Page 26 - GEORptMay18

6.2 Debt
Georgia - Gross external debt
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
Gross external debt ($ mn)
14,756.04 15,206.00 15,536.52 15,679.52 15,796.77 16,416.51 16,712.72 17,203.5
2010 2011 2012 2013 2014 2015 2016 2017
Gross external debt (% GDP)
36.8 32.46 32.53 33.92 35.38 41.28 41.6 /
source: CEIC, World Bank
The gross external debt of Georgia increased to $17,203.5mn in the fourth quarter of 2017 from $16,712.72mn in the third quarter. External debt averaged $11,420.4mn from 2007-2017, according to the National Bank of Georgia. 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
2011
2012
2013
2014
2015
2016
2017
Currency (units per EUR) (average)
2.347
2.123
2.209
2.346
2.520
2.617
2.832
Currency (units per USD) (average)
1.686
1.651
1.663
1.766
2.270
2.367
2.509
The depreciation of currencies in Georgia’s main trade partner countries - Azerbaijan, Turkey, Armenia and Russia - has put pressure on the Georgian lari, which lost some 40% of its value in 2014-2015. The lari stabilised and began to appreciate in the first part of 2016, but began to depreciate again in November, reaching a record low exchange rate of GEL2.7 to the dollar in early December and January.
The Georgian central bank has intervened 24 times on the foreign exchange markets since January 2016 to manage the exchange rate, and had begun to ease monetary policy after raising its refinancing rate from 4% to 8% in 2015 in order to boost growth.
Since April, the central bank gradually eased monetary policy by cutting the rate from 8% to 6.5% in four interventions, responding to the appreciation of the Georgian lari and a decline in inflation. At a mid-December meeting, it decided to keep the rate unchanged, saying that the depreciation was due to one-off factors and that the currency would stabilise.
The Georgian central bank received a strong political opprobrium for its
26 GEORGIA Country Report May 2018 www.intellinews.com