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Gvindadze repledges the country2011-09-20 15:40
Curiosly enough, Georgian finance minister Dmitry Gvindadze has a much wilder imagination than Mikheil Saakashvili, a recognized master of building castles in the sand. According to the ministry of finance, in 2012 the country will start reducing its national debt. As the minister believes, the level of financial obligations will reach 33-35% of GDP versus current 43%. Proving rightness of this, Gvindadze immediately borrows USD 40 mln more from the World Bank.
"Judging by the economic growth rate in Georgia, from 2012 we will start reducing our state debt that will reach 33-35% of GDP", - Dmitry Gvindadze told journalists. - The debt-to-GDP ratio must not exceed 60%, since the national debt is one the key indicators of economic stability. Presently, it's 43% in Georgia".
Certainly, compared to Greece whose financial liabilities went over 100% long ago, Tbilisi is not a poor case. However, the volume of economies is different. Greece is 35-fold bigger than Georgia. Yet, problems of both countries are similar. Both Athens and Tbilisi don't know where to get money for essential needs: pensions, public salaries, etc. So both countries rely entirely on foreign loans.
Now that we haven't lived to see miraculous 2012 yet when, as the Georgian finance minister assures, gradual reduction in the national debt will begin, the debt keeps growing steadily. Over the past 12 months Georgia's national debt has grown by 15% and keeps getting heavier. In July Tbilisi's liabilities to foreign and domestic creditors exceeded the country's consolidated budget reaching the mark of USD 4.2 bn.
This is not the end. A few days ago Gvindadze the dreamer signed an agreement on a USD 40 mln credit facility for Georgia "in support of reforms in Georgia" with Asad Alam, regional director of the World Bank in South Caucasus. The international financial institute is Tbilisi's largest creditor with nearly USD 1.5 bn granted by the bank to Georgian ministry of finance. Nobody knows where most part of this money went to. It is also unknown how much money the government of Sakartvelo gained placing USD 1.5 bn Eurobonds in spring 2011.
"You know, Georgia has a negative experience of dealing with Eurobonds: early in 2008, USD 1.5 bn bonds were issued from Georgia's treasury without public discussions. There has been no report on appropriation and necessity of this issuance yet", - Soso Tsiskarishvili, an expert for economic issues remarked after the issue of Eurobonds in spring. - The new European loan will be non-transparent again while members of Georgian government will see lots of joyful events - multi-million concerts and other shows".
Money vanishes, and the burden of the national debt grows. The World Bank, unlike the International Monetary Fund, is controlled by the United States, so basically this USD 1.5 bn is what Saakashvili owes to the White House as a guarantee of his loyalty to be paid off by people of Georgia.
As long as the puppet controlled by the US Department of State lives in Avlabari palace, the national debt won't go down. Washington does not want Tbilisi to abandon "cheap loans" providing for US influence in strategically important Transcaucasia. As we know, debts can be repaid only when economy is growing dynamically. Thus, politicians from the White House have no interest to see Sakartvelo's economy growing. GDP growth is mentioned in Gruzstat's reports in US dollars when the US currency is facing drastic devaluation.
Dmitry Gvindadze now has another possibility to lay hands on a "cheap loan" from the World Bank under Mikheil Saakashvili's wise guidance. He can speak about debt reduction freely. To make it happen in real life, both Gvindadze and his boss must first sit down in a prisoners' box.