Page 28 - GEORptJul19

The gross external debt of Georgia amounted to $17.8bn as of end-December 2018, rising from 17.2bn in the third quarter of 2018. External debt averaged $11,420.4mn from 2007-2017, according to the National Bank of Georgia. It accounted for 109.6% of GDP. Gross external debt include both public sector (general government, public corporations and national bank) and private sector (banking and other sectors) external debt.
Georgia’s government debt is expected to inflate to 3.5% of GDP in 2017-2019, in part due to the depreciation of the Georgian lari and the high level of dollarisation of Georgia's external debt. External government debt is expected to peak at 43% of GDP in 2018.
The country's high current account deficit, which reached 13% of GDP at end-2016, is one of the important sources of external debt.
7.0 FX
Georgia - Foreign exchange rate
2013
2014
2015
2016
2017
2018
Mar’19
Jun’19
Currency (units per EUR) (average)
2.209
2.346
2.520
2.617
2.832
3.054
3.037
3.132
Currency (units per USD) (average)
1.663
1.766
2.270
2.367
2.509
2.485
2.684
2.777
Georgia’s central bank explains currency weakening, stresses its robust reserves
Georgia’s central bank commented on June 27 on the weakening of the local currency, saying that it is an automatic stabiliser for the balance of payments and it is normal under the circumstances of the expected negative impact of Russia’s sanctions on the tourism revenues. But the foreign currency reserves are robust and the current account improved in the first quarter of the year, the central bank stressed, implying that it is going to smooth the exchange rate and prevent speculative attacks.
Georgia’s currency has weakened by 3.2% against the US dollar since before the street protests emerged on June 20-21, culminating with Russia imposing a ban on Georgia's tourism and wine, while in the year to date the weakening reached 7.2%.
Notably, in the first quarter the country's currency was stronger both in nominal and in real terms compared to the same period last year — while the balance of trade with goods still improved. The weakening seen through the year is likely to make a significant contribution to the trade with goods hence the current account balance as the country's exports depend to a moderate extent on Russia.
At this stage, it is difficult to make accurate predictions, but according to the initial calculations, the reduction of tourism flows from Russia will amount to about $200mn-300mn during the rest of the year (1.2%-1.8% of the year's GDP), the central bank said. This could be absorbed by the positive dynamics of the current account that halved in Q1. The current account deficit of Georgia amounted to $227mn in the first quarter of 2019, 48% ($207mn) smaller than in the same period last year. Georgia's current account decreased to 7.7% of GDP in 2018, from 8.8% one year earlier.
28 GEORGIA Country Report July 2019 www.intellinews.com