"In the current year, the government will not borrow a cent," Georgia’s Prime Minister Irakli Gharibashvili said in the summer as the government decided to refuse the EU concessional loan aiming to support judicial reform in the country.
The authorities were not ready for a reform and refused the loan, but the official reason was that Georgia had managed to overcome the pandemic crisis and did not need additional debts.
But still according to the 2021 budget, Georgia’s external debt will grow by GEL 3.5 billion by the end of the year and will reach GEL 32 billion.
On September 21, the Georgian government signed a contract for a $ 100 million loan with the Asian Development Bank (ADB) to strengthen the electricity transmission sector.
the debt-to-GDP ratio
Expert Paata Sheshelidze sees the only difference, because of which the EU loan turned out to be unnecessary unlike the EBRD loan.
“The EU is a political organization and its financial support requires the fulfillment of certain obligations by Georgia, in particular, the judicial reform. The Asian Development Bank (ADB) , on the contrary, is a purely economic institution that gives loans for specific projects and does not bind borrowers with any political obligations. This is the reason of why the EU loan was refused although the amount is almost the same, and the interest of the EU loan is 2 times lower, ”he points out.