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Mainstream, VOL L, No 41, September 29, 2012

High Risks of Investing in Unstable Georgia

Tuesday 2 October 2012, by Benjamin Todd


Georgia today is a picture of political and economic instability. The risks of investing in the country’s economy are thus extremely high.

Foreign analysts in particular have noted that the perspective of stable development of the Georgian economy in the forseable future is bleak. That is because the country is completely depen-dent on continuous foreign inflows. Hence Georgia has a vast external debt and most of this debt has to be repaid by 2013. It is most unlikely that Tbilisi would be to pay US $ 1 billion (equivalent of 10 per cent of Georgia’s GDP and 25 per cent of its state budget) without foreign aid.

Almost all the country’s assets are already privatised or sold out, the cost of foodstuff imports is four times more than incomes from exports. The total external debt in 2011 grew by 13.5 per cent and amounted to US $ 11 billion 167 million (which equals 77 per cent of the country’s real GDP).

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