The ruling Georgian Dream - Democratic Georgia party, which intends to impose a constitutional ban on agricultural land sales to foreigners as part of the ongoing constitutional reform process, is planning to introduce certain exemptions for foreign-owned banks and microfinance organizations.
The GDDG-proposed amendments to the Law on Agricultural Land Ownership come less than three months after the ruling party introduced a temporary blanket restriction on land ownership by foreigners to the same law, which, as a consequence, also applied to Georgian citizens, who are no longer able to use land as an asset in securing their loans from foreign-owned banks and microfinance organizations based in Georgia.
According to the amendments initiated by the ruling party on August 31, foreign-owned banks and microfinance organizations will be exempt from land ownership restriction if their right to ownership was acquired through “banking/microfinance activity,” meaning the land that they have obtained as a result of borrower defaults. The microfinance organizations and banks will, however, have to sell the acquired property in a year or two years’ time, respectively. At the same time, in “special circumstances,” the Government of Georgia may grant its consent to foreigners or foreign companies wishing to own agricultural land in Georgia.
The decision drew criticism from opposition politicians, who have denounced the restriction previously as well, citing its negative economic effects.
“We have warned them that this law was unconstitutional, absolutely imprudent, and the first difficulties have emerged with respect to the banks; lands used as loan securities have become practically unusable,” stated MP Roman Gotsiridze of the United National Movement.
“We told them two months ago as well, that such a rigid ban on agricultural land sales would create problems in the agricultural sector. Today, those who created the very problem are trying to address the issue and present it as a step forward,” said MP Irakli Abesadze of the European Georgia.
Georgian Young Lawyers Association criticized the changes as well, saying that the government is considering the amendments “in an accelerated way,” and that granting additional powers to the government in deciding the “special circumstances” would increase “the risk of sham deals.”
Prime Minister Giorgi Kvirikashvili issued a statement on the matter on September 12, stressing that the restriction remains in force, and that it applies “only to the financial sector and for a limited period of time.”
The legislature is to discuss the ruling party-proposed amendments at its upcoming plenary session.
Under the new constitution, which will be put to final vote in late September, exceptions related to land purchases will be regulated by organic law. Before then, restrictions contained in the Law on Agricultural Land Ownership will apply.