The heavy burden of servicing foreign loans

Georgia’s foreign debt and its servicing has been a heavy burden on the Georgian economy.

In 1995, four-years after Georgia’s independence, its foreign debt was $1.15 billion. In 2003 when the Rose administration came to power Georgia’s foreign debt was $1.75 billion and in 2007 it was $1.79 billion. Dramatic growth of the debt became noticeable beginning in 2008. Then in 2009, foreign debt rose to $3.38 billion. In 2011 it reached $4.17 billion.

So, over the last 8 years, it has increased very quickly. Since the Rose Revolution, foreign debt increased almost 2.5 times.

Of course foreign debts require financial servicing – and paying interest. In the budget of 2012, there is allotted GEL 580 million for the servicing of Georgia’s foreign and domestic loans. Some economists think that this is a very heavy burden for the country during a very difficult economic period. In 2013, the situation will become even more critical, because around $900 million will be required for servicing state debts. This will represent a further burden for the country’s economic situation.