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Default threatens Georgian economy

2010-04-01 11:18

The joint foreign debt of Georgia reached 80.3 per cent of GDP, and experts say this can lead the country to bankruptcy in 2013 - the VZGLYAD.


According to the National Bank of Georgia, the joint foreign debt of the country increased by USD 1.329 bn, or by 18.2 per cent, and reached USD 8. 631 bn, equaling 80.3 per cent of GDP.

Dr. David Narmania, the founder of the Research Centre on Economic Problems, noted the situation can result in Georgia's being in the list of 10 bankrupt countries in 2013.

In his opinion, in 2013 GEL 760 mln [USD 458.4 mln at the current rate] will be needed for debt service, and GEL 80 mln [USD 48.25 mln] for interest rate. Georgia doesn't have that much money, and no-one will give a loan.

Zurab Noghaideli, the ex-PM and the leader of Movement for Just Georgia, is also sure of that scenario. In his view, in 2013 uncontrolled financial processes will begin, as 20 per cent of budget will be needed for service of the foreign debt, and there's no way to obtain that much money. "Being in power in 2013 is a very bad thing," he said.

In the view of the ex-PM, after the defeat in August war in 2008, instead of conducting structural reforms, Saakashvili "pumped" economy with money, as if nothing happened. That's what caused the colossal foreign debt, Noghaideli believes.


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