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How Much Countries Owe – The Fiscal Condition of Georgia and Its Partners in 2019, and Previous Years

When a country lacks money for some projects, it takes a loan. Such loans are called state debts. There are numerous examples worldwide of when a country fails to pay the loan and announces default.

The very default created the preconditions for freezing the bank deposits of ordinary citizens in Argentina in 2001. As a result, near anarchy and political tensions hit the country. To appraise what a threatens a country when they expect this, or that size of loans.

Specialists apply various indicators but, the debt-to-GDP ratio is a key indicator. Based on international prices, in order to maintain economic stability in developed countries, debt must not exceed 60% ratio of GDP, while the figure makes up 40%-50% for the developing economies. As of February 2019, Georgia’s external debts amounted to 5.448 billion USD.

Georgia owes 3.824 billion USD to multilateral creditors, and 954 million USD to bilateral creditors. Debts from Eurobonds totaled 500 million USD. The list of Georgia’s bilateral creditors includes 17 countries, including our neighboring countries: Armenia (8.305 million USD), Azerbaijan (7.435 million USD), Turkey (14.275 million USD), and Russia (58.773 million USD). According to preliminary reports, at the end of 2018 the debt-to-GDP ratio in Georgia was at 42.1%. This figure makes up 41.1% in Azerbaijan, 58.3% in Armenia. Russia has a very good indicator on this – 19.43%. The figure accounts for 29% in Turkey.

According to the Finance Ministry of Armenia, as of December 31, 2018, Armenia’s external debts exceeded 6.922 billion USD, while in Azerbaijan the state debts hit 9.338 billion USD as of January 1 , 2019. According to the current plan, Georgia’s state debt-to-GDP ratio must be reduced to 40.6% by 2012. According to the International Monetary Fund (IMF), Japan has the heaviest state debt burden, where the debt-to-GDP ratio amounts to 250%.

The ratio exceeds 100% in Italy (131.7%), Portugal (127%), the USA (107.48%) and Belgium (106.5%). It is interesting that the biggest debt worldwide is recorded in the USA, the country with the strongest economy. According to the 2019 indicators, the state external debts of the USA reached 22 trillion USD, while even in 2017 the state external debts of the USA was only 17 trillion USD. According to the US Central Intelligence Agency, the major external debt was registered in EU at 29 trillion USD, including the major external debt among EU countries was registered in Great Britain at more than 8 trillion USD.

The figure exceeded 5 trillion USD in France and Germany. As for Georgia, the external debt indicator made up 17.2 billion USD in 2017. Surprisingly, there are countries with no debts, including Brunei, Macao and Palau, as well as Lichtenstein and Andorra.