When it is dealt with foreign debts of Azerbaijan, one unwillingly flinches seeing the figure, which seems very deterrent. According 1 April 2006 the total debts of Azerbaijan made up $1,741bn (11% of the GDP). It means that even a new-born citizen of Azerbaijan has a debt of $207.3 on his shoulder.

But it should not be forgotten that they also owe Azerbaijan. For instance the issue of restructuring of Georgias debts to Azerbaijan has become actual. The Georgian Ministry of Finances announced that as of 31 May 2006 Georgias state foreign debts and the arrears taken under state guarantee made up $1.77bn. Georgia owes $603m to 16 creditor countries, including $16.1m to Azerbaijan.

This debt accumulated in 1992-1994 as a result of trade operations, when Georgia was unable to repay for

Electricity supplied by Azerbaijan. As a result, there was formed a debt of $17m. In the beginning of 2005 there has been achieved an agreement that Georgia will return debts not in money, but electricity in the same volume that it received. It is dealt with 32m kW/h. In accordance with the agreement achieved the deliveries were set up. However, Georgia succeeded to supply only 2 million kW/h and ceased energy delivery through borders following the bug that evolved in the Inguri HPS. Tbilisi refused to restore deliveries referring to insufficiency of electricity in the country. In mid-December 2005 the leadership of Azerenerji company threatened Georgia with appeal to the international court. Afterwards the talks moved from dead point.

The Georgian government took an advantage of a meeting of the Managing Board of the Black Sea Bank for Trade and Development to put forward the issue on restricting its debts to Azerbaijan. During the gathering the Georgian Deputy Finances Minister held talks in Baku and put forward the issue intensification of an agreement on new restructuring of the debts. The term restructuring implies the extension of the repayment of the debts and its interests.

Official Tbilisi stated its readiness to pay Azerbaijan $2.7mln right upon signing the convention on debt restructuring, Trend reports with reference to Georgian Ministry of Finance. Georgia also requests accelerating internal procedures to sign the convention the soonest, which was declared most recently during Georgian officials visit to Baku. Yet, Finance Ministry shall get authorized to sign such agreements, while Georgians are.

The delay with signing the agreement were initially linked to staff changes in Georgian government, now official Baku awaits settling procedures for signing customs agreement between the countries

Finance Ministry officials said the debt will be repaid in cash based on restructuring schedule. Georgian debt to Azerbaijan amounts $16,189,573. According to the new variant, a part of debt in $3.239mln shall be repaid between 2007 and 2021. Besides, repayment of $2.7mln of the debt will start upon said agreement coming in effect. This payment will be effected in two stages by the end of 2006. Third part of the debt shall be repaid in 2010-2025. Rate on this debt total 3% annul interest.

An agreement on restructuring of Georgias debts to Azerbaijan is an only document, which is ready for signing at the 3rd meeting of the Azerbaijani-Georgian intergovernmental commission on economic cooperation. In general, 14 draft agreements are being considered with Georgia, while their adoption depends on preparations at the Georgian government. Thus, the Georgian side proposed to hold the 3rd meeting in Tbilisi in August.

Meanwhile, the Cabinet of Ministers is developing an appeal to the Azerbaijani President with request to authorize the Finance Minister Samir Sharifov in signing of an agreement on restructuring of Georgias debts. On 4 July Artur Rasizade, the Prime Minister, was appointed the co-chairman of the commission. Zurab Nogaideli is co-chair of the commission of the part of Georgia.

Fully acknowledging that the debt cant be non-interest, the Georgian Prime Minster visited Baku on 5 July. Then the Azerbaijani side voiced its will to accelerate the preparations for the meeting. The Azerbaijani government is waiting from Georgia as a receiving side, an official appeal with proposals on the date, agenda and final report. It is also necessary to conclude work over a packet of intergovernmental and interstate agreement. Azerbaijan is ready for maximal expansion of cooperation with Georgia on mutually profitable terms.

During the last consultations Georgia did not state about new schemes of restructuring, including the repayment of debts at the expense of fees for Azerbaijan oil and gas transportation via its territory. When Georgia started repayment of its debts to Azerenerji for electricity, Etibar Pirverdiyev, the President of the company, voiced his will on repayment of debt sin money equivalent.

For a while in exchange to repayment of debts by Tbilisi Azerbaijan wanted to participate in the privatization of sea ports of Georgia. Former Azerbaijani Finance Minister Avez Alekperov even spoke about it. Azerbaijan took such resolution on the base of Georgias desire to repay its debts in the form of commodity. It can also be agriculture products, metal, wine and the Georgian Prime Minister Zurab Nogaideli appealed to the Azerbaijani government with a letter. However, the Azerbaijani government regarded the appeal as unacceptable. The Azerbaijani government regarded possible participation the privatization of the Georgian ports as the best variant. So strange, the proposal was not initially rejected by the Georgian authorities, whereas the real cost of the Black Sea ports of Georgia is inadequate to figures reflecting debts to Azerbaijan.

The so-called problem of Georgian debt exists even today. It is very difficult and uneasy problem for Georgia. Big foreign debt infringes international authority and can complicate the approval of new foreign debts. There gore, the countrys government takes measures to decease the foreign debts.

The Georgian authorities are wiling about economic independence. However, it will not occur soon without settling the debts.

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