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Georgia: head over ears in debt2010-02-23 20:23
According to Georgian Finance Ministry the volume of the country's 2009 external debt has increased by almost a third. In March the IMF board of governors plans to decide on granting Tbilisi a new loan - USD 150 million this time. In this situation Georgia is actively hunting for markets to sell its produce though Saakashvili-inspired breakdown of ties with Russia hits the country's financial sector heavily. A logical question comes up: how great is the foreign donors' credit of trust to Tbilisi?
Last weekend Georgian Finance Ministry reported on a 30.8% increase in the country's foreign debt over 2009 amounting to almost USD 3.5 bn. Georgia's total debt on bilateral loans has grown from USD 537 to 553 bln with USD 118 mln owing to Moscow.
Remarkably over the past few years Georgia's accumulating external debt has turned into a kind of system. In 2008 the debt amounted to USD 2.5 bn. In a year's time it was half a billion more. Now Georgia owes USD 3.5 bn to the donors. Simultaneously liabilities to multilateral creditors, the World Bank and IMF are growing too. There is an impression that methodical borrowing from other countries is not only a custom for Tbilisi, now it is the core of the country's economic policy.
By the way a few days ago the IMF mission presented its statement on Georgia's economic situation. According to the document the republic has pulled through the first wave of the economic crisis. As the experts believe the country's banking sector has returned to profits though Georgia will hardly survive without foreign investments. The foundation thinks that Tbilisi has made certain success implementing the economic program and restoring trust of the investors. Moreover, an economic growth was registered in the second half of the year. According to Edward Gardner in charge of the IMF mission in Georgia if the republic pursues the worked out program this year Tbilisi will have a 2% GDP growth. Gardner also recommends that the budget deficit be lessened in order to avoid future problems when the country stops receiving aid from international donors. However, financing Georgian democracy hasn't been finished yet - in March the IMF board of governors plans to decide on a new 150 USD mln credit tranche for Georgia.