22.5% of the state budget revenues will be filled through domestic debt and money transferred from donors. In the last 2 years, the scale of the debt is rising sharply. Although the country’s debt to GDP ratio has not yet reached a critical threshold, specialists still consider taking excessive debt dangerous in terms of low economic growth.
According to the Law on the State Budget for 2015, the Ministry of Finance should manage to mobilize GEL 8.090 billion in revenues. Out of this, GEL 1,090 billion is foreign debt, GEL 600 million – domestic debt, while GEL 215 million – grant. So, similar to last year, the country’s budget revenue dependence on foreign money is quite high.
Recall that in the last quarter of 2014, the budget had a shortfall in terms of foreign liabilities. Donors transferred money in December which has not been spent.
In 2015, the foreign debt will increase by another GEL 1,090 billion. According to official data for December 2014, the country’s total foreign debt exceeded GEL 7.7 billion. Georgia’s biggest creditor is the World Bank, followed by the Asian Development Bank ( GEL 855 million), and the third biggest creditor is the European Investment Bank ( GEL 450,8 million).
As for the internal debt, as already mentioned, the Ministry plans to issue treasury bonds and securities worth GEL 600 million. According to the budget law, similar to last year, 200 million GEL will be used for providing resources to promote long-term economic mechanism.
More specifically, this year the Ministry will sell securities worth GEL 1,097 billion.
This time, the country’s internal debt amounts to GEL 1.8 billion- GEL 1,325 billion are received from treasury securities while GEL 573 million – from other government securities. In 2013, the internal debt was 1,344 billion, in 2012 – 1,230 billion, in 2011 – 1,220 billion, in 2010 – 1,168 billion. It is obvious that the internal debt dramatically soared last year.
The Finance Ministry’s website informs that by the end of 2014, government debt was 36.4 percent of GDP (including the foreign debt – 27.6%, domestic debt – 8.8%). The Ministry says that this figure is far from the critical margin. The government plans to increase the share of domestic debt due to a high share of foreign debt. It is planned that gross debt would be 40% lower in the medium term.
“I have repeatedly said that the new government’s policy was focused on debts accumulation and not on the business development and diversification. It’s not surprising that the government needs other sources to cover obligations. This was reflected in the domestic debt, inflation stimulation. The results of a wrong economic policy are obvious. What should happen else – the country experiences inflation, rising prices, domestic and foreign debt, unfulfilled budget ‘, – says the economic expert Paata Sheshelidze.