More about Georgia’s foreign debt

By the beginning of this month Georgia’s foreign debt had grown to over GEL 5 billion. Servicing these debts will become more and more difficult. Some analysts suggest that Georgia can only repay these debts by taking on even more.

Servicing these debts costs Georgia a lot of money in interest. In 2010 Georgia will have to pay over USD 71 million as interest on existing loans, in 2011 over 70 million, in 2012 over 68 million and in 2013 over 45 million. These sums refer to the interest on the loans only, not the loans themselves. The worst year for repayment of principal loans will be 2013, when Georgia will need to pay back GEL 1. 3 billion, one quarter of its 2009 budget. This amount includes a USD 500 million loan taken by the country in 2008 for issuing Eurobonds, the whereabouts of which are not transparent.

Most independent analysts say that to pay back this debt the country will have to take on extra debt which will further burden the population in the future and mean economic growth will have to proceed at a faster rate than ever before simply to keep the country in the same position.