wealth
management
Issue 2/2009

Bank of Georgia Wealth Management
Issue Highlights: Issue 2 FEBRUARY 2009
GEORGIAN ECONOMY Important upcoming tax dates P7
Main Trends of Commercial Banks’ Activities P4
Statement at the Conclusion of the Visit by IMF
Director Masood Ahmed to Georgia P5
The National Bank of Georgia Lowers its
Policy Rate to 7 Percent P6
SCULPTURE EXHIBITION AT CLUB24
P8
ffer
Special o
www.wealthmanagement.ge Issue 2 February 2009 2

20% off
Restaurant
Complement Lady’s Day on March 8th with a nice meal
and an exceptional experience at Club24 Restaurant with
your loved ones and enjoy 20% discount.
9 Jorbenadze St. Tbilisi 0103 Georgia Tel: +995 32 774 676 info@club24.ge www.club24.ge

Bank of Georgia Wealth Management
MAIN TRENDS OF COMMERCIAL BANKS ACTIVITIES
Press Release
02. 02. 2009
Compared to the beginning of the year total assets of 120.3 million GEL (26.5 percent). Compared to the
Georgian commercial banks (in current prices) beginning of the year, the number of foreign-controlled
increased by 1657.5 million GEL (23.0 percent) and banks has increased from 12 to15 and their share in the
constituted 8865.6 million GEL. banks' total equity capital made up 85.7 percent.
Compared to the beginning of the year, the banking The share of five banks having the largest assets within
sector's own funds (equity capital) have grown by 46.2 the total amount of the banking sector assets decreased
million GEL (3.1 percent) to equal 1517.3 million GEL, from 80.4 percent at the beginning of the year to 79.3
which makes up 17.1 percent of commercial banks' net percent.
total assets. The growth of paid-in capital constituted
www.wealthmanagement.ge Issue 2 February 2009 4

Bank of Georgia Wealth Management
STATEMENT AT THE CONCLUSION OF THE VISIT BY IMF DIRECTOR
MASOOD AHMED TO GEORGIA
Press Release No. 09/27
February 6, 2009
the most serious crisis since the Great Depression. He
The economic program supported by the International
added that strong and comprehensive policy actions are
Monetary Fund (IMF) is helping Georgia weather the
reducing the risk of a prolonged downturn, but that there
effects of the global economic crisis, underpin
is still considerable uncertainty in all markets.
confidence, and mobilize donor support, Masood
Mr. Ahmed explained that emerging markets entered the
Ahmed, Director of the Middle East and Central Asia
crisis with stronger fundamentals than advanced
Department at the International Monetary Fund (IMF),
economies, notably improved policy frameworks and
said today at the conclusion of his first visit to Tbilisi.
strengthened balance sheets. However, after being
In meeting with the authorities, parliament, and civil
largely unaffected through the summer, emerging market
society, Mr. Ahmed cautioned that, because of the
and developing economies have been increasingly
impact of the global crisis, economic conditions would
swept up by the spreading crisis—particularly those
remain difficult in 2009 and economic recovery was
countries with large external financing needs.
not likely to take hold until 2010. He also discussed
with the authorities the importance of implementing
The IMF now projects global growth in 2009 to fall to just
consistent policies and protecting the most vulnerable
0.5 percent, its lowest rate since World War II. Advanced
groups during this period of transition.
economies will experience significant contractions in
economic activity (-2 percent GDP growth). Growth in
Mr. Ahmed's visit coincided with that of an IMF mission
emerging and developing economies is also projected to
currently conducting the second quarterly review of
slow sharply from 6¼ percent in 2008 to 3¼ percent in
the economic program, which is also discussing more
2009, dragged down by falling export demand, lower
broadly the outlook and policy challenges for 2009 and
commodity prices, scarcer capital inflows, and therefore
the medium term, as part of the IMF annual
much tighter external financing constraints. The
consultation cycle with all its member countries.
emergence of large output gaps (relative to potential
Georgia—like many Central and Eastern European
output) will put strong downward pressure on inflation
countries—is negatively affected by the crisis, in
globally.
particular by the drying up of capital inflows from
abroad, including foreign direct investments that were
Many governments that have fiscal space have
attracted by Georgia's impressive economic reforms
announced stimulus packages to boost their economies
in the past. Mr. Ahmed's discussions with the
and deal with credit strains. This should support a gradual
authorities touched on the economic impact of the
recovery in late 2009, with world growth expected to pick
2008 conflict with Russia and prospects for 2009.
up to 3 percent in 2010.
The IMF mission and the authorities have agreed on
However, despite wide-ranging policy actions, financial
the need to limit the economic contraction within the
strains remain acute. A sustained economic recovery will
constraints of available external financing, and reduce
not be possible until the financial sector's functionality is
the risks of a more severe crisis. To this end,
restored and credit markets are unclogged. Greater
discussions focused on the coordination of exchange
international coordination will be key in boosting the
rate and monetary policy with the donor-financed
effectiveness of policies and restoring confidence. In all,
fiscal stimulus package to protect international
the uncertainty surrounding the outlook is unusually high,
reserves and maintain an adequate international
and downside risks dominate. This uncertainty reflects
liquidity buffer against unforeseen events. Mr. Ahmed
fundamental questions as to whether our models still
also stressed that the new global environment places
hold at this time of profound upheaval in the world
urgency on strengthening further the financial sector.
economy, Mr. Ahmed said.
Mr. Ahmed also presented the most recent views of the
IMF on the world economic outlook. He stressed that
the global financial crisis is now widely recognized as
www.wealthmanagement.ge Issue 2 February 2009 5

Bank of Georgia Wealth Management
THE NATIONAL BANK OF GEORGIA LOWERS ITS POLICY
RATE TO 7 PERCENT
The Monetary Policy Committee (MPC) of the National Forecasts on world economic growth remain pessimistic.
Bank of Georgia (NBG) met on February 18, 2009 and According to updated global economic forecasts of the
made the decision to lower its main policy rate (the International Monetary Fund, annual economic growth in
refinancing rate) by 100 basis points to 7 percent. 2009 is projected to be 0.5%, which is 1.7 percentage
points lower than the forecast made couple month ago.
The annual rate of inflation in January decreased to 4.4 Economic growth outlook has deteriorated substantially
percent. As a result average annual inflation stands at in Georgia's neighboring and main trade partner
9.4 percent. According to existing forecasts, the countries. According to current NBG projections, the
downward pressure to inflation has increased since growth rate for the Georgian economy is also expected to
the Committee's last meeting. Increase in prices on decline to 2% in 2009.
short-term consumer goods is lower than average
inflation; this has weakened inflationary expectations The NBG will closely monitor current developments in
for households. the economy and the financial markets and will, in due
course, act accordingly.
The outlook for growth of money aggregates is still
negative, which is also affected by low credit activity. The next meeting of the Monetary Policy Committee will
The National Bank of Georgia is planning to initiate be held on March 18, 2009.
new monetary policy instruments to supply additional
liquidity to the system.
www.wealthmanagement.ge Issue 2 February 2009 6

Bank of Georgia Wealth Management
IMPORTANT UPCOMING TAX DATES
You can take an advantage of Tax Advisory Services at
Bank of Georgia Wealth Management and plan your
tax filing with the help of professionals. Our tax
advisors are available for consultations and for
assisting with preparing the documents to file in the tax
agency.
Two major tax deadlines are approaching for filing
income and property taxes. Below you may find brief
information about taxable income and property and
rules for submitting the tax returns.
Income Tax – March 31, 2009
According to the Georgian Tax Legislation, taxpayers
of income tax are resident individuals and non-resident
individuals receiving income from sources, existing in
Georgia.
A return for personal income tax should be filed to the
tax agency at the place of registration prior to April 1 of
the year following the reporting year by the following
taxpayers:
a) resident individuals having income not taxed at the
source of payment in Georgia (capital gains realized
from the sale of securities, rent income etc);
b) resident individuals having monetary resources in
accounts with foreign banks;
c) nonresident individuals having income from a
Georgian source that is not taxed at the source of
payment;
Taxes should also be paid prior to April 1 of the year Individuals are obliged to present property tax return no
following the reporting year. later than May 1 of the calendar year according to their
place of registration, in case of inexistence place of
Property Tax – May 1, 2009 registration, tax return should be presented according to
their place of residence and in case of inexistence of
According to the Georgian Tax Legislation, a property above mentioned places, according to the place of
taxpayer is a person (inter alias a lessor) that owns an immovable property.
object taxable by this tax and the revenue earned by
the owner's family during calendar year preceding Information declared in the tax return regarding land
reporting year exceeds 40,000GEL. should be as of calendar year, as for the other taxable
property – as of end of the previous calendar year.
A taxable object of a property tax is: total area of
immovable property (buildings/constructions or their Our tax advisors will provide advice and help you
parts) owned or leased by the person, construction with preparing the files for the tax agency on your
under progress, yachts (motor boats), planes and behalf. Please, contact your private banker for more
helicopters and land as well. details.
www.wealthmanagement.ge Issue 2 February 2009 7

Bank of Georgia Wealth Management
SCULPTURE EXHIBITION
February 13 – March 20, 2009
Club24
Club24 is hosting a sculpture exhibition by a prominent
Georgian sculptor, Badri Goguadze. The sculptures
are exhibited at the conference halls and in the wine
bar. Exhibition opened on February 13th and will run
until March 20, 2009.
Badri Goguadze is a true master of one of the oldest
and most important forms of art - sculpture. He began
his career as a sculptor in the late 1981s after
completing the Georgian Academy of Arts in Tbilisi.
The sculptor's mastery of the classical techniques and
his superb craftsmanship enables him to forget new
frontiers in a wide variety of genres and styles. His
work cannot be compartmentalized in one school; it is
a synthesis of the abstract, the classical, the romantic
and the expressionist schools of sculpture. Neither is
Badri limited in his mediums, as he experiments in
stone, marble, plaster and wood. Badri finds
inspiration for his creativity in the architecture of the
Georgian society and the dynamics of his country's
history. Although some of Badri's work contains Tbilisi, Georgia
mythological and decorative themes, it is the human
form that remains an endless source of inspiration for 1988 Composition \"Birth\", Symposium, Baku, Azerbaijan.
the artist. Despite the diversity and complexity of the
2000 Interior design at the Shipping Bureau Office (Horse
forms and volumes of his figures, they are governed by
head bronze), Tbilisi, Georgia
an altogether abstract concept, where the abstract
concept of beauty replaces the actual physical reality.
1988 10 decorative park compositions, Stavropol, Russia.
His sculptures are governed by an expression of
timeless motionlessness and inwardness, offering the Exhibitions:
viewer a pure, simplified view of formal harmony.
2004 - Georgian Sculpture exhibition in the National Gallery,
Badri's work has been exhibited abroad in countries Tbilisi, Georgia.
like Germany, the Netherlands, and he continues to
2004 - Charity exhibition International Fundraising
exhibit in his home town of Tbilisi where he is well
Committee-Masked Ball 2004, Tbilisi,
known as one of the foremost Georgian sculptors.
Georgia.
Today, he works from his studio in Tbilisi both for
himself and on commission. As a true artist, Badri
2003 - Trading Centre \"David\" collective exhibition, Tbilisi,
continues to explore new mediums, genres and styles Georgia.
but remains devoted to the constant search for
perfection end harmony in his work. 2002 - Personal exhibition \"Sculpture: A Universal
Language\", Gallery on Sharden Street, Tbilisi, Georgia.
If you are interested in buying any of the exhibits,
2000 - Group exhibition \"15 years later\", Blue Gallery, Tbilisi,
please consult with your private banker, who can
Georgia.
provide you with the price list and will put you in
contact with the sculptor directly.
1998 - \"Greece in the creative works of Georgian artists\",
National Gallery, Tbilisi, Georgia.
Important Activities:
1987 - All union art exhibition Moscow, Manege, Russia.
2003-2004 Trinity Cathedral (Iconostasis Dionise's Marble,
Outer wall ornamental pattern, 1987 - 2005 local Spring, Autumn, Christmas exhibitions of
Bolnisi tuff), Tbilisi, Georgia sculpture in the National Gallery
1999 Royal District Theater (Horse, Wounded Eagle),
www.wealthmanagement.ge Issue 2 February 2009 8

Bank of Georgia Wealth Management
www.wealthmanagement.ge
9 Jorbenadze St. Tbilisi, 0103 Georgia
23 Chavchavadze Ave. Tbilisi, 0179 Georgia
Tel: 995 32 444 333
E-mail: wm@bog.ge
Please, send your comments/enquiries regarding the newsletter to wmnewsletter@bog.ge