Foreign debt as critical margin

If in 2005-2006 Georgia’s foreign debt burden was decreasing over the last two years it has increased dramatically and is approaching a critical point. In 2004 Georgia had a foreign debt of over GEL 4 billion. In 2006 the sum had fallen to less than GEL 3 billion, but in 2008, it was again over GEL 4 million and higher than in 2004.

In 2009 debt commitments have exceeded GEL 5 billion already. According to an internationally accepted formula a state becomes a defaulter if its foreign debt is more than 50% of GDP. According to the National Bank of Georgia foreign debt was 21% of GDP in 2008. Economic analysts predict that by the end of 2009 the situation will deteriorate further. GDP will decrease and foreign debt will increase. There is no sign of Georgia’s exports increasing.

Moreover Georgia faces some even more difficult problems concerning foreign debts. Analysts suggest that the most difficult year from the point of view of paying back debts will be 2013. As the representative of the Economic Research Centre Shota Murghulia stated after monitoring Georgia’s foreign debt, by 2013 Georgia would have to repay debts of more than GEL 1 billion. The prospects of Georgia covering its debts are not encouraging at all. In 2010 Georgia will have to repay USD 95 million, in 2011 USD 121 million, in 2012 USD 257 million and in 2013 USD 771 million. Furthermore Georgia will have to pay interest on these sums: in 2010 this interest will be USD 71,000, in 2011 USD 70 million, in 2012 USD 68 million and in 2013 USD 45 million. In 2013 Georgia will be liable to repay the Eurobonds issued by the country in 2008 for 5 year terms.

These are not good figures, as behind them are people with problems, pensioners, the unemployed and so on. Furthermore industry, agriculture and other fields of the economy are not performing at their best. Whoever is in power will face great challenges in four years time, but the terms of President Saakashvili and the current Parliament will have expired by then.