Georgia should create financing opportunities other than banks, according to the World Bank’s (WB) ‘Trade in Transition’ Europe and Central Asia (ECA) Economic Update made public by Hans Timmer, WB’s chief economist for Europe and Central Asia, during a video conference in Tbilisi, Georgia May 11.
“I am not sure that a lot of credit supply at the moment is the most important mechanism. It is important to create other financing opportunities. Instead of relying on banks, it would be much better if start-ups have access to venture capital,” he said, adding that it is not necessary to increase the volume of bank lending.
WB experts believe that key macroeconomic vulnerabilities faced by Georgia include risks to external and fiscal sustainability.
“Continued disturbance in some of Georgia’s main export markets and longer-term stagnation in the EU could further impact external performance,” said the report. “On the fiscal front, lower corporate tax revenues, high social spending commitments and plans to significantly ramp up capital spending pose risks to the plans for fiscal consolidation.”
In addition, contingent liabilities arising from state owned enterprises and the existing power purchase agreements with hydropower companies also pose potential risks to fiscal sustainability, WB experts believe.