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Killing creditors as Georgia’s last resort?2010-09-22 14:15
Georgia continues to get poorer. By the end of August the amount of joint external debt as well as state-guaranteed loans was USD 3,574,000,000. The growth is accounted for the unjustified risks which naturally resulted in more loans. Now the country is facing the critical amount of its liabilities. The question now is not when they will be paid off but how the state, now on the brink of a technical default, will handle this "operation".
Georgia is in no hurry to get alarmed. According to an acknowledgment by Forbes magazine, it is still a rather attractive country for doing business throughout the whole of ex USSR after Baltic states. The new rating comprising 129 world countries includes several GDP indexes: growth, balance of trade and federal budget balance all of them showing that Sakartvelo is quite a trustworthy country in terms of investment flows. A sweeter pill for Georgia the debtor is a changed position of the "leash holder", the United States, going down from second to ninth position in view of deterioration in business climate for investors and an increased tax burden.
Georgian government is also fond of revealing good figures. According to Gruzstat, for instance, the volume of direct foreign investments in 2010 second quarter is nearly 200,000,000 USD which allegedly confirms the inflow of foreign money to the country showing a 11% increase in the index as compared with last year. Investment distribution is this: transport and communications - 104.4 mln, industry - 42 mln, real estate - 33.2 mln, other sectors - 17.3 mln. The investors' share is nearly 86% in the overall volume of investments.
The statistics look so sugary reminding of Azerbaijan overstating gas production volumes calculated together with common gas going straight from the mine for higher pressure. Georgia too continues to exaggerate satisfactory results wishing they were real. However, the question is still here: what are Sakartvelo officials going to do to pick up the tab when all profits from foreign investments are spent on domestic needs?
In accordance with market economy laws (a wonder for the Georgian market), theoretically the Caucasian republic must choose one of three solutions (like in a fairytale): going to the right you'll find yourself a wife, going to the left you'll get to Baba-Yaga, and going straight you'll be killed.