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Georgia's External Debt Service Has Become More Expensive

დოლარი ლარი ფული

The service of Georgia's external debt has become more expensive by hundreds of millions of lari due to the interest rate increase on the debt.

In 2024, the budget will spend GEL 2.12 billion on paying off foreign debts, which was GEL 529 million more than in 2023. Of which, the budget will spend GEL 1.37 billion (increase of GEL 305 million) for the payment of principal, while GEL 750 million (increase of GEL 224 million) - on debt interest.

The increase in the cost of debt service is related to the interest rate growth in the global capital market.

"In the conditions of global monetary policy tightening from 2022, the weighted average interest rate of the government's foreign debt is characterized by an increasing trend, which amounted to 3.2% as of August 31, 2023. That hit a historic high for the last ten years. The increase in the mentioned indicator was mainly due to the increase in the share of loans with variable interest rates in the government's external debt portfolio (the share of such loans is 49% as of August 31, 2023). The mentioned type of loans are characterized by significant sensitivity to the global monetary policy", - states the conclusion of the State Audit Service.

The total foreign debt of Georgia is GEL 22.8 billion. The largest part of the external debt of Georgia is owed to international donors - World Bank Group, Asian Development Bank, EIB, German International Development Bank, French International Development Bank, EBRD and other donors.