Georgia

• Total external debt: $1.9 billion
• Total external debt payments: gives $187 million each year to the rich world in debt payments.
• Population: 4.5 million
• Percentage of adults who can read and write: 100%
• Average life expectancy: 70.7 years
• HIV prevalence: 0.2%
• Total health spending: 2.4% of GDP (2003)
• Total spending on debt service payments: 2.9% of GDP
• Annual GDP: $6.4 billion
  
  

Background
Georgia was historically an object of rivalry between Persia, Turkey and Russia, before being eventually annexed by Russia in the 19th century. It emerged from the Soviet Union in 1991 and has found itself again at the centre of geopolitical rivalry, this time between Russia and the USA, which has invested heavily in the controversial Baku-Tbilisi-Ceyhan pipeline from the Caspian to the Mediterranean seas.

On independence Georgians voted overwhelmingly for nationalist leader Zviad Gamsakhurdia. However, he was overthrown by militias in 1992, and former Soviet Foreign Minister Eduard Shevardnadze was installed as president for 11 years. He was forced to resign in the 2004 ‘Rose Revolution’ whose leader, Mikhail Saakashvili, became President. Saakashvili faced a wave of protests himself in late-2007, when former defence minister Irakli Okruashvili accused him of corruption and of plotting a murder. Saakashvili imposed a state of emergency and brought forward presidential elections to 5 January 2008, in which he won an outright victory with more than 50% of the vote.

Where has the debt come from?
At independence Georgia lost the cheap energy supply to which it had access in the Soviet period. The rupturing of trading ties caused the economy to nose-dive. Moreover relations with Russia have deteriorated and Russia has sharply increased the cost of energy, while banning imports of Georgian wine and mineral water, for what the Georgian authorities insist are purely political reasons. There have also been costly periods of internal conflict with breakaway regions in the country. Finally, the Shevardnadze presidency, which lasted from 1992 to 2004, was marked by poverty, crime and corruption.

Debt cancellation status
Georgia is officially classed as a lower middle-income country by the World Bank. It is therefore not eligible for the Heavily Indebted Poor Countries initiative or the Multilateral Debt Relief Initiative. This does not take into account the size of Georgia’s external debt in comparison to the value of exports, its domestic debt or what he country needs to spend on tackling poverty.

The New Economics Foundation calculates that Georgia requires 100% debt cancellation in order for the government to meet the basic needs of its citizens, such as health, education and infrastructure, without taxing those living below an ethical poverty line of $3 a day.

Last updated: April 2008