Page 36 - GEORptDec21

Georgia's public debt overview
Georgians drowning in debt
The trade of goods and income account make a negative contribution to current account, while the services account and current transfers a positive contribution, the central bank said.
In the first quarter of 2021, the current account deficit decreased by 13.8% annually and the current account deficit ratio to GDP from -11.2% to -10.7%.
Georgia’s public debt metrics deteriorated more than envisaged during the 2020. Due to the economic decline in 2020-2021, tax revenues collapsed and the budget deficit increased to 9.1% of GDP in 2020 (from 1.8% of GDP in 2019), and it is not going to decrease to anywhere below 7.6% in 2021 according to Minister of Finance Ivane Machavariani.
The government debt, which also increased along with the expanded budget deficit, is set to go beyond the 60% margin in 2021. In this context, it is relevant to mention that the government is planning to roll over its $500mn eurobond in 2021, to preserve international reserves. Repaying the eurobond from government deposits rather than refinancing it would reduce the 2021 debt ratio by 2.8pp of GDP.
The largest creditors of the state of Georgia are Asian Development Bank (ADB), World Bank International Development Association (IDA), European Investment Bank (EIB) and International Bank for Reconstruction and Development (IBRD).
The debt owed to IDA is GEL2.85bn ($935mn), the ADB debt stands at GEL4.36bn ($1.43bn) and the EIB debt is GEL1.88bn ($620mn). Gross external debt include both public sector (general government, public corporations and national bank) and private sector (banking and other sectors) external debt.
Over the last several years, Georgians have been sliding into debt.
Roughly 80% of Georgia’s households owed a collective $5.5bn (31% of GDP) on bank loans in 2018, the last year for which detailed figures are available from the National Bank. Unknown amounts are owed to subprime lenders. The figure puts Georgia towards the top of the list of European countries in terms of the amount of consumer loans relative to the size of the national economy, and significantly higher than neighbours Armenia and Azerbaijan.
While well-off households can take loans to improve their financial flexibility, an
36 GEORGIA Country Report December 2021 www.intellinews.com