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Êóðñîâàÿ ðàáîòà: Private sector and human-resource development in Georgia

Kazbegi JSC – Valuation (Refer to Annex 1)

Valuation Limits

True Value (GEL mln.)

True Value/Market Cap.

Low

15.0 2

High

22.5 3

BANK OF GEORGIA JSC

Sector:

Financial Services

GSE Ticker:

GEB

Summary Information:

·    Bank of Georgia JSC is the country's leading commercial bank;

·    Last year the company reported about 6% increase in annual sales to GEL 36.6 mln.;

·    Net profit of the company has decreased by about 7% in 2002 mainly due to higher administrative expenses; 

·    The Earning Per Share (EPS) in 2002 was GEL 0.72;

·    The company's assets grew by remarkable 30% over the year to reach GEL 176.7 mln.;

·    The company's equity increased by 13% over the last year and amounted to GEL 46.6 mln.;

·    The company continues to pay dividends, which amounted to GEL 2 mln.or GEL 0.20 per share.

Source: Galt & Taggart

BANK OF GEORGIA JSC - Summary

Current Price (GEL)

1.55

Year High (GEL)

1.90

Year Low (GEL)

1.00

Market Capitalization (GEL mln.)

15.5

Shares Outstanding (mln.)

10.0

Free Float (%)

47.6

Free Float (GEL mln.)

7.4

Source: Galt & Taggart

BANK OF GEORGIA JSC – Key Figures (IAS)

Year Ending December 31

2001

2002

Net Sales (GEL mln.)

34.4 36.6

Net Income (GEL mln.)

7.7 7.1

EPS (GEL)

0.78 0.72

Total Assets (GEL mln.)

135.6 176.7

Equity/Assets (%)

30.5 35.8

ROA (%)

5.7 4.0

ROE (%)

18.6 16.5

Book Value per Share (GEL)

4.13 5.14

P/E

2.02 2.15

P/BV

0.38 0.30

Sources: Bank of Georgia, Galt & Taggart

BANK OF GEORGIA JSC – Valuation (Refer to Annex 1)

Valuation Limits

True Value (GEL mln.)

True Value/Market Cap.

Low

50.8 3.3

High

68.6 4.4

 


4.3  Human-Resource Development in the Private Sector

4.3.1     Business Schools/Universities

European School of Management (ESM).

Data Sheet.

  1. European School of Management ESM-Tbilisi
  2. 40, Vazha Pshavela Ave. 1077, Tbilisi, Republic of Georgia
    Tel.: (995-32) 39 68 64
    Fax: (995-32) 37 55 16
    e-mail: esmtbs@gol.ge
    Internet: esm-tbilisi.ge
  3. Simon Kadagidze
  4. Mission of European School of Management in Tbilisi (ESM-Tbilisi) is to create a new Georgian management elite - professionally thinking and professionally acting under market economy managers – providing high quality management education using modern and innovative teaching technologies and highly qualified faculty.
  5. LTD, Nonprofit
  6. Self financed through students tuition fees
  7. 1992
  8. 20
  9.  87
  10. 4 - Undergraduate Program, Graduate Program, Base Certificate Program, Foundation Program
  11. 224+46+58+50
  12. Look the attached sheets
  13. Undergraduate                                     4 years
    Graduate                                  – 2 years
    Base Certificate Program         – 7 months
    Foundation Program                – 1 year
  14. Undergraduate                         - 224
    Graduate                                  - 46
    Base Certificate Program         - 58
    Foundation Program                - 50
  15. School leavers and young professionals
  16. Undergraduate Program           - secondary school leavers with certificate
    Graduate Program                    - young people with min bachelor
                                                          diplomas and min 2 years experience
    Base certificate program          - any person with high education
    Foundation Program                - secondary school leavers or students
                                                     in their last school year
  17. Undergraduate             - $ 2200/ year
    Graduate                                  - $ 3500
    Base Certificate Program         - $ 1200
    Foundation Program                - $ 1000
  18. Entrance examinations, visiting schools with presentation, visiting educational fairs, marketing campaign through an advertising agency
  19. Georgian with good command of either English or German languages.
  20. Undergraduate                         - Bachelor of Business Administration
                                                          (General Management)
    Graduate                                  - Master of Business Administration
                                                          (General Management, Finance, Marketing)
    Base Certificate Program         - Certificate
  21. $ 2000/year

The ESM  Evening & Weekend MBA Program, A Curriculum                                                                              2003-2005

 



4.3.2     Government Sponsored Training Programs

GEPA's In-Company Export Marketing Programme.


The objective of GEPA's new programme is to increase the export capabilities of Georgian companies. An integrated programme has been designed to assist Georgian companies to systematically plan and prepare for export marketing. The programme includes in-company export market development, training, the organisation of inward and outward missions and a cost sharing grant scheme.


The in-company programme involves GEPA's Export Advisers working closely with individual companies to establish an export marketing function. Participating companies will be assisted and guided through the process of defining their objectives and capabilities, the first step in the process. They will be shown how to identify suitable markets and have access to all the information sources in the Export Information Centre. They will then be in a position to draw up a realistic export marketing strategy. GEPA staff will help them to prepare for exporting and to implement their defined strategy.


In working through the programme, training needs will be identified and addressed and some financial assistance may be available to assist companies in financing eligible actions they need to take to prepare for exporting. Participating companies will have in place a system for reviewing and redefining their export marketing strategies on an on-going basis. This will enable Georgian companies to anticipate and to be prepared for the ever changing marketing environment, rather than just reacting to it.


During recent weeks GEPA staff has been visiting companies to explain the programme in detail. Four companies have already begun the first stage of the programme and another four will be added over the next few weeks. Companies committed to developing an achievable export marketing strategy and willing to devote time and effort to the process are invited to contact GEPA.


5.   Other Donors Activities

5.1  The World Bank and IMF

5.1.1     List of the Active World Bank Projects in Georgia

Projects under implementation

Commitment
(US$ million)

Develp’t. Objective

Impl.

Progress.

Approval Date

Signing Date

Closing Date

Social Investment Fund 25.0 S S 12/11/97 06/05/98 12/31/03
Primary Health Care Dev. 20.3 S S 08/01/02 05/06/03 12/31/07
Education 1 (APL) 25.9 S S 03/20/01 12/03/01 06/30/05
Social Investment Fund 2 15.0 S S 05/15/03 08/29/03 09/30/07
Roads Project 40.0 S S 05/25/00 01/31/01 12/31/04
Electricity Market Supp. 27.4 S S 05/03/01 09/26/02 12/31/05
Energy Transit Institution 9.6 S S 03/13/01 11/19/01 07/31/05
Municipal Development 2 19.4 S S 08/01/02 02/19/03 06/30/06
SAC3 40.0 S S 06/29/99 08/02/99 10/30/02
Structural Ref. Support 16.5 S S 06/29/99 09/22/99 03/31/04
Judicial Reform 13.4 S S 06/29/99 09/22/99 12/31/04
Enterprise Rehabilitation 15.0 S S 12/17/98 09/08/99 12/31/04
Agriculture Development 15.0 U U 03/25/97 08/21/97 04/30/04
Forestry Development 15.7 S S 08/01/02 04/22/03 06/30/09
Protected Areas Dev (GEF) 8.7 S 05/24/01 04/26/02 12/31/06
Integrated Coastal Mngmt 4.4 S S 12/17/98 05/21/99 12/31/04
Irrig/Drainage Dev. 27.0 S S 06/28/01 02/20/02 04/30/07
Cultural Heritage 4.5 S S 02/13/98 05/18/98 12/31/03
Integrated Coastal Mngmt (GEF) 1.3 U 12/17/98 05/21/99 12/31/04
Agriculture Research Ext (GEF) 2.5 S S 05/11/00 02/05/01 12/31/05
Agriculture Research Ext 7.6 S S 05/11/00 02/05/01 12/31/05

Total

354.2

S Satisfactory

U - Unsatisfactory

 


5.1.2     List of the Closed World Bank Projects in Georgia

PROJECT

AMOUNT

(millions)

Rehabilitation Credit US$ 75.0 Closed June 1996.  Fully disbursed.
SAC US$ 60.0 Closed December 1997.  Fully disbursed.
SATAC US$ 4.8 Closed December 1998.  Fully disbursed.
Institution Building Credit US$ 10.1 Closed June 1998.  Fully disbursed
SAC II US$ 60.0

Closed December 1998.  Fully disbursed

 

Transport US$ 12.0 Closed June 30, 1999.  Fully disbursed.
SATAC II US$ 5.0 Closed December 31, 1999.  Fully disbursed.
Municipal Infrastructure Rehabilitation US$ 18.0 Closed June 30, 2000. Fully disbursed.
Power Rehabilitation US$ 52.3 Closed June 30, 2000.
Oil Institution Building US$ 1.4 Closed December 31, 2000. Fully disbursed.
Energy Sector Adjustment Credit (ESAC) US$ 25.0 Closed March 1, 2002. Fully disbursed.
Third Structural Adjustment Credit (SACIII)

US$ 60.0

Closed October 30, 2002. Fully disbursed

Total:

US$ 383.6


5.1.3     Description of the Closed World Bank Projects in Georgia

REHABILITATION CREDIT

Implementing

Agency                          Temuri Basilia, Chief Economic Advisor to the President of  Georgia; State Chancellery, 7 Ingorokva str.

                                       (99532)989953, (99532) 999757

                                       Fax: (99532)995797

Task

Manager                       Michaelle Riboud, EC4C2

                                       Phone: (202) 4738743

                                       Fax:     (202)4773387

Project

Objective                       The main objective is to support the government’s economic reform program aimed at restoring macroeconomic stability and at promoting resumption of growth and improvement in living standards. The other objectives are to:

                                       1. Provide budgetary support to maintain the level of basic public expenditures, in particular for wages and the social safety net;

                                       2. Provide foreign exchange for the purchase of critical imports;

                                       3. Improve the functioning of the foreign exchange market;

                                       4. Provide a framework for assistance from other donor agencies.

Project

Description                   The reform program to be supported by the credit comprises three sets of policies:

                                       a) those aimed at reducing and redefining the role of the public sector in the economy

                                       b) those theta foster the development and increase efficiency of markets;

                                       c) those that maintain a minimum social safety net through improved targeting of benefits.

Disbursement               Fully disbursed

 


INSTITUTION BUILDING

Project Objective         Assist the Georgian government in its efforts to move to a private market economy through strengthening public institutions on three functional areas: (a) financial sector, (b) economic management , (c) privatization and enterprise reform

Project Description      1. Financial Sector Reform (US$ 2.325 million)

                                       (a) Financial Sector Infrastructure:

                                       Consulting service and equipment:

                                       -- to introduce and implement Broadly Adapted Financial Statement (BASF), and internationally acceptable accounting and auditing system;

                                       --  to conduct diagnostic studies in five state-owned banks and make recommendation for steps to streamline the system;

                                       --  review existing payment system and make recommendations for steps to streamline the system

                                       2. Economic management (US$ 5.660 million)

                                       (b) Economic Policy Formulation

                                       Support will be provided to the Office of the Deputy Prime Minister (now Chief Economic Advisor to the President) to design a strategy for the restructuring and the reform of the government’s economic management agencies, particularly the Ministries of Finance and Economy, and to strengthen economic policy formulation and analyses.

                                       (c) Statistical Services:

                                       Consulting services, training, and equipment to assist the Committee for Social and Economic Information in

                                       -- reviewing the methodology used for generating and maintaining national accounts and initiating steps to introduce the internationally acceptable System of National Accounts (SNA);

                                       --  designing and conducting an improved household survey in the city Tbilisi

                                       (d) Tax Administration:

                                       -- computerization of tax offices; IDA pilot project for the modernization and computerization of the central State Tax Inspectorate (STI) and the Tbilisi City Inspectorate;

                                       -- training of the STI staff.

                                       (e) Treasure:

                                       --  first phase: a central treasury function will be established in the Ministry of Finance and regional branch in Tbilisi;

                                       -- second phase: regional Treasuries will be established throughout of Georgia:

                                       -- IDA will finance computers for the establishment of the Treasury offices.

                                       (g) Strengthening of Customs Administration:

                                       Support will be provided to the Customs Committee in

                                       (i) simplifying and reforming the organization and procedures of customs operations: (ii) modernizing customs management ;

                                       (iii) training the customs staff in the customs management and the computerization;

                                       (iv) computerizing customs clearance procedures, accounts, and statistics at Tbilisi headquarters  and at the Tbilisi airport as the first pilot site.

                                       (h) Aid Coordination:

                                       -- Project will finance long-term external advisor and equipment to assist and train the staff of Aid Management Unit (AMU) in maintaining donor procedures, coordinating country’s external aid priorities consistent with the national development objectives, and communicating those with the external aid agencies.

                                       -- Project will finance experts to assist the government staff in analyzing Sectoral information with the objective to design and develop project that will be acceptable to the donor community.

                                       (i) Project Implementation: The project will finance:

                                       -- an external procurement consulting firm to assist the PIU with the preparation of procurement an disbursement documents under this project, and to ensure that all procurement under the project follow the World Bank’s procurement guidelines

                                      

3. Privatization and Enterprise Reform (US$ 2.27 million)

                                       (j) Support for Privatization:

                                       -- one short-term senior level adviser to assist the Ministry of the state Property Management  and the Office of the Chief Economic adviser to the President in reviewing the current privatization plan;

                                       -- experts and equipment to assist in:

                                       a) formulation the mass privatization program and the voucher scheme

                                       b) the design and implementation of a public information campaign to support the mass privatization campaign;

                                       c) provide training aimed at strengthening the institutional capabilities of  SPM;

                                       d) review and further development of a legislative framework for privatization.

                                               

Implementing Agency           Alex Sikharulidze, Head of PIU, 42, Kazbegi ave.,

                                                Phone: (99532)950865

                                                Fax:       (99532)950865


STRUCTURAL ADJUSTMENT TECHNICAL ASSISTANCE CREDIT (SATAC)

Project Objective         To support the Government’s reform program to stabilize the economy and create the conditions for a resumption of growth and an improvement in living standards.

Project Description   1. Privatization and post-privatization (US$ 0.95 million)

                                       (i) Continued support for the implementations of the privatization program and on support for the establishment of the share registries.

                                       (ii) Introduction of cash auctions and an international tender program;

                                       (iii) Strengthening of institutional capacities, elaboration of standard procedures, advise on structuring of transactions and bid evaluation, as well as legal assistance and licensing of private share registries.

                                       (iv) Elaboration of operational guidelines, training of officials in securities market and in the starting-up of pilot registries.

                                       2. Financial Sector ( US$ 0.78 million )

                                       (i) Advisory services on supervisory issues as well as the development of training programs.

                                       (ii) Audits if the three former state banks will be financed to dacilitate a realistic assessment of the financial position of each bank.

                                      

                                       3. Energy sector reform ( US$  0.86 million )

                                       (i) Assistance in creating the capacity to monitor and manage payment performance, and in reviewing structural and tariff issues.

                                       (ii) Assistance in reviewing the scope of the regulatory authority and its tariff policy functions.

                                       4. Social Protection ( US$ 0.56 million)

                                       (i) Assistance in the design of a program of social assistance which meets the needs of poor families that do not qualify under any existing program;

                                       (ii) Facilitating the establishment of private pension schemes.

                                       5. Resource mobilization and public information

( US$ 1.43 million)

                                       (i) A program aimed at improving  the revenue collection performance of the Customs Department through training, revision of procedures and controls, and anti-fraud measures;

                                       (ii) A public information/education program on economic reforms, including mass media campaigns, round-tables/seminars on key issues, and the design of an education program focusing on skills in high demand in market economics

Implementing Agency           Zaal Japaridze, Head of PIU, 12 Kazbegi Ave.

                                                Phone:  (99532) 950865

                                                Ministry of Trade and Foreign Economic Relations

                                                42, Kazbegi Ave.       

Phone: (99532) 225186 / (99532) 389652


TRANSPORT REHABILITATION

Project Objective         1. To support policy reform in the transport sectoral and restructure its institutions to operate in a market economy.

                                       2. To repair and maintain some of the most critical elements of the transport system.

Project Description      (1) Institution Building Component (US$ 4.9 million):

                                       (i) advice and support  to teams preparing sector reforms;

                                       (ii) technical assistance for the formulation of technical and legal framework necessary to the restructuring,

                                       commercialization and privatization of sector entities;

                                       (iii) managerial assistance for public and private transport enterprises;

                                       (iv) a training program to update transport technical staff of the private and public sectors;

                                       (v) project management.

                                       (2) Investment Component ( US$ 13.2million )

                                       (i) road maintenance program, including selected equipment and spares for road maintenance as well as emergency repairs and the necessary imported road building materials;

                                       (ii) a railway sub-component, including bridge repairs and the required structural steel, track materials (ties, rails and fastenings), spares for locomotives, and communications and selected signaling equipment

 

Implementing Agency           Gia Tsagareli, Head of PIU, 12 Kazbegi Ave.

                                                Phone: (99532) 986385

                                                Fax:      (99532) 990461


STRUCTURAL ADJUSTMENT CREDIT (SAC)

Project Objective:      The main objective is to consolidate stabilization, foster a strong and sustained growth recovery and reduce poverty.

                                    The reform program aims at:

(a)   maintaining a tight monetary program supported by an improving fiscal position;

(b)  streamlining the Government sector and improving efficiency of public spending;

(c)   inducing a rapid adjustment of the productive  sector to new               market signals.

The other objectives are;

(i)   provide budgetary support to maintain the level of critical  public expenditures;

(ii)  provide foreign exchange for the purchase of critical imports;

(iii) provide a framework for financial assistance from other donor agencies.

Project

Description:                1. Maintaining a Tight Monetary Policy:

-   reduce inflation to 20-25 percent in 1996 and strengthen the international position of NBG;

-   increase the range of monetary instruments and enhance the capacity of the NBG to achieve monetary objectives.

2. Improving the Fiscal System:

-   ensure sustainability of stabilization;

-   increase tax revenue to 6.7 percent of GDP in 1996;

-   reach a revenue to expenditure ration of 70 percent in 1996 and maintain budget deficit at 3-4 percent of GDP in 1996.

3. Streamlining of the Government Sector and Improving the Efficiency of Public Spending:

-   to maintain critical public function within the framework of a tight expenditure program (expenditure maintained at about 13 percent of GDP in 1996);

-   reforming government pay and employment;

-   reforming the provision and financing of social services reforming social insurance and social protection;

-   eliminating energy subsidies;

4. Fostering Adjustment of the Productive Sector:

-   accelerating privatization;

-   restructuring the financial sector;

-   fostering export growth.

Disbursement:            US$ 29.88 million

The disbursement of the loan is linked to agreed targets specified for each tranche release – to be met by the Georgian Government in implementing its structural reform program.


SECOND STRUCRUTAL ADJUSTMENT TECHNICAL ASSISTANCE CREDIT (SATAC II)

Project Description:    The Government’s structural reform program outline in the Letter of development Policy was presented with the Second Adjustment Credit (SACII), $60 million (which closed in December 1998). To facilitate the timely implementation of structural reforms, the Government requested a program of technical assistance to support the design and implementation of reform measures in the key areas. The institutional capacity of the Government to implement structural reform measures has been successfully strengthened under the Institutional Building Credit (IBC) and the Structural Adjustment Technical Assistance Credit (SATAC). Lessons learned from these two technical assistance projects were incorporated in the design of SATAC II.

 

The Core objective of SATAC II is to enhance the capacity of the Georgian Government to implement the structural reform program supported by SAC II.

The technical assistance is divided into seven broad categories:

·     judicial reform and anti-corruption initiative;

·     financial sector;

·     energy sector reforms;

·     social protection

·     health

·     resource mobilization

·     public information


5.1.4     The World Bank and IMF Cooperation in Georgia

The World Bank and IMF Partnership in Georgia’s Development Strategy

1.          The IMF has taken the lead in assisting Georgia in enhancing macroeconomic stability.  In this regard, the Fund has encouraged the authorities to pursue a prudent fiscal policy, including by increasing tax revenues and reducing domestic expenditure arrears.  The IMF Board approved a new three-year program under the Fund’s Poverty Reduction and Growth Facility (PRGF) in January 2001.  The first and the second reviews under the PRGF were completed in October 2001 and July 2002, respectively.  Implementation of the 2002 macroeconomic program was broadly on track.  Quantita­tive criteria and indicative targets were met, except for those on domestic arrears, fuel and excise tax collection and reserve money.  At 2 percent of GDP, the fiscal deficit was slightly higher than programmed because of shortfalls in external financing, and revenue collection improved only slightly from 14.3 percent of GDP to 14.4 percent over the period.  An IMF mission which visited Georgia in July 2003 to discuss completion of the postponed third review found that the fiscal pressures that emerged in early 2003 had continued, with tax revenue falling short of budget targets, and an accumulation of substantial new budget arrears.  The IMF thus saw the need inter alia to introduce some tax reform measures, adjust electricity tariffs and revise the 2003 budget to close the fiscal gap.  The authorities achieved the first two but were unable to secure parliamentary approval of a revised budget.  The current PRGF will expire in the next several months and the IMF will soon be initiating discussions to assess prospects for a possible new three-year program to support Georgia’s EDPRP.

2.          The World Bank has taken the lead in the policy dialogue on structural issues, focusing on: (i) strengthening public expenditure management; (ii) deepening and diversifying sources of growth, (iii) protecting the environment; and (iv) reducing poverty.  The table on page 53 summarizes the division of responsibility between the two institu­tions. In a number of areas – for example the social sectors, rural development, environment, and infrastructure – the Bank takes the lead in the dialogue and there is no cross conditionality with the IMF-supported program.  The Bank is also leading the dialogue on private sector reform, and Bank analysis serves as inputs into the Fund program.  In other areas – energy, the financial sector, public expenditure management, and revenue and customs – both institutions work together.  Finally, in areas like monetary policy the IMF takes the lead with little Bank involvement.

Areas in which the World Bank leads and there is no direct IMF involvement

3.          Areas in which the Bank leads and there is no direct IMF involvement include the social sectors, infrastructure and environment.

·     In the social sectors the Bank conducts annual updates of Georgia’s Poverty Assessment based on household data collected on a quarterly basis.  The Bank’s focus has been to improve the budget execution of expenditures for health, education and poverty benefits and to raise the efficiency in the use of scarce public resources.  Through the Social Investment Fund Credits IDA is focusing in particular on areas with high poverty levels to provide basic infrastructure to the poorest communities.  A recently approved Self-reliance Fund Grant will help authorities address the complex issues related to internally displaced people.  IDA is also supporting a dialogue with the Government on social protection reform that may lead to an IDA-supported project. 

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