Yet more on Georgia’s foreign debt

In November 2009 Georgia’s external debt increased by GEL 101 million, according to the Rezonansi newspaper. Analysts think that if this increase continues at the present rate pretty soon around a quarter of Georgia’s budget will have to be spent on servicing these liabilities.

In 2005-2006 Georgia's foreign debt decreased, but in 2007 it started increasing again, and has continued to do so most dramatically in 2008-2009. On November 30, 2009 Georgia’s foreign debt was GEL 5,687,972 billion, whereas on the same date last year, it was GEL 4,117,667 billion.

The Government is also planning to take out extra loans in 2010, of around GEL 1.3 billion. If we take into account that in 2009 Georgia's GDP decreased by 4 percent, its foreign debt takes an even larger share of GDP.

Today Georgia has a foreign debt of USD 1,222 per citizen. In 2010 Georgia will need about USD 95 million to pay back its loans, in 2011 121 million, in 2012 257 million and in 2013 771 million. On top of this Georgia has to pay annual interest rates.

If we take into account that there is a problem collecting budget revenue in this country, analysts suggest that paying back foreign loans will only become possible by taking out extra loans or decreasing the amounts spent on social programmes. Both these options contain serious threats. If the country takes on extra loans the debt problem will exacerbate over time, whereas if social programs are cut the reaction will be immediate.