally liberalized .  However, there appears to be little competition, 
and fixed-line services are dominated by the incumb ent operators.  The fixed-line network has only 
limited coverage outside Tbilisi, and growth in the  number of fixed-line telephone units stagnated 
between 2003 and 2007, although the total number of  active fixed-line phone subscribers grew to 
about 618,000 in 2008 (Table IV.6).  Fixed-line tele density has barely reached 14.7%, with rural areas 
being particularly under-served.  There are two ma jor operators on the market:  the privatized United 
Georgian Telecom and Akhali Kselebi.  Those two companies, together with Akhtel Communications, control an estimated 90% of the market. United Ge orgian Telecom is the market leader, controlling 
75% of local fixed-line networks, and serves 72% of local calls. It has 350,000 fixed-line subscribers, 
                                                     
 
18 Georgia is one of the few countries without any state-sponsored bank deposit insurance arrangements 
due in part to the high dollarization of deposits, which reduces the credibility of state guarantees. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 76 
 
 
most of which are in Tbilisi.  The company was privatized in 2006 when the Georgian-Kazakhstan 
company Black Sea Telecom Holding became the majority shareholder.19 
Table IV.6 
Electronic communications sector, 2001-08 
 2001 2002 2003 2004 2005 2006 2007 2008 
Revenues (GEL million) 261.4 331. 8 454.1 588.9 703.7 1,001.4 1,113.6 1,312.63  
Share of revenues in communications 
sector in GDP (%) 3.8 4.3 5.1 5.7 6.1 7.5 6.6 6.9 
Revenue share by segment (%)         
Fixed telephony .. .. 37.4 35.3 35.1 29.8 29.5 29.0 
Mobile telephony .. .. 58.3 60.2 60.3 64.9 63.2 63.3 
Broadcasting .. .. 4.3 4.5 4.6 5.3 7.5 7.7 
Subscribers of fixed communications 
networks ('000) .. 493.9 519.5 532.7 544.4 553.1 556.1 618 
Mobile network subscribers ('000) 253 430 520 841 1,152 1,704 2,600 2,755 
Total ISD end users .. .. .. .. 200,326 270,031 521,494 903,444 
.. Not available. 
Source:  Georgian authorities. 
59. The mobile telephone industry has been growing rapidly.  In 2008, three mobile telephony 
operators provided services for over 2.7 million subscr ibers (with a penetration rate of about 60%) up 
from 430,000 subscribers (about 10% penetration rate ) in 2002.  Competition between these operators 
(Geocell, Magticom, and industel) has stimulat ed considerable growth in this market.20 
60. The mobile market, dominated by Magticom a nd Geocell, is effectively a duopoly although 
the authorities state that there are no legislative or financial entry barriers for other companies to enter 
the market;  Mobitel entered in 2007.   
61. Internet use has also increased in recent years with the number of subscribers rising from 
about 26,000 in 2006 to over 107,000 by 2008. The dominant providers are Caucasus Online and 
United Telecom which, between them, have a market share of 85%. 
(b) Legislative framework 
62. The communications sector in Georgia is cu rrently regulated by the Georgian National 
Communications Commission (GNCC) and governed  by the Law on Electronic Communications.  
The law was adopted in 2005 and, according to the authorities, is in compliance with all five 
European Union communications directives.21  The GNCC is an independent sector-specific 
                                                      
19 Two companies used to control the fixed infrastructure inherited from the state: Sakartvelos 
Electrosvyaz (Georgian United Telecomm unications Company), and Sakartvelo s Telekomi (Georgia Telecom).  
Both companies were fully privatized. 
20 Geocell, which is controlled by a Swedish-Finnish operator (TeliaSonera), and acquired a universal 
mobile telecommunications service (UMTS) licence in May 2006;  MagtiCom, owned by a group of U.S. companies;  and Mobitel, owned by VimpelCom (Russia), which launched mobile services in 2007.  According 
to the most recent data available, Magticom led the market with approximately 1.2 million subscribers out of 
1.7 million in 2006 and covered about 97% of the populated area of Georgia.  Magticom won public bids for new CDMA and 3G licences issued by GNCC in 2005. 
21 The law stipulates the basic prin ciples for protection of the compe titive environment in the sector:  
merger controls and abuses of dominant position (among others) are regulated.  In regard to determination of dominant position, the legislation meets the requirements of international agreements (among them WTO Georgia WT/TPR/S/224/Rev.1 
 Page 77 
 
 
regulatory authority, established in 2000.  Its main functions relate to licensing, spectrum monitoring, 
tariff setting in regulated areas, the administration of universal service, maintenance of a competitive 
environment, and other technical aspects connected  to the communications sector.  The Department 
for Information and Communication Technology in  the Ministry of Economic Development is 
responsible for the development of sector policy. 
63. The mobile market has benefited from the regul atory approach to competition taken by the 
GNCC.  The GNCC has recognized that there are two important factors in the development of a competitive mobile sector: interconnection fees a nd number portability. Interconnection charges are 
one of the biggest cost items for new entrants and could constitute a significant barrier to development 
of potential competition as existing operators have an  incentive to raise the cost of making/receiving 
calls to new networks, thus making it unattractive fo r consumers to switch to newer operators in the 
market.  Interconnection charges are regulated by  the GNCC (and were decreased by 21% in 2008), 
which also set a cap on the interconnection fee ch arged;  it has also facilitated mobile number 
portability, permitting consumers to switch operator while keeping their cell number.
22 
(iv) Transit and transport 
64. For centuries, Georgia has been a trading route lin king Europe to Asia.  In recent years, it has 
emerged as a strategic transit corridor for pipelin es carrying Caspian oil and natural gas to world 
markets.  Georgia plays an important role in the existing and planned projects for the transportation of 
oil and natural gas along the South Caucasus trans it system outside the territory of the Russian 
Federation and Iran.  While this yields a certain amou nt of revenue in transit fees, its main importance 
for Georgia is in helping it to establish itself as a guarantor of western energy security. 
(a) Transit  
Oil and gas pipelines 
65. The Baku-Tbilisi-Ceyhan (BTC) oil pipeline h as a current throughput capacity of 1 million 
barrels of per day (bpd) – around 1% of the world' s daily production – of crude from BP's Azerbaijan 
offshore Azeri oilfields to export terminals at the Tu rkish port of Ceyhan in th e Mediterranean.  It is 
capable of carrying 1.2 million bpd with small upgrad es, and 1.6 million bpd with additional pumping 
stations.  The pipeline extends 1,750 km across all three countries, of which 249 km is in Georgia.  
The macroeconomic impact of the BTC pipeline, commissioned in September 2005, is reflected in:  
the sectoral contribution to GDP growth with the expansion of the construction sector and related 
services sector activity;  the fiscal accounts, as higher non-tax revenues;  and the balance of payments, 
initially in the construction phase as large pipe line-related FDI inflows, and after pipeline 
commissioning, as higher exports of services. 
66. The Baku-Supsa oil pipeline, opened in 1999, has an initial throughput capacity of 
150,000 bpd of Azeri oil and is capably of carrying larger volumes with a dditional pumping stations. 
The pipeline constructed in the la te 1990s and operated by British Petr oleum, runs 814 km from Baku 
to the Georgian port of Supsa.  Georgia also serv es as a transit corridor for Kazakh oil (produced by 
the Chevron-led TCO consortium at Tengiz); crude oi l is transported by barge across the Caspian Sea 
to Dupendi (near Baku), and is then moved by railcars.  
                                                                                                                                                                     
General Agreement on Trade in Services).  The law prohibits the use of subsidies in the provision of 
communications service. 
22 GNCC resolutions No. 189/9-2008 regulates interconnection charges for both the mobile and 
fixed-line network.  Number portability will be facilitated by a new numbering plan to be elaborated by 2010. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 78 
 
 
67. The Baku-Tbilisi-Erzerum natural gas pipeline, another BP-led Caspian development in the 
same corridor of land as the BTC pipeline, links the Shah Deniz gas and gas-condensate field in 
Azerbaijan to Erzerum in Turkey.  At full capacity, the 692 km pipeline will export up to 20 billion cubic meters of gas a year. Currently it is operating at a capacity of 8 billion cubic meters 
but is scheduled to increase production to supply natural gas via Turkey to Greece and Italy and 
onward through the Nabucco pipeline to Eastern and central Europe. 
68. For Azerbaijan, Georgia is a very significant export outlet and even after the events of 
August 2008, nearly all of the Azeri exports of oil an d gas was via Georgian territory.  Tariffs paid by 
oil and gas shippers for Georgian transit are not substantial. The BTC oil pipeline is expected to 
provide Georgia with transit fees of up to US$4 0 million per annum by 2009, while the SCP gas 
pipeline will provide an additional US$11 million in ta riff payments.  In order for Georgia to fully 
benefit from the BTC and SCP pipelines, transparency  in revenue management will be essential. Gas 
received as a transit fee at full capacity of the SCP gas pipeline operation will be enough to meet half 
of Georgia’s current demand.  Georgia has the ri ght to purchase another 5% under the terms of the 
concession agreement. 
Georgian ports 
69. Poti and Batumi, Georgia’s two major Black Se a ports, play a major role in the transit 
corridor system and in regional economic developm ent. Poti, the main port facility for the entire 
region, handled 8 million tonnes in general liqui d and dry cargoes in 2008, and 210,000 containers 
(Table IV.7).  Poti terminal can handle 45,000 tanke rs and has a capacity for 60,000 bpd.  The port is 
being refurbished to develop new terminals and in crease freight capacity; on an annual basis, the sea 
port can handle 6.7 million tonnes of dry cargo and 3 million tonnes of liquid cargo.  The port suffered limited damage from Ru ssian bombing in the August 2008 armed conflict but has endured 
revenue losses in consequence. 
Table IV.7 
Transported cargo by mode, 2006-08 
(Million tonnes) 
Transit Import Export Total Transport mode 
2006 2007 2008 2006 2007 2008 2006 2007 2008 2006 2007 2008 
Railway 16.2 14.4 13.8 2.7 3.6 3.5 1.2 1.4 1.5 20.1 19.4 18.8 
Road 0.8 1.1 1.4 0.9 1.1 1.2 0.3 0.2 0.2 2.0 2.4 2.8 
Civil aviation ('000) 0 0 0 6.9 9.7 14.6 1.2 2.4 2.5 8.1 12.1 17.1 
Total 17 15.5 15.2 3.6 4.7 4.7 1.5 1.6 1.7 22.1 21.8 21.6 
Sea ports             
Poti 3.7 4.2 4.5 1.7 2.3 2.4 1.2 1.2 1.1 6.6 7.7 8.0 
Batumi 12.4 10.2 7.8 0.4 0.4 0.3 0.3 0.6 0.5 13.1 11.2 8.6 
Supsa 5.6 0 0.6 0 0 0 0 0 0 5.6 0 0.6 
Kulevi 0 0 1.3 0 0 0 0 0 0 0 0 1.3 
Total 21.7 14.4 14.2 2.1 2.7 2.7 1.5 1.8 1.6 25.3 18.9 18.5 
Source: Georgian authorities. 
70. The port of Batumi is one of the deepest water ports in the Black sea.  Both an oil terminal 
and seaport,  it has a handling capacity of 15 million tonnes of oil and 2.5 million tonnes of dry cargo 
per year.  The port shipped 11.2 million tonnes in 2 007, of which 9.6 million tonnes were oil and oil 
products;  tonnage declined to 8.6 million tonnes in 2008, of which 7.2 million tonnes were oil and oil 
and oil products.  The port belongs to Kaza khstan's state-owned oil company KazMunaiGas. Georgia WT/TPR/S/224/Rev.1 
 Page 79 
 
 
71. The new oil terminal of Kulevi is located to th e north of Poti port. It is owned by Azerbaijan's 
state-owned company SOCAR. With a capacity of 4 million tonnes of liquid cargo per year, it handled 1.3 million tonnes in 2008. 
Railways and roads  
72. Georgia's rail system accounted for 87% of the volume of non-machine cargo in 2008.  
Railways transported nearly 19 million tonnes of frei ght in 2008:  73% consis ted of transit traffic
23, 
primarily oil and gas products;  19% import traffi c;  and only 8% export traffic.  The Georgian 
railroad system is vital for Armenia's transportati on, providing essential access to Georgian ports, and 
the rail transit infrastructure in th e South Caucasus, connecting the port of Baku to the Georgian ports, 
has become a vital export line for Azerbaijan, Turk menistan, and Kazakhstan, starting with oil and oil 
products and expanding in to substantial freight volumes of grains, minerals, and fertilizers. 
73. Georgia’s non-oil transit potential remains largely untapped;  Georgia accounts for a 
relatively small share of the non-oil trade of the Central Asian republics and that of the two other 
South Caucasus countries, Armenia and Azerbaijan.   Factors that contribute to underperformance 
include poor road conditions and long transit times.  Road infrastructure improvement is one of the 
stated priorities in the BDD, the Government's main policy document, and various projects are under 
way in conjunction with several institutions, incl uding the World Bank, the Japanese International 
Cooperation Agency, the Asian Development Bank, and the Millenium Challenge Corporation.  
Construction, rehabilitati on, and maintenance works on Georgian roads are managed by the Road 
Department in the Ministry of Regi onal Development and Infrastructure. 
(b) Regulatory framework for the transport sector  
74. The Georgian National Commission for Transpor t Regulation regulated the sector until 2007, 
when the Unified Transport Administration (UTA),  under the Ministry of Economic Development, 
assumed responsibility for the technical regulation of  the road and maritime transport, and civil 
aviation.  The UTA develops and endorses techni cal regulations on safety and security, and issues 
licences for transport operators.  In a further recen t change, the Ministry of Regional Development 
and Infrastructure became the overall regulatory authority. 
75. The main transport-related legislation compris es the Rail Code;  the Civil Aviation Code;  the 
Maritime Code;  and the Law on Road Transpor t with their subordinate rules and technical 
regulations. According to the authorities, the basic thrust of government policy is ensuring safety and 
security, improving infrastructure, achieving the maximum feasible liberalization, maximizing 
Georgian transit potential, and improving regional  cooperation and cooperati on with international 
organizations.  
76. The rehabilitation of decaying physical infrastruct ure is important to enable the country to 
take advantage of its geographic position as an im portant transit link between the South Caucasus, 
Central Asia, and Europe. The railways are still operated as an unbundled state-owned company 
although some restructuring efforts have been made .  The authorities stress that it is a profitable 
company able to invest in its infrastructure. Geor gian Railways was granted the right to manage its 
cargo policy independently.  Simplif ied tariff rates were introduced in 2007 with a view to attract 
additional cargo flows. 
77. When the Civil Aviation Authority was closed dow n in 2006, its functions were transferred to 
the National Commission and subsequently to the Unif ied Transport Administration.  There is a need 
                                                      
23 For a fuller analysis, see La shkhi et al. (2008), p. 25. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 80 
 
 
to strengthen regulatory, and in particular safety, oversight in order to improve the safety performance 
of Georgian carriers.  Georgia actively pursues a po licy of liberalization of air traffic in order to 
promote competition.  In 2005, Georgia announced an  open skies policy with a view to abolishing 
restrictions on the number of authorized air carrier s, and on capacity, frequency, and destinations.  
Georgia has proposed to change the law on licensing aviation activities, to open investment in 
Georgian carriers to foreigners. Georgia has also started negotiations with the European Commission 
on a comprehensive aviation agreement.  The Batumi  International Airport has been modernized, and 
the new Tbilisi International Airport was officially op ened in February 2007.  The Government states 
that the civil aviation authority cooperates actively with the International Civil Aviation Organization 
(ICAO) and other organizations on safety and security. 
(v) Tourism  
78. During the Soviet period, mass tourism was a major industry for Georgia, with around 
5 million visitors a year mostly from various pa rts of the FSU.  Tourist numbers are now only a 
fraction of what they were, but expanded more than three-fold between 2000 and 2008, from 387,000  
to nearly 1.3 million (Table IV.8).  Georgia, more  than ever, is mainly visited by its immediate 
neighbours with Armenia, Azerbaijan, and Turk ey accounting for over three-quarters of tourist 
arrivals.  Figures made available by the authorities for the first seven months of 2009 indicate a small 
increase (0.3%) in the number of visitors compar ed with the same period in 2008 with the increase 
mainly accounted for by Azerbaijan.  The authoriti es state that average expe nditure per tourist is 
around US$815 and the average length of stay is 10.5 da ys.  Tourists arrive mainly by air transport. 
Table IV.8 
International tourist arrivals and estimate share of GDP, 2000 and 2004-09 
 2000 2004 2005 2006 2007 2008 2009a 
Total ('000) 387 368 560 983 1,052 1,290 750 
Share by source (%)        
CIS 57.4 59.5 65.3 64.5 62.4 60.8 61.9 
Turkey 21.7 20.3 19.6 19.5 23.6 27.2 26.9 
USA 2.3 2.6 2.3 1.7 1.4 1.2 1.1 
Other 18.6 17.6 12.8 14.3 12.6 10.8 10.1 
Estimated share of GDP of 
tourism related revenues (%) 3.2 4.1 4.5 4.0 4.1 3.7 .. 
.. Not available. 
a Seven months (Jan-July). 
Source:  WTO calculations, based on data fro m the Department of Tourism and Re sorts of Georgia.  Viewed at:  
 http://www.dotr.gov.ge/e ng/statistics.php;  GDP shares provided by Georgia authorities.  
79. According to the authorities, the share of tourism revenues in Georgia's GDP has hovered 
around 4% since 2004.  Tourism-related investments ha ve seen impressive growth in recent years, 
reaching over US$1 billion by 2008.  In terms of  policies to encourage and develop tourism, 
procedures for issuing visas have been simplified. Th ere is no visa requirement for nationals of Israel, 
Japan, Canada, USA and EU countries, nor for CIS nationals, except citizens of the Russian 
Federation and Turkmenistan.  Visitors able to en ter Georgia without a visa are allowed to stay for 
90 days, and passengers on cruise ships who stay in Georgia for less than 72 hours do not require visas.  According to the Tax Code, since 2006, to ur operators' incoming tourist revenue has been 
exempted from VAT.  Georgia WT/TPR/S/224/Rev.1 
 Page 81 
 
 
80. Regarding basic infrastructure development, the authorities maintain that roads and highways, 
and energy and water supply systems are developing rapidly, with positive results for the tourism business.  Tbilisi and Batumi are serviced by new m odern airports approved for full membership in 
the European Civil Aviation Conference, with direct flights to 32 cities.  Currently two Marriott hotels 
and one Sheraton hotel provide upmarket accommodati on in Tbilisi, while th e SAS Radisson hotel, 
Hyatt, Kempinski, and Intercontinental are unde r construction and Accor and Hilton hotels are 
scheduled for construction.  
81. To assist with developing the country's comp etitive advantage in tourism, the Government 
signed an agreement with the U.S. Trade and Deve lopment Agency in 2007 for the America-Georgia 
Business Council and others to develop a National Tourism Development and Investment Plan and 
Strategy.  Together with the Georgia Department  of Tourism and Resorts, a review of tourism 
policies, institutions, and infrastructure found su bstantial tourism potential but also serious 
impediments in terms of room stock, access to sights and attractions, and infrastructure. Georgia WT/TPR/S/224/Rev.1 
 Page 83 
 
 
REFERENCES 
Asian Development Bank (2007), Country Economic Report: Georgia .  Viewed at:  
http://www.adb.org/ Documents/ CERs/GEO/CER-GEO-2007.pdf. 
CASE, Economic Feasibility, General Economic and Implications of a Free Trade Agreement 
between the European Union and Georgia,  Network Reports, No. 79 (200 8), Warsaw.  Viewed at:  
www.case-research.eu/upload/publikacja_plik/20963402_rc70.pdf. 
EC Commission (2008), Eastern Partnership, S taff working document.  Viewed at:  http://ec.europa. 
eu/external_relations/eastern/docs/sec08_2974_en.pdf. 
EC Commission (2009), Implementation of the European Nei ghbourhood Policy in 2008:  Progress 
Report on Georgia .  Viewed at:  http://ec.europa.e u/world/enp/pdf/progress2009/sec09_513_en.pdf. 
European Parliament (2008), Analysis of the EU's Assistance to Georgia, EP Briefing Paper, August.  
Viewed at:  http://www.europarl.europa.eu/ac tivities/committees/studies/download.do?file=22871). 
Georgian Law Review (2005), GEPLAC Activities:  Analysis of the Draft Customs Code,  Vol. 8, 
No. 3-4.  Viewed at:  http://www.geplac.or g/newfiles/reports/Draft%20Customs%20Code,%20 
Avizienis.pdf. 
Georgian Law Review (2006), GEPLAC Activities:  The New Competition Policy in Georgia.  Vol. 9, 
No. 1-2.  Viewed at:  http://www.geplac. org/files/50258_141_483576 _The_%20New_Competition 
_Policy.pdf. 
Government of Georgia (2007), Basic Data and Directions for 2008-2011 , Tbilisi.  Viewed at:  
http://www.imf.ge/aattach/285.pdf. 
Gylfason, T. and E. Hochreiter (2008), Growing Apart?  A Tale of Two Republics:  Estonia and 
Georgia,  IMF Working Paper, WP/08/235.  Viewed a t: http://www.imf.org/ external/pubs/ft/wp/2008/ 
wp08235.pdf. 
Heritage Foundation (2009), The 2009 Index of Economic Freedom.  Viewed at:  
http://www.heritage.org/index/ Country/Georgia. 
IMF (2007), Financial Sector Assessment Georgia . 
IMF (2009a), Georgia:  2009 Article IV Consultation and Second Review under the Stand-By 
Arrangement , Staff Report No. 09/127.  Viewed at:  http://www.imf.org/external/pubs/ft/2009/cr09 
127.pdf. 
IMF (2009b), Georgia:  Letter o f Intent .  Viewed at:  http://www.imf.org/external/np/loi/2009/geo/ 
073009.pdf. 
IMF (2009c), Georgia: Third Review under the Stand-By Arrangement,  IMF Country Report 
No. 09/267, August.  Viewed at:  http://www. imf.org/external/pubs/ft/scr/2009/cr09267.pdf. 
Independent International Fact-Finding Mission  on the Conflict in Georgia (2009), Report, 
September.  Viewed at: http://www.ceiig.ch/Report.html. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 84 
 
 
International Finance Corporation (2008), Georgia:  After Three Years of Licensing Reform – 
Analytical Note.   Viewed at:  http://www.ifc.org/ifcext/georgiasme.nsf/Attachments 
ByTitle/LicensingPolicy PaperEng/$FILE/ LicensingPolicyPaper.pdf. 
Ivianiashvili-Orbeliani, G. (2009), "Globaliza tion and National Competitiveness of Georgia", 
Caucasian Review of International Affairs,  Vol. 3.  Viewed at:  http://cria-online.org/Journal/6/Done_ 
Globalization%20and %20Nati onal%20Competitiveness%20 of% 20georgia_Orbeliane.pdf. 
Lashkhi, I. et al. (2008), Georgian Railway Problems and Perspectives,  Paper of the Open Society 
Georgia Foundation, Tbilisi.  Viewed at:  http://www.osgf.ge/data/file_db/ News/RAILWAY%20 
Final%20ENG _9saox0TNn1.pdf. 
Nadibaidze, L. (2008), Waiting for a push:  A quick overvi ew Georgia's capital markets .  Viewed at:  
http://www.nbg.gov.ge/uploads/discu ssion/dp_nadibaidze_20.09.2008.pdf. 
National Bank of Georgia (2006), Georgian Banking System Development Strategy for 2006-2009 .  
Viewed at:  http://www.nbg.gov.ge/uploads/ publications/thematicp ublications/nbg7.9nbg 
strategyeng.pdf. 
National Bank of Georgia (2008), Financial Stability Report 2008 .  Viewed at:   
http://www.nbg.gov.ge/uploads/publications/finstab ility/nbg7.4financiaostabilityreport2008eng.pdf. 
OECD (2009), Competition Policy and the Informal Economy – Note by the Secretariat , in document 
DAF/COMP/GF(2009)2.  Viewed at: http:// www.oecd.org/dataoecd/23/25/42062211.pdf. 
Office of the State Minister of Georgia for European and Euro-Atlantic Integration (2009), Georgia's 
Progress Report on Implementation of the ENP Action Plan in 2008 .  Viewed at:  
http://www.amcham.ge/res/Bullets_on_+stPage/EN P/Progress_report_ENP_APImplem.pdf.    
Phillips, D. (2008), Post-Conflict Georgia, Policy Paper of th e Atlantic Council of the United States .  
Viewed at:  http://www.acus.org/files/publi cation_pdfs/65/Post-Con flict%20Georgia.pdf. 
Schneider, F. and D. Enste (2002), The Shadow Economy: An International Survey,  Cambridge 
University Press, Cambridge. 
Transparency International Georgia (2003), Corruption Perception Index.  Viewed at:  
http://www.transparency.org/polic y_research/surveys_indices/epi/2003. 
Transparency International Georgia (2008a), Competition in Georgia .  Viewed at:  
http://www.transparency.ge/files/215_476_9794 53_TI%20GEORGIA%20C ompetition%20in%20Ge
orgia%20[ENG].pdf. 
Transparency International Georgia (2008b), Corruption Perception Index.  Viewed at:  
http://www.transparency.org/polic y_research/surveys_indices/epi/2008. 
Transparency International Georgia (2008c), Food Safety in Georgia .  Viewed at: 
http://www.transparency.ge/ fil es/215_509_501247_FOOD%20S AFETY%20ENG.pdf. 
UN and World Bank (2009), Georgia:  Joint Needs Assessment Progress Report,  30 June. 
UNDP (2008), Georgia Human Development Report:  the Reforms and Beyond,  Tbilisi, Georgia.  
Viewed at:  http://undp.org.ge/new/fil es/24_278926712_nhdr2008- final-eng.pdf.   Georgia WT/TPR/S/224/Rev.1 
 Page 85 
 
 
U.S. Department of State (2008), Georgia: 2008 Investment Climate Statement .  Viewed at: 
http://www.state.gov/e/eeb/ifd/ 2008/10087.htm.   
World Bank (2008), International Development Association and International Finance Corporation:  
Country Partnership Strategy Progress Re port for Georgia for the period FY06-FY09 .  Viewed at:  
http://www-wds.worldbank.org/external/defau lt/WDSContentServer/WDSP/IB/2008/05/13/0003349 
55_200805 13061107/ Rendered/PDF/4335 40CASP0P101300and0IFCR200810123.pdf. 
World Bank (2009a), Doing Business 2010 Georgia .  Viewed at:  http://www.doingbusiness.org/ 
Documents/CountryProfiles/GEO.pdf. 
World Bank (2009b), Georgia Poverty Assessment .  Viewed at:  http://www-wds.worldbank.org/ 
external/default/WDSContentServer/WDSP/IB/ 2009/04/29/00035 0881_2009042911174 0/Rendered/P
DF/444000ESW0P1071C0Disclosed041281091.pdf. 
World Bank (2009c), Georgia Manufacturing Sector Competitiveness Assessment .  Investment 
Climate Advisory Services (ICAAS).  Viewed a t:  http://www.ifc.org/ifcext/georgiasme.nsf/ 
AttachmentsByTitle/2GeorgiaManufacturingSector CompetitivenessAssessmentExe SumEng/$FILE/2 
GeorgiaManufacturingSectorCompe titivenessAssessmentExeSumEng.pdf. 
World Bank-European Commission (2008), Georgia Public Expenditure and Financial 
Accountability,  Public Financial Management Assess ment, Report No. 42886-GE, November.  
Viewed at:  http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/ 01/29/00033303 8_20090129230214/Rendered/PDF/ 428860ESW0GE0P1010disclosed0Jan0281.pdf.  
World Economic Forum (2008), Global Competitiveness Report 2008-2009 .  Viewed at:   
http://www.esmap.org/filez/pubs/PnP16633.pdf.