I would like to greet the Parliament of Georgia, opposition and majority members, distinguished guests, journalists, representatives of diplomatic corps, representatives of the Georgian church and the whole society.

This is the President's report before the Parliament of Georgia about the existing situation in Georgia, about the challenges the country faces, about the activities of the Georgian government, about our future priorities and aim.

It is great honor for me that during last three months this is my third visit to the Parliament of Georgia.

I delivered my report in front of the crisis committee in November and for many hours answered all questions.

Despite the fact that law doesn't oblige me to do that, I intend to stay here and listen to the debates after my address.

I, as the President of Georgia welcome the dialogue between the opposition and the government.

I welcome the increased role of the Parliament and the Parliamentary control of the executive branch.

Only strong democracy shows the right way for the development of Georgia.

Today, in such tough period of time for Georgia, I address the whole Georgia, the whole society that is fighting with hardship in this very tough period of time for Georgia from here.

I address the most deprived part of the society.

I address each family that has to fight with poverty and hopelessness daily.

I address each displaced person, who were thrown out of their houses, villages and towns earlier or after this new aggression. They have very hard life. Nothing can substitute what was taken away from them, nothing like systematic or single assistance, nothing can substitute their homes that were destroyed and taken away from them.

Many of these people lost everything in one day, all their possessions, what was created during all their life and was loved by them, they have lost everything.

Everything, what was lost by them is the biggest wound of our country, and this wound needs to be treated.

I address each and every unemployed person, there are many of them. They cannot make their aims real, because they have no stable income. These people want and need jobs, they have energy and have knowledge to find jobs, but they cannot achieve it yet.

I address those people who were finally employed during last several years, but lost their jobs during this world economic crisis and still are losing.

I address people below the edge of poverty, every single person living in poverty, those who are obliged to live and survive on state assistance, which is very low - who are obliged to live without someone who cares for them, or who cannot help those, who are awaiting for their help.

I address all pensioners, who served all their lives for their homeland, but today have very low pensions. I address those people who think they are not needed and very often they think they are left alone.

I address farmers, who are not yet able to find market to sale their products. Many of them do not have irrigation water, many of them do not have normal roads. Village stands on the shoulders of these people and the rest of Georgia stands on the shoulders of the village. We need to solve so many problems in the villages. We all know very well, that we will not be able to build strong Georgia without strong village.

I address teachers and professors, people who work in medical sphere, these people raise generations with their honest service and hard work, people who are trying to treat our people. They need better working conditions, assistance and more appreciation.

I address soldiers and policemen, who are ready to sacrifice their lives to protect their homeland (some of them already sacrificed themselves), they fight with thieves and criminals.

I address businesspeople, who employ and give jobs to our people who do not have easy days today. They are fighting with very difficult results of the world economic crisis. They need more assistance from the Georgian government.

I address these groups of the society. First of all we are accountable before them and our priority is to take care of these people.

Their interests stand over all kinds of politics. Our efforts should be directed not towards the political wrangling, but towards overcoming unemployment in the process of global financial crisis.

My dear fellow citizens!

Today Georgia is facing huge national challenges.

Many Georgians are suffering because of unemployment in the results of global economic crisis and war.

We must overcome unemployment problem, we must find solutions for economic challenges, we must try to minimize the results of global economic crisis of our country, our aim is to give jobs to the people, increase employment and minimize poverty.

This is our main present mission.

We have no luxury today of having tens of priorities. The PM of Georgia was right the other day - we have one and the major priority - our priority is to tackle economic difficulties, to save jobs, to create new jobs and increase employment.

All our next steps and decisions will be taken according to these priorities.

Everything what the state does today and will do in the nearest future will be dedicated to these priorities.

Of course we do not have any preliminary recipes, of course the state does not posses unlimited resources, on the contrary - our resources are very limited. Today the whole world tries to find out the ways how to fight with this huge economic disaster.

You know that many states, stronger and richer than us aren't able to find ways out and their economics are practically in collapse. Many of you probably have been in Baltic countries, Hungary or Ukraine lately. One third of cars are not moving around in Ukraine as it was even a year ago. Lights are off in the center of the capital. Stores and cafes' are empty. It is very painful for me to hear it all on TV.

We must not allow the same to happen in Georgia.

Catastrophic economic difficulties exist especially in those countries, in the period of global financial crisis, where it was not possible to maintain political stability.

I haven't mentioned Ukraine by chance, this is a country of hundred percent more potential than us, but with all kinds of political wrangling on the background it became impossible to get through this crisis, but on the contrary the crisis enhances there.

We have certain economic difficulties in Georgia:

- Many qualified employees lose their jobs in financial systems, which were created in the last two years - I want to underline this fact;

- There are problems at real estate markets - the prices on flats raised significantly during last three years, now prices fall down in the whole world and in Georgia as well.

- This is why all successful Georgian enterprises have problems today, those who export their production to the international markets, the world crisis hit them most.

- The middle layer of the society is in hardship. This part of the society lived like the rest of the world and had planned their future depending on bank credits. The banking system almost destroyed their plans.

I want all of us to start thinking about what we have to care most today. Right now we are able to maintain the current situation and there is no economic crisis in Georgia yet. Of course we have economic difficulties but this is not crisis, like in many other countries.

- Our banking system is stable - in most of the countries there is no money-flow in banks any more, many banks have collapsed, but the banking system in Georgia is stable. Many of you represent the banking system and know this better than me.

- Our state resources give us ability to do serious investment in our economy.

- We receive support from our friendly countries, from donor nations, which is very important to save our economy.

- The national currency is stable.

- Inflation is under control. If we derive on digits the indicator of inflation is two or three times lower in Georgia, than in our neighboring countries. We have deflation in Georgia, and it means that prices on some products have even decreased.

- People get their pensions and salaries on time.

According to the data of International Monetary fund and world leading economic experts Georgia has a chance to be in those ten countries around the world, which will least suffer from the world economic crisis in total.

If in the last several years we were proud because of our business-climate, if we were proud that Georgia was the fastest growing economy all around the world, now we have to be satisfied with the fact, that we will be among those ten countries which will least suffer from this crisis.

According to our forecasts we can assume that if we are able to maintain economic stability we will finish this year with growing economy indicators.

We have our economic plan and it is developed not only by the government, but by many Georgian and foreign experts. This plan gives us a chance to maintain jobs and increase employment in some directions.

We face a huge battle ahead; fight to rescue our economy; fight for maintaining working places and struggle against poverty and our success in this struggle depends on one thing - whether or not we will be able to maintain unity and stability. We can only win this decisive struggle for the country's future jointly.

We have already decreased the income tax by five percent and this way 250 million GEL will be saved in our economy.

We have started to increase pensions, it is not much, but it is still a new level of increased pensions and doubled state assistance for socially undefended people. This was a very important step.

Despite the crisis we have started to increase salaries for teachers.

And all this serves the aim to put as much money in the Georgian economy as it is possible, besides it somehow makes lives of our people easier.

Now our economy needs money and big investments, this is why we are starting to execute a three-point plan, which includes:

1. Directing of foreign aid towards creation of new jobs.

2. New program - implementation of 2.2 Billion GEL in economic stimulus package. Fulfillment of projects, which will strengthen economy and give us ability to create more than 25 000 jobs.

3. Attraction of foreign investments and this is very important as for the growth of short-term economy also for the long-term warranties to create economic stability and better future.

The aim of these three directions is that state will help Georgian companies with state orders. We are announcing tenders on these orders for these companies to maintain their businesses.

This is not the time when it was possible to win a tender via publishing one tender newspaper. Now this is done transparently, to make sure that everyone has equal chances to win, everyone has sense of impartiality, to make sure that everyone gets amounts issued by the state equally.

According to these three directions the state becomes the largest investor in the Georgian economy.

Of course some people, do not like all the plans developed by the Georgian government and criticize these plans. One of them has even left the hall, others are still here.

We are criticized a lot for investing money in infrastructure and in the construction, some of our opponents even say "Do you want to turn Georgia into a country of workers and road-builders?"

I accept all the criticism and welcome my opponents. Especially when we are talking about the economy and employment, but I cannot agree with their arguments.

First of all I cannot accept sarcastic approach towards workers and road-builders. If someone thinks that it is a shame to be a worker, they are wrong. These people build our country and our children and grandchildren will live here. The economy of our country stands on the shoulders of these people and we are moving forward with their help.

But the major argument, why I cannot agree with them is that construction is the backbone of the economy, constructions and infrastructural projects employ our companies, which have huge problems because of the global crisis.

Construction gives work to many parallel industries like -transportation, enterprises of construction materials, cement and other construction materials. They are employing workers, engineers, legal workers, accountants, logistic managers, and architects, transport specialists.

Wide scale construction makes the whole economy work and employs many people. Developed infrastructure creates basis for developed economic relations.

Besides this I cannot agree with the arguments of my opponents because we concentrate our attention not only on infrastructural or road projects, but also on some other spheres. I mean the other two points of our business-plan. Attraction of private investments, which might and must be implemented in all directions and foreign assistance. We are building several high-class hotels in Georgia, when all sorts of projects are stopped in our neighboring countries. This is money invested in the future.

500 million is part of 4.5 billion $ donor's assistance for banking sector. Part of this agreement was signed several weeks ago, part of this agreement will be signed in the nearest future. I am glad that banks are starting to issue big loans in Georgia. But we have to work a lot to achieve it.

This three-point plan is not enough, we have much more to do. Economic difficulties force us to tighten our belts and the government should be the first to do so.

For that purpose the new PM launched his tenure with instructing the state agencies to cut administrative cost by 10%.

This doesn't mean that the number of state employees will be reduced at the state agencies, we will not make anyone lose their jobs. This doesn't mean that we will reduce their pays, because families stand behind these people. At the same time state employees without good salaries present a threat for corruption and we will never return to these times any more. Each ministry must learn how to work with spending minimum of state money for their administrative work.

I welcome the same initiative from the parliament as well. The Parliament and the Government work together, to tide their belts as much as it is possible.

The same has to be said about the President's institute. I have decided to turn the presidential residence in Tserovani into kindergarten for displaced families.

The governmental residences in Zugdidi and Batumi will be prepared to be sold at the same time. This way the state will not spend money on these residences any more and the state budget will get more money after selling them.

So we have to spend these free amounts in two directions - first: - to increase the program of cheap credit, to give chance to many Georgian companies, accordingly more people will be employed and the second direction - to widen health programs.

Today I want to make a statement about a very important social initiative.

I am talking about the fundamental reshuffle of the health insurance system of our citizens, to make sure that health insurance is available for any citizen.

Today there are only two systems of insurance in country - free and expensive.

Free insurance means that state provides health insurance for citizens under edge of poverty, teachers, pensioners, defense and law enforcement agencies.

Everything else is expensive insurance, insurance that is bought by the citizens with their own money from the insurance companies.

Besides these two unequal insurance systems, there exists a middle category insurance system, this is cheap insurance as well, this is insurance for the middle class, who do not belong to the category of free insurance and have not enough money, to buy expensive insurance.

The majority of our population belongs to this category. These people are obliged to live without insurance. And in case of health problems, they have to pay maximum amounts for medicine, diagnostics and treatment.

I know from my relatives that people postpone even single surgeries because they are not able to pay. I know facts when the parents sacrifice themselves and are left without treatment because of their children. We have cases when medical expenditures destroyed the family budgets.

This is unacceptable. This is why we have found ways and decided, that state should co-finance health insurance package, that can be available for large part of our citizens.

This will once and for all implement and develop medical insurance system in Georgia, because without this system it is impossible to develop social and medical spheres.

There will be 5 GEL health insurance policy; the state will cover 3.35 GEL per month and the rest will be paid by an insurance policy holder; a holder of this policy will be able to undergo urgent surgery worth of no more than 5,000 GEL.

The available insurance program will be a revolutionary approach in the system that has ever existed before.

Each citizen will have a chance and with the support of the state will have insurance for less than 20 GEL per year, and it will be equal to about 8 000 GEL medical service.

Our aim is not to have patients left without medical help in Georgia, to make sure that each citizen has minimal medical help.

This type of insurance program enables us to give our people a chance to reduce risks related with their health at most.

I want to give you an example of our fellow citizen Lali Chikvanaia. She lives in Tbilisi. She has two daughters, her husband has passed away recently and she is left on her own. She works a lot, she is a nanny, housekeeper, she bakes... She does everything to earn money and take care of her family. She is not listed in the category under the edge of poverty, but at the same time she doesn't have enough money to buy insurance from insurance companies. She will never have a chance to do urgent surgery for any member of her family if they need it. So she will have to sell everything what is in her possession. You all probably understand what does all this mean.

There are too many people like Lali in Georgia today. As soon as the available insurance program is launched Lali will be able to go to the insurance company and insure her family. And it will cost her 1 GEL and 65 Tetri for each family member per month. It means that she has to pay less than 60 GEL per year for the family insurance. But at the same time she will get 24 00 GEL worth medical insurance per year.

These are the chances given to every Georgian citizen in the frames of new medical insurance program.

We gave free insurance to about 1 200 000 people in Georgia. We have active programs for people over 60 and before 3 years financed by the state as well.

Everyone could not possibly fit into this category.

This is why we are giving chance to our society to get insurance for the minimal price. This program will also help clinics and medical installations. People employed there will maintain their jobs.

Our main problem was that doctors were losing their skills of qualification, on the other hand patients couldn't go to the doctors because of lack of money.

My aim was to bring these two categories close to each other and to destroy the existing edge between medical service and treatment proposal.

We are constructing 700-800 ambulatories, with internet and computers, it gets easy to get consultations within Georgia as well as outside it. We have many high-class medical centers in Gori, Kutaisi, Zugdidi. And now it is very important to give people this chance.

Our pain and an issue of special care is internally displaced persons; nothing can replace homes they have been deprived of.

No matter what the state does to lighten their hard lives, you would probably agree with me - nothing could substitute what they have already lost, nothing could substitute their homes and houses taken away from them. Each of them has lost part of their soul, love, live that cannot be restored.

We know that we will not be able to change their lives until they return back to their homes.

I want everyone to know - We will make those people, who have expelled IDPs out of their homes, to pay through the nose; This is my promise and this should be our motivation. We will reach this point through out unity and our strength.

We do everything to create better living and working conditions to the IDPs there where their new addresses are.

Of course we are not able to do everything like we want to do. Of course you can never be satisfied with what you do for your refuges, because no matter what you do is not enough. Of course we know that we need to do much more.

Time, which we have spend on construction of new homes for IDPs, would have been only enough for the international organizations for their paper work; We were able to do this in very short period of time. We were building these houses with all our energy and in unprecedented prices all around the world.

We have equipped these houses with hitting ovens and with some elementary conditions. We provided running water, energy, gas and roads.

We also saw big solidarity from our society. I will never forget that people were receiving absolutely unknown people in Tbilisi, Batumi, Kutaisi. These families were sharing what they had and were bringing their own pillows and blankets to the IDPs stations. It was the huge difference between Georgia 14-15 years before. We have nothing to hide - even some politicians were complaining about IDPs living in Tbilisi.

Now the society expressed incredible solidarity, braveness, tact and ability, while helping their fellow citizens.

We have also received big international support, and we are grateful for this.

We were able to maintain jobs and salaries to all people employed in government sector.

We are building schools, police stations, kindergartens, churches in new villages constructed for the IDPs.

We are working a lot to attract investments in these areas and create new jobs there.

We will hand over half hectare plot of land to each IDP family. We will give them ability to work on land. We are giving them seeds.

It is very important for me that sufficient care would be given to the persons displaced after the conflict of the 90ies.

We are working on the legalization of those places where they live now and our aim is to create normal living conditions for these people.

Until Georgia is united and all IDPs are not back to their legal houses, areas of origin, city or village, the priority of our government will always be to take sufficient care of them.

I hope in you, I hope we all will take care of this.

Our main social policy is taking care of pensioners as well.

I know very well how much more assistance they need today.

Recently I have visited one of the pensioners Ioseb Cotniashvili's family in Vazisubani. He lives together with his spouse Mrs. Mary Tsotniashvili. She is a pensioner as well. We together calculated how much this family needs for the medications per month. And we together came to the solution that if not the insurance program, this family would be destroyed long ago.

Their basic pension was increased by 5 GEL this year, and now their pension is 75 GEL. Besides pension they get 54 GEL assistance, and have qualification fee 10 and 7 GEL. They have also 22 GEL subsidy. So in total they have 243 GEL per month. They have certain benefits on transportation and utilities in the frame of our municipality program. But of course they are still in very heavy conditions. Of course they deserved much more, but several years ago they would have been in worse situation.

Recently I was asked a question on air, this was a woman from Marneuli region, if I am correct Luba Ubuashvili: - "Mr. President, despite the Russian aggression will your promise about increasing of pension package be fulfilled any way?"

I want to respond to Miss Luba from here: Miss Luba, the Russian aggression has changed our plans significantly in respect of increasing pensions. But I want you to be sure that within our 50 months program your pension package, as the pension packages of all other pensioners will reach 100 US dollars. You can be sure. I will not brake my promise!

Now we were only able to increase pension by 5 GEL and now the basic pension is 75 GEL. Of course this is not enough and it does not change lives of pensioners significantly, but this is an indication that regardless of political and economic challenges, we will not stop!

The pensioners have to be appreciated the most. They have served their homeland all their lives, so to provide dignified elderly age is the issue of my personal dignity.

Regardless of war and economic crisis we do not have rights to pay less attention to the very special part of our society - our teachers. These people are responsible for the future of our country.

I often meet the teachers all around Georgia. These people worked so hard and they must be appreciated because they managed to maintain schools, when the state assistance did not exist and we have maintained the minimal level of education.

Of course there are many pretensions, many of us are parents and we aren't satisfied with the standards of education, but teachers are least to be blamed. This is the result of the existing system and the years of hardship, of the specific problems in the society.

I know about their hardship very well. I know that they must be better appreciated and assisted.

Despite of this the teachers are the first, who defend our future.

In the first years of our reform the main attention was shifted on the educational infrastructure, on the frozen and empty schools that needed rehabilitation.

We all remember as fairy tails and never forget our schools. I studied in a very special school, experimental school N1. It was well organized school with sports infrastructure, the art school and a swimming pool. When in 2000 I went to visit the school of my dream, I saw that the yard surrounding the school was destroyed, non of the sport halls functioned, there was not a single window left unbroken. Blackboards filled the window frames, and the smoke was coming from the chimneys. The walls were all black from smoke and the infrastructure completely destroyed. My heart sank. Then I said that we should do everything to reconstruct our schools. They should be far better and resemble schools in Netherlands, Germany, France and many other developed countries. If you now visit experimental school N1 in Tbilisi or public school N2 in Zugdidi, you will get sure that they aren't anyhow worse than the schools of those countries.

Sure we have more to do, but the development of infrastructure, which is a long process will not stop.

Last year the government did much to help teachers:

- We managed to give free insurance to the teachers and the technical personnel of the schools.

- The teachers were given thirteenth salary.

- The teachers salaries increased by 33%.

- Finally annual contracts were annulled, nobody knows why we brought this system in, it turned out to be a weapon of blackmailing and torture.

But these were the first steps and of course they weren't sufficient.

This is why from this year on we have started a new stage of increasing the teachers' salaries.

- From January 1 the teachers' salaries were increased by 25 GEL and we plan to increase it by 25 GEL more from September 1.

- Besides we increased financing of insurance for teachers by 19 million GEL. It was rather important.

At the same time we are going to increase financing of students and school children. I have spoken to the Minister of Education Nika Gvaramia about it. The financing of the Master's Degree students will be significantly increased in Georgia.

Master's Degree requires payment in Georgia today. This is a very serious deficiency of our education system. After Bachelor's degree no matter how talented the person is, he cannot get Master's degree in Georgia without having money.

We are losing many good specialists this way.

One of the major axis of employment and economy lays on the village. The village has a lot of problems today, starting with the deficit of the irrigation water, tractors, good roads. Many majoritarians are here and they know this pretty well.

Despite economic difficulties, we won't stop taking care of our villages.

- 20 million GEL is issued within the cheap credit program from which 75 percent will be spent on the opening of agricultural processing enterprises.

- 30 hectares of land is issued to make 100 enterprises work. New active phase of investment attraction has started for building new enterprises.

For example after Mikho Svimonishvili resigned he did not had huge banking account. We gave him land for free, he brought several hundred cows in and is implementing new standardsof farms together with his family.

We have problems on selling fruits every year. Now the most popular and big producer of infant food "Hippy" is going to buy one factory in Georgia and is building a new one. This means that good quality apple will be sold nearby these factories and Georgia will present this world known brand around the world. This is very important for our country and for the development of agriculture in Georgia.

We all have to work together on this issue.

All of this will create thousands of jobs in villages around Georgia in the nearest future.

The half of village population is employed in agriculture, but they create 10 percent of domestic production.

This is a catastrophic indicator, but at the same time this is a reserve for us to rescue our economy in terms of the world economic crisis.

We are beginning new experimental program of helping and developing the village from March this year - "money to every village". Within the frames of this program 20 million GEL will be distributed all around Georgian villages. Money will be given to every village and the population will decide how do they want to spend it. This is the highest expression of democracy.

For example village Kirnati, Khelvachauri region, is going to arrange lighten up the center and rehabilitate water system. The same region village Akhalsopeli's population decided to clean 3 km irrigation system, reconstruct water system cistern and damaged network, to renovate transportation waiting spots, to arrange and lighten up center of the village with 20 000 GEL given to their village.

According to this program every village will be given a chance to do some renovations and developments. Local population will participate in the process and village will start to restore economically. We will by all means raise an issue of widening this program if it is successful.

The major promise we made was gasification of every village around the Georgia. This promise is still our priority and is a significant part of development of our villages. It is true that the global economic crisis somehow influenced the gasification process, but it continues still and we re intending to give ass to 60 000 families this year.

The same can be said about the individual meters. We are going to once and for all annul unjust joint system of meters and each village will have individual meter system.

It is unjust not to have individual meter systems. We had cases when neighbors started to fight. By the way this process Georgia stand quite well. People in Romania killed each other because of this reason. We were facing dilemma 2-3 years ago. We could have electricity and collective meter, or we would not have electricity at all. Now we do not have to make this choice any more. We have electricity but we do not have individual meters yet. We were hopping that this process could end by the end of 2010. This year 65 000 families will be through with this unjust meter system.

Also we are starting village roads rehabilitation from March this year. 130 km road will be paved at the first stage, and in total 80 percent of population will have roads to and in their villages.

Press Office
of the President of Georgia