Baku, Azerbaijan, April 12 / Trend /
Ellada Khankishiyeva, Trend Analytical Centre head
In May 2013, Georgia will begin making payments aimed at reducing the size of its foreign debt. As the Minister of Finance of Georgia Nodar Khaduri stated, Georgia will pay $200 million to repay its foreign debt this year.
Georgia intends to pay off 1.5 percent of its debt this year, taking into account the fact that the total debt of the country amounted to $13.4 billion on January 1, 2013.
In the structure of total external debt, some $ 4.2 billion account for the public sector (31.8 percent), 582.3 million (4.4 per cent) - for the National Bank of Georgia, $ 2.5 billion (18.5 percent) - for the banking sector, 3.2 billion (24.1 percent) - for the other sectors.
Georgia will first repay its Eurobond debt in the amount of $40 million, and cover part of the debt of the International Monetary Fund (IMF).
Therefore, the creditor countries of Georgia (there are 17 of them) should not expect a return of their money this year. Georgia's total debt to those countries amounts to $746.03 million, of which $12,959 million are what Georgia owes to Azerbaijan. The five major creditor countries of Georgia are: Germany ($341.260 million), Russia ($106.341 million), Japan ($80.823 million), France ($52.885 million) and the USA ($32,139 million). Of the former Soviet countries, in addition to Azerbaijan and Russia, Georgia owes Kazakhstan ($27,774 million), Armenia ($15,332 million), Uzbekistan ($314,000), Ukraine ($287,000) and Turkmenistan ($211,000).
Georgia's debts to its neighbors mainly formed in the early 90s as a result of trading operations. During this period, Georgia did not have time to pay for imported products and as a result, accumulated debt. Despite Georgia's desire to return the debt in the form of goods, creditor countries demanded their debt in monetary terms, which exacerbated the situation. The Georgian government has borrowed additional funds from other sources to repay the debt, or reissued the short-and medium-term debt into long-term debt in order to defer payment of foreign debt (with the consent of the creditors). However, the total amount of the debt kept on growing. For example, in 2017, Georgia will have to repay the debt on bonds worth $500 million, due to which the country has had to raise funds from international markets.
Georgia hopes there will be sufficient resources to repay the debt within the determined period. Otherwise, according to the agreement of the Ministry of Finance with the IMF, the repayment of the debt will be financed by the IMF. Georgia has previously taken loans from the World Bank, the European Bank for Reconstruction and Development and donor organizations, thus, more and more immersing itself into the debtor's prison. Only in 2012, the country's debt increased by almost a billion dollars.
Officials in Tbilisi note that the size of the external debt of the country is not huge (more than 30 percent of GDP) in comparison to disparate European debt (problem countries have long crossed the mark of 100 percent). However, the country recognizes that the debt must be used appropriately and its timely return ensured. The Georgian government realizes that the larger the size of the debt, the greater the share of the income from the sale of the GDP it has to direct not for the purposes of internal development, but for the execution of debentures to foreign creditors, which is contrary to the plans of the imminent economic independence of Georgia.