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Saturday, 22 October 2016


Gilauri looks for treasure in debtor's prison

2011-10-03 14:08

Gilauri looks for treasure in debtor's prison. 22707.jpegGeorgian authorities, after issuing eurobonds, imagined that the problem of external debt is solved. The republic's leadership has openly relaxed and continues to recieve impressive tranches from international lenders with undisguised pleasure. The result was immediate. According to the state on July 31, the republician debt rose by more than $ 500 million. But they still have to pay it back: the problems of the Georgian economy was only delayed, but not resolved.


It's not a secret that in recent years, Georgia lives at the expense of foreign grants. The country's leadership was gaining credits until the spring of this year, while the International Monetary Fund (IMF) hasn't intervened and hasn't said its say. Representatives of the influential organization lucidly explained Tbilisi that in the very near future they will have to pay on the national debt - and the sum is rather big. In 2012-2014, the republic faced with the need to serve large external liabilities, which will peak in 2013. Then they will have to pay their lenders one billion dollars. For Georgia, where the tranches are conveyed over the pockets of officials with record speed, it is realy big sum.

But resourceful Sakartvelo's authorities found a way out. They actually have put the country's economy in pawn in order to postpone payment. "After the Eurobonds were issued, Georgia will no longer have problems with the payment of external debt in 2012-2013" - said Prime Minister Nika Gilauri in July. And he seems to have given his economists team an order to work closely with the major creditors of the republic.

Gilauri had a sole motivation. The head of the government genuinely believed that Eurobonds are sold well in world markets. So, they should not worry about the return of the first part of the debt. But the privatization of state enterprises - is not the best way out of the situation in which the Georgian economy found itself. No wonder that experts have immediately called the prime minister's strategy a simple sellout which will not produce any tangible results in the field of economic development.

No wonder that just a week after Gilauri's bravura speeches the European Bank for Reconstruction and Development has reduced the forecast rate of GDP growth in the country by half percent. Bank experts' forecasts for next year is even less reassuring: according to experts, an extensive package of financial assistance provided to Georgia after the August 2008 is reducing. This means that Tbilisi will lose income from abroad, such usual for Mr. Saakashvili and his team.

But these alarming messages don't warn Georgian government. Now the republic expects to take another $ 40 million from the World Bank under the pretext of "supporting reforms aimed at restoring Georgia's economy and preparing for post-crisis growth". Tbilisi officials do not even think that this is the last tranche of the World Bank.

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