Before coming to power Minister of Finance negatively assessed the growth of public debt and saw need for “belt-tightening”. Since coming to power, in spite of the fact that the practice of taking out loans continues, Khaduri assures that the debt sustainability is maintained.
In 2010, the Finance Minister said that there was no need for a debt in order to implement some projects. In his words, this would make debt burden even heavier. It is true, a loan may be long-term, but our foreign debt will amount to 5 billion, which is quite a lot for such a small country.
Georgia’s foreign debt as of June 30, 2011, totals USD 4.18 billion, which is 20.7% more compared to the same period in 2010.
At the same time, the Minister said that despite a self-restraint, which is constitutionally defined and the government debt should not exceed 60% of the total GDP, Georgia is still facing serious challenges , in recent years the debt growth rate exceeds the GDP growth rate which may force the government to make a decision on “belt-tightening” and even freezing the debts.
The trouble is that in spite of so much debt, the government of Georgia still plans to appeal to the creditors for additional debts. This is a disaster for the country with such solvency, – said the Minister.
In his words, 2012 was a year of parliamentary elections and 2013 – a year before presidential elections that increased risk of social and populist expenditures in the budget.
He also noted that in developed countries debts are rarely divided into internal and external.
“In these countries, financial markets are open, and both residents and foreigners can buy government securities. Unfortunately, Georgia is not a developed country,”- said the oppositionist Nodar Khaduri.
However, in 2013 Nodar Khaduri announced as Finance Minister that he would begin to repay the debts, and their volume decreased by GEL 200 mln, but in order to cover the budget deficit for 2014, the state took a new debt in the amount of GEL 600 million.
In December 2013 the Minister said that in 2014 the government would also take another debt that would be spent on infrastructure projects.
“This debt will have a specific direction. We will continue to construct the East-West highway, as well as to implement infrastructure projects, “- said Finance Minister Nodar Khaduri.
In late 2013, he also said that despite taking new debts, the government would cover more old debts than take new ones – in particular, in 2013-2014 the Ministry of Finance planned to repay debts in the amount of GEL 1.7 billion.
Despite this, the Minister states that debt sustainability is maintained.
In 2015, the Ministry of Finance intends to take domestic debt in the amount of GEL 400 million and external debt in the amount of GEL 1.04 billion.
Like in 2013, this time the Minister explains this by the need for implementation of long-term projects.