BAKU, Azerbaijan, August 20. As Georgia ramps up its climate change initiatives ahead of the COP29 conference in neighboring Azerbaijan, the Asian Development Bank (ADB) is playing a critical role in supporting the country’s climate action efforts, said Lesley Bearman Lahm, ADB Country Director for Georgia, in an interview with Trend.
"ADB’s new Country Partnership Strategy with Georgia outlines a climate action plan which will be integrated into key areas of engagement until 2028," Lahm stated. "These key areas include transport, energy, waste management, and urban and regional development." She emphasized that ADB is committed to strengthening cooperation across the Central Asia Regional Economic Cooperation (CAREC) region, particularly through decarbonizing value chains and managing disaster risks.
In addition to these strategic initiatives, ADB is providing technical assistance to support Georgia in aligning with the Paris Agreement and achieving its updated national targets for 2030. "Through technical assistance, ADB aims to provide policy support for Georgia in ensuring Paris Agreement alignment and achieving updated national targets for 2030," Lahm noted.
ADB has also been instrumental in fostering innovative sustainable finance in Georgia, targeting climate-related investments. "In 2023, ADB invested 20 million Georgian lari in Tegeta’s green bonds, promoting electric vehicles, expanding the charging network and services, and decarbonizing the transportation sector," the country director highlighted. Another significant investment in 2023 was ADB’s $16 million contribution to Georgia Capital JSC’s $150 million sustainability-linked bonds, which support CO2 emissions reduction through energy efficiency projects and the transition from fossil fuels to renewable energy sources.
The bank is also exploring new renewable power projects, including hydro, solar, and wind energy, which are expected to boost Georgia’s energy security and resilience while tackling climate change. "These projects will have a positive impact on Georgia’s energy security and resilience, help tackle climate change and prevent adverse effects, and have meaningful benefits to the local communities and general public," Lahm said. "They will also support Georgia in meeting its nationally determined targets."
With COP29 on the horizon, Lahm underscored the importance of regional integration and cooperation. "COP29 is a great opportunity to explore opportunities for enhanced and comprehensive regional integration and cooperation, and build sustainable and resilient economies," she remarked. "ADB has been at the forefront of regional integration efforts and is discussing its support to the South Caucasus countries for COP29 preparations."
Further speaking, Lesley Bearman Lahm added that the ADB has committed up to $5 billion in total assistance to Georgia.
"Of this amount, $935 million is allocated directly to the private sector. The bank’s sovereign loan portfolio currently stands at $1.9 billion, with over half dedicated to transportation and road infrastructure and a third to urban and water infrastructure projects," she said.
Lahm highlighted Georgia’s potential as a premier tourist destination and natural transit hub, noting that ADB's efforts are directed towards developing modern economic corridors, livable cities, and a skilled workforce. "Ensuring that these developments lead to green, inclusive, and resilient growth remains a top priority," Lahm said.
The country director expressed strong support for Georgia’s ambitious projects, which aim to modernize road networks, water supply and sanitation systems, and energy infrastructure. "These investments have already started to yield benefits, improving economic opportunities and enhancing regional significance," Lahm noted. In recent years, ADB has expanded its portfolio to cover education, health, and agriculture, believing that investments in human capital, social protection, and agriculture will advance food security, build climate resilience, and enhance quality of life.
An example of ADB's recent engagement is its investment of $40 million in Georgia Global Utilities JSC’s (GGU) $300 million Green Bond, announced on July 26, 2024. This investment, comprising $20 million from ordinary capital and $20 million from the "LEAP 2" fund managed by ADB with a $1.5 billion commitment from JICA, will enhance Tbilisi's water supply network and improve climate resilience for surface and groundwater resources. "This marks the latest in approximately 45 transactions from ADB’s Private Sector Operations in Georgia, reinforcing ADB’s role as a leading climate solutions bank in the region," Lahm said.
Additionally, ADB has recently approved a health program aimed at improving access to quality, affordable healthcare, particularly for the poor and vulnerable. The program focuses on enhancing health services, increasing public funding for primary care, and improving digital health management.
ADB's agriculture program is set to modernize irrigation systems and support institutional reforms in Georgia. "This initiative will assist farmers in the Kakheti region with advanced agricultural production technologies for high-value crops like grapes. It includes climate-smart water management, local water storage and recycling, and measures to address soil erosion," Lahm added.
Looking ahead, the ADB plans to continue supporting the growth of micro, small, and medium enterprises (MSMEs) in Georgia through both bank and non-bank finance, as well as capacity-building initiatives, she noted.
"In 2023, we assisted Credo Bank JSC (Credo), one of Georgia’s largest banks, to expand its lending in the agriculture sector," Lahm said. "This effort was aimed at boosting domestic food production and reducing imports to address food security concerns."
ADB committed local currency loans totaling 65 million Georgian lari (approximately $24.8 million) for the Credo Bank Supporting Food Security through the Inclusive Access to Finance Project. "This funding allowed Credo to extend loans to a diverse group of rural borrowers, including women farmers and small business owners involved in production, processing, and trade across the rural value chain," Lahm explained. In addition to the loans, ADB provided a $550,000 grant to help Credo’s clients, particularly women entrepreneurs, improve their skills in both agricultural production and digital services.
As part of its Trade and Supply Chain Finance Program’s gender and inclusion strategy, ADB conducted several workshops in 2023 in collaboration with the International Chamber of Commerce and Enterprise Georgia. "These workshops aimed to support women entrepreneurs in accessing international markets, improving liquidity, and managing the risks associated with international trade," Lahm noted.
Lesley Bearman Lahm emphasized the strategic significance of Georgia's location at the crossroads of Asia and Europe.
"Georgia is at a unique location that allows it to serve as an important transit route linking the Caucasus and Central Asia with global markets through its roads, railways, and Black Sea ports," Lahm said. She noted that the performance of Georgia’s transport and logistics sector has wide-reaching implications for the entire region, particularly for the landlocked countries of the Caucasus and Central Asia.
Lahm highlighted the critical importance of the Middle Corridor. "The route enhances trade opportunities and facilitates expanded access to new markets," Lahm explained. "It also helps create new jobs and plays a significant role in developing infrastructure across the countries involved." She added that combining different transport modalities could improve connections between economic centers and increase logistics efficiency.
However, Lahm acknowledged that there are challenges to overcome, including inadequate railway networks, insufficient feeder vessels and port infrastructure, as well as time-consuming border crossings and cumbersome customs clearance procedures. "Addressing these issues, along with increased participation from the private sector, is essential for optimizing the Middle Corridor's potential," Lahm said.
The country director also provided insights into the ADB’s projections for Georgia’s economic growth, inflation rate, and monetary policy, while also discussing the bank’s financing plans for the coming years.
"ADB recognizes Georgia’s strong track record of impressive macroeconomic performance, ensuring resilient economic recovery and price stability following COVID-19 and the Russian invasion of Ukraine," Lahm stated. She highlighted Georgia’s V-shaped recovery post-pandemic, marked by two consecutive years of double-digit growth in 2021 and 2022, alongside a low inflationary environment and continued robust growth in 2023 and 2024, with a growth rate of 9.3 percent to date.
However, Lahm acknowledged the challenges ahead, especially given the geopolitical tensions and economic developments in the wider region. "Though revenue from tourism continues to remain strong, increasing by 1.5 percent in the first quarter of 2024 year-on-year and demonstrating 40 percent growth compared to the pre-pandemic level in 2019, we have observed a 36-percent decline in money transfers in the same period, along with a 10-percent annual decline in exports," she explained. These export challenges were attributed to a slowdown in vehicle re-exports and weak global demand for ferroalloys.
Despite these headwinds, Lahm noted that Georgia’s unemployment and poverty rates have dropped to historically low levels, with unemployment at 14 percent and poverty at 11.8 percent. "The IMF recently recognized Georgia as one of the best performers globally in terms of job creation and unemployment reduction, assessing the past 10-year unemployment trend across countries," she added. Nonetheless, Lahm emphasized the need for Georgia to continue implementing structural reforms to diversify its economy, enhance labor productivity, and support technological innovation.
Looking ahead, Lahm outlined the ADB’s financing plans for Georgia, which are aligned with the country’s National Development Strategy, Vision 2030. "The 5-year partnership strategy that ADB has endorsed for Georgia directly supports three major priorities – economic development, social policy and human capital development, and public administration," she said. ADB’s focus will be on promoting regional cooperation and integration, private sector-led growth, and sustainable development.
"We will continue to help Georgia expand its multi-modal transport network, strengthen the population’s climate- and disaster-resilience, and scale up clean energy generation and trade," Lahm noted. ADB’s support will also extend to strengthening national social protection systems, pension reforms, and capital market development, as well as enhancing vocational education and training alongside the country’s general education system through ongoing and planned projects.