Resume: Despite numerous attempts at communication with the National Bureau of Enforcement, FactCheck was not able to obtain official statistics on borrowers from the Debtor Registry of the previous years. In order to get this information, FactCheck sent an official letter to the National Bureau of Enforcement as early as 18 April 2018 although we have not yet received a reply. Therefore, in order to verify Mikheil Saakashvili’s statement, FactCheck
has had to use its own archives as well as information from other news agencies.
By the end of 2012, approximately 90,000 individuals were registered in the Debtor Registry which is 2.8 times less as compared to the current figure (256,316 borrowers). Therefore, Mikheil Saakashvili is right to note that the number of borrowers in the Debtor Registry has increased significantly as compared to 2012. However, the aforementioned registry includes all cases of disputes between any two parties which were subject to enforcement and not only the number of bank debtors.
In the second part of his statement, Mikheil Saakashvili reviews the results of statistical research on pawn shops. According to this research, the number of debtors at pawn shops was 609,000 in 2017. However, according to the information of the National Statistics Office of Georgia, this number is calculated on the basis of contracts that pawn shops conclude with their borrowers. For instance, two separate loans from a pawn shop by one person are registered as two borrowers in the debtor database. Therefore, the aforementioned figure does not in fact show the actual number of individual borrowers. Therefore, Mr Saakashvili’s emphasis that every fifth Georgian citizen has to go to pawn shops is inappropriate.
The average weighted annual interest rate in pawn shops was indeed 45.4% in 2017. However, Mikheil Saakashvili tries to give this figure a negative context in his statement and he ignores the tendency of change. In fact, the pawn shop interest rate has decreased by 8.7 percentage points as compared to 2013.
Analysis In one of his video addresses,
the former President of Georgia, Mikheil Saakashvili, stated that the number of bank debtors was 110,000 in 2012 whilst the number of debtors in the official registry today has increased to nearly 250,000. In his same statement, Mr Saakashvili noted that more than 600,000 people have had to use a pawn shop’s service with interest rates at 45%. According to his assessment, the population of Georgia is three million with every fifth citizen having to go to a pawn shop.
In the first part of his statement, Mikheil Saakashvili names the figures from the National Bureau of Enforcement’s Debtor Registry. The Debtor Registry is an electronic database of the National Bureau of Enforcement which is used prior to the enforcement of a cash settlement. It contains enforcement information about those persons, legal entities and organisations (with the exception of central and local self-government organs) which have been subject to enforcement since 1 January 2010 and for which the time envisioned by the Law of Georgia on Enforcement of Cash Settlement for the voluntary settlement of acts under this law (with the exception of secured settlements) has expired. Once enforcement against a debtor has been launched, information about the debtor is immediately stored in this database. If enforcement ceases, information about the debtor is removed from the registry. Therefore, figures in the debt registry about borrowers are constantly changing. As of 3 July 2018, there is informationabout 256,316 debtors in the Debtor Registry.
The National Bureau of Enforcement’s website only allows visitors to access data of those debtors against whom enforcement is in progress at the time of their visit to the website. Therefore, in order to fully verify Mikheil Saakashvili’s statement and obtain statistics of debtors in the registry year by year, FactCheck sent a letter to the National Bureau of Enforcement on 18 April 2018 requesting public information. Despite several additional attempts at communication with the Bureau, FactCheckhas not yet received the information we requested. Therefore, we used second-hand documents from our archives as well as other information from different sources in order to verify Mr Saakashvili’s statement.
At the beginning of 2012, nearly 70,000 individuals were registered in the Debtor Registry. As of August 2013, enforcement has been launched against 92,933 borrowers. As of 1 January 2014, this figure stood at 107,805. In October 2016, 178,500 entries were activein the Debtor Registry. These figures indicate a tendency of growth in the number of debtors in the Debtor Registry.
The aforementioned data illustrate that entries in the Debtor Registry increased by 19,000 entries on average per year in 2012-2014. Based on this calculation, nearly 90,000 debtors should have been registered in the Debtor Registry by the end of 2012 which is 2.8 times less as compared to the current figure. Of note is that the number of debtors is lower as compared to enforcement cases because several enforcements are sometimes simultaneously carried out against one and the same individual. Of additional note is that the Debtor Registry contains data not only about bank debtors but also about any obligations arising between any two parties which were later subject to enforcement. Therefore, the number of bank debtors is only a part of the total amount of debtors.
In addition to the Debtor Registry, Mikheil Saakashvili also discussed data about pawn shop debtors. These figures are based on the main findings of the National Statistics Office of Georgia’s statistical research about pawn shops which was carried out in 2017. Apart from the 2017 research, the National Statistics Office of Georgia conducteda study on pawn shops in 2013, too. Information about periods before 2013 is not available.
Table 1:
Main Findings of Statistical Study on Pawn Shops (GEL thousand)
| 2013 | 2017 | |
| Name of Indicator | Total (In Both Currencies) | |
| Cash | 13,435 | 23,764 |
| Money in Banks | 3,731 | 17,664 |
| Money in Resident Banks | 3,731 | 17,160 |
| Money in Non-resident Banks | 0 | 504 |
| Issued Loans | 310,669 | 405,832 |
| Loans Issued for Individuals | 299,105 | 391,030 |
| Accounting Period Profit/Loss | 21,590 | 47,587 |
| Number of Borrowers | 681,988 | 609,358 |
| Number of Individual Borrowers[1] | 680,950 | 606,875 |
| Average Annual Weighted Debt Interest Rate | 54.1% | 45.4% |
Of importance is that in accordance with the information of the National Statistics Office of Georgia, borrowers are calculated on the basis of the number of contracts concluded with pawn shops. Therefore, the number of debtors does not show the actual amount of both individuals and legal entities.
In 2017, 609,358 loan agreements were concluded in pawn shops. Of this amount 99.6% or 606,875 contracts were concluded with individuals. Of note is that this figure has declined by 10.9% as compared to 2013.
Of importance is that despite the decline in the number of debtors in pawn shops, the volume of loans issued by pawn shops increased by GEL 95.1 million in 2017 as compared to 2013. This figure was GEL 405.8 million with GEL 391 million in loans having been issued for individuals.
In accordance with the information of the National Statistics Office of Georgia, the average annual weighted interest rate on debts has also decreased as compared to 2013. In 2017, the interest rate in pawn shops was 45.5% on average which is 8.7 percentage points less as compared to the same figure in 2013.
[1] This figure includes the number of contracts and not the actual number of borrowers.
