Georgia took a new external debt of USD 2 billion to fight the pandemic in 2020 and mitigate the economic crisis. As a result, the budget deficit increased to a record 9%.
Currently the pandemic crisis is largely considered over, although the country is facing a new crisis caused by Russia-Ukraine War.
So far, the economic impact of the new crisis is not fully assessed, although preliminary estimates suggest that economic growth could slow by 2-2.5 percentage points this year. As a result, real GDP growth is expected within 2-3% this year.
Today, Deputy Finance Minister Giorgi Kakauridze said that currently the Georgian government no longer has enough fiscal space to request donations from donors with the same amount as at the beginning of the pandemic.
"We had free space to take a loan during the pandemic. Our debt volume increased up to 60%. Today, we no longer have a chance to borrow the same amount. If the second shock is the same, we will not be able to take a loan with the similar volume," - said the Minister of Finance Giorgi Kakauridze.
The depreciation of the national currency had a negative effect on the state debt of Georgia. According to statistics published by the Ministry of Finance, as of February 28, Georgia's public external debt was USD 8.12 billion or GEL 25.63 billion.
Compared to January, state debt increased by USD 26 million, while the growth made up GEL 908 million in the national currency (almost one billion GEL). This increase was due to the depreciation of the GEL exchange rate. If, 1 USD was worth GEL 3.05 on January 31, the exchange rate was GEL 3.15 on February 28. In the last few weeks, the lari has depreciated against the dollar, leading to an increase in government debt.
Georgia owns the largest debt of the World Bank, which ranks on the first place. The country took the debt for the development of a number of major infrastructure projects. In second place is the Asian Development Bank, which also finances major infrastructure projects and Georgia owes a debt of USD 1.86 billion. As for bilateral loans, France (AFD) is in the first place among the countries, to which Georgia owes a debt of USD 691 million.
Whose Debt Does Georgia Own – Statistics
● World Bank IDA and IBRD - USD 2.03 billion;
● Asian Development Bank (ADB) - USD 1.86 billion;
● European Investment Bank (EIB) - USD 806 million;
● France (AFD) - USD 691 million;
● Germany (KFW) - USD 670 million;
● Eurobond of the Government of Georgia - USD 500 million;
● Debt of the National Bank to the International Monetary Fund (IMF) - USD 466 million;
● European Bank for Reconstruction and Development (EBRD) - USD 229 million;
● Government Debt to the International Monetary Fund (IMF) - USD 205 million;
● Asian Infrastructure Investment Bank (AIIB) - USD 194 million;
● Japan - USD 186 million;
● European Union (EU) - USD 149 million;
● International Fund for Agricultural Development (IFAD) - USD 37 million;
● Russia - USD 25 million;
● Austria - USD 16 million;
● America - USD 13 million;
● Kuwait - USD 11 million;
● Turkey – USD 7 million;
● Council of Europe Development Bank (CEB) - USD 5 million;
● Kazakhstan - USD 4 million;
● Azerbaijan - USD 4 million;
● Armenia - USD 3 million;
● Iran - USD 3 million;
● Scandinavian Environmental Finance Corporation (NEFCO) - USD 2 million;
● China – USD 0.5 million.
