Paris Club to decide Georgia debts
By M. Alkhazashvili
messenger.com.ge
Friday, July 16, 2004, #132 (0656)
The Ministry of Finance is trying hard to reschedule Georgia’s
external debts. Minister Zurab Noghaideli is in Paris where the issue
of restructuring Georgian debts is to be decided Thursday. The Paris
Club agreed to reexamine the issue after the IMF renewed its programs
with Georgia in early June.
Considering that on January 30, 2004 Georgia’s external debt was USD
1.851 billion, the structure of repaying these debts is a major issue
for the new government.
Servicing this debts is a huge burden for the Georgia’s economy. This
year GEL 189 million have been allocated for debt repayments. From
this amount GEL 88.3 million is for covering interests whereas GEL 101
million goes to pay off the principle as well.
The government hopes that the Paris Club will be positive and give the
Georgian budget serious relief. Georgia has 15 creditor countries and
Georgia owes to them USD 751 million. The remaining debt goes to
international financial organizations and most of them are long term
credits whose restructuring is not yet on the agenda.
In Paris, Noghaidelli will try to persuade the governments of
Azerbaijan, Armenia, China, Iran, Kazakhstan, Austria, Russia, Turkey,
United States and Netherlands to restructure Georgia’s debts. The
restructuring concerns the amounts to be paid over 2003-2004 and
equals more than USD 196 million.
Georgia approached Paris Club first in 1999. It was decided then that
a restructuring would be allowed for debts taken before November 1999;
this included debts to CIS countries, Austria, Turkey, Iran, China,
Netherlands and United States. During the two years of the
consolidation period 2001-2003 Georgia was in fact free from
payment. The amount accumulated during the consolidation period is
payable from 2005.
Out of debts to individual governments, Georgia’s biggest creditor is
Turkmenistan. These debts were accumulated mainly in 1993-1994 for
consumed natural gas. According to the 1996 agreement, the debt was
fixed at USD 393.5 million. Turkmenistan has not agree to restructure
the debts but on the other hand it agrees to receive payment in
kind. Several Georgian enterprises are supplying Turkmenistan with
their products or services. Until today, these enterprises have
already covered USD 151.9 million in principle and USD 28.9 million in
penalties. For these activities, the enterprises covering Georgia’s
debts are paid back by the Georgian budget through the special
schedule.
In terms of Georgia’s international standing, the positive judgment of
the Paris Club will do a great deal to alleviate the country’s debt
burden. Meeting under the auspices of the World Bank and the European
Commission in June, international donors from 31 countries and 12
organizations, noted that “solid progress is expected to be made in
the July Paris Club meeting.” Without further restructuring of
Georgia’s external debt through the Paris Club, the donors stated,
“viability in public finances would not be possible.”