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GEORGIA



 

In-depth Business Intelligence

Key Economic Data
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 3,937 3,324 3,100 126
         
GNI per capita
 US $ 830 650 590 145
Ranking is given out of 208 nations - (data from the World Bank)

Books on Georgia

REPUBLICAN REFERENCE

Area (sq.km)
69,700 

Population 
4,693,892 

Principal 
ethnic groups 
Georgians 68.8%
Armenians 9% 
Russians 7.4%

Capital 
Tbilisi 

Currency 
Lari

President 
Mikhail Saakashvili



Update No: 296 - (26/08/05)

The Kiev-Tbilisi axis
The Georgians are revelling in their new status as a member of the Free World. Their president, Mikhail Saakashvili, is a world-renowned figure. It was the Rose Revolution he led in the autumn of 2003 that set off the even more momentous revolution in Ukraine last year, which then sparked off the one in Kyrgyzstan. But the Georgians were the prime movers in this wave of post-Soviet democratisation.
In mid-August Saakashvli went to Kiev to cement ties with President Viktor Yushchenko of Ukraine. They devised what the Georgian leader calls 'the Kiev Club for Democracy.' He says: "The purpose of the initiative is to provide an open and forward-looking forum for the new democracies of our region to share our experiences, learn from one another and better coordinate our efforts to promote democratic reform. We are looking to tie together democracies from the Baltic, Black Sea and Caucasus Regions." 
It is not difficult to imagine how this clarion call is heard in the Kremlin. Convinced that the West and its NGOs were behind the nefarious events in Georgia, Ukraine and Kyrgyzstan, it can now see Russia being increasingly encircled by former Soviet states taking the Western path, an inexorable process it can do nothing to stem.

Russian bases to depart?
The Kremlin at least seems to be aware that military activities are not the way to do so. It is in principle agreeing to remove its bases in Georgia some time soon.
The withdrawal of Russian bases, a longstanding dream for the Georgians, has great political importance not only for Georgia, but also for Saakashvili and his party. His lavish pre-election promises, including the quick removal of the Russian bases, remain unfulfilled. Moscow's delay tactics likely are intended to hurt Saakashvili politically. Should Saakashvili be successful and have the bases removed by the end of 2007, it would give him and his party a tremendous asset going into the 2008 parliamentary and 2009 presidential elections. If they fail to do so the opposite may be true.
Moscow has basically agreed to their withdrawal, under pressure from Washington and persuasion by the Europeans. After all is it sensible for the Russians to contemplate another Caucasus war? They have enough on their plate in Chechnya as it is.
It appears that Tbilisi's bold attitude to have the Russian bases removed from Georgia by the end of 2007 is backed by more than Georgia's own resources. If left to face Russia alone, Tbilisi, given its heavy dependence on Russian energy-carriers and the great number of Georgian guest workers in Russia, could hardly afford such a bold stance regarding the military bases. The type of concessions, if any, that Moscow might make about the terms of the pullout could indicate how much the Western community has pressured Russia on this issue. 

IMF extends 3rd loan tranche to Georgia; negotiation on PRGF programme bears fruit 
Full cooperation with the West on economic issues is also the order of the day. The International Monetary Fund (IMF) recently extended to Georgia the third tranche of a loan for 14 million liras, or 20.4 million Euro, under a three-year Poverty Reduction and Growth Facility (PRGF) programme.
The Georgian national bank received the money on August 5th. The third tranche, like the previous two, will be used to fulfil the bank's foreign currency reserves, which, including the tranche, are currently at 444.6 million Euro, the source added. Georgia is expected to get another PRGF loan by the end of the year. 
The executive board of the IMF in fact recently completed the second review of Georgia's performance under the three-year programme supported by the PRGF, the IMF said in a statement.
In completing the review, the board approved the authorities' request for a waiver for the non-observance of an end-December 2004 structural performance criterion on amendments to the budget systems law, and the conversion of the indicative target on reserve money into a performance criterion. The executive board approved the PRGF arrangement on June 4, 2004 for an amount equivalent to SDR 98 million (about US$141.6 million). Completion of the second review will release an SDR 14 million tranche, bringing total disbursements under the arrangement to SDR 42 million (about US$60.7 million). Kato said the government has made progress in structural reforms, including in revenue administration, the promotion of transparency in government operations, and a sweeping simplification of licences and permits to facilitate private sector activities. 
"It is important now to also make progress in areas where measures were delayed, including parliamentary approval of amendments to the budget systems law and liberalisation of the trade regime," he said. He noted that the thrust of the authorities' economic programme for the remainder of 2005 is to maintain macroeconomic stability and keep inflation at single-digit rates. 
"The government will also continue to pursue reforms aimed at enhancing growth prospects and alleviating poverty, and it plans to institutionalise and further strengthen its anti-corruption strategy. Public spending priorities for 2005 seek to remove long-standing obstacles to growth, especially in infrastructure and the energy sector," he said.
"Going forward, higher government spending against the backdrop of sizable capital inflows will require skilful coordination between the fiscal and monetary authorities. To ensure low inflation, the government has provided welcome assurances that discretionary spending will be managed carefully. If inflationary pressures intensify during the second half of the year, the central bank should stand ready to tighten the monetary stance beyond the limits envisaged in the programme," Kato said.
The PRGF is the IMF's low-cost facility, which carries an annual interest rate of 0.5 per cent, and is repayable over 10 years with a five and a half year grace period on principal payments. PRGF-supported programmes are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a Poverty Reduction Strategy Paper. This is intended to ensure that each PRGF-supported programme is consistent with a comprehensive framework for macroeconomic, structural, and social policies, to foster growth and reduction of poverty.

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ENERGY

Gilauri: Georgia to diversify gas supplies 


Georgian Energy Minister, Nika Gilauri, recently announced that Georgia will soon begin talks with Kazakstan on supplying natural gas. Georgia's energy ministry has planned to diversify the country's gas supplies, according to Interfax News Agency. 
He said that the Baku-Tbilisi-Erzurum pipeline would also provide another source of gas and Georgia was already holding talks with the consortium behind the project to increase the amount of gas it will receive under the existing contract. Gilauri explained that the demand for gas in Georgia would grow considerably over the coming years and there would be a need for several alternative supplies. 

Azerbaijan, Georgia ink natural gas deal 

Georgian Prime Minister, Zurab Noghaideli, and Azerbaijani President, Ilham Aliev, signed an agreement in Baku recently according to which Azerbaijan will send new stocks of natural gas to Georgia, New Europe reported. 
The details of the agreement will not be worked out until August at which time Aliev will announce the amount of Azerbaijani natural gas that Georgia will receive in the winter.
During the talks, the most important item on the agenda was the search for an alternative to Russian natural gas and Georgia preferred Azerbaijan as the ideal partner. 
At the same meeting, there was another discussion on whether Georgia will get an additional two billion cubic metres of natural gas from the Shah Deniz-Erzrumi natural gas pipeline, according to the reports.

Georgia to transport Iranian gas to Europe 

Georgia will facilitate projects proposed by Ukraine and the European Union to transport Iranian gas to Europe, Georgian Energy Minister, Nika Gilauri, said on August 8th, Interfax News Agency reported.
Gilauri said the package of proposals that Britain, France and Germany submitted to Georgia on the EU's behalf on August 5 included the construction of a trunk pipeline to ship Iranian gas to Europe, provided that Tehran discontinues its nuclear programmes.
Ukraine submitted two options to Iran for transporting Iranian gas to Europe at the beginning of July. Ukraine's proposals, like the EU's, involve routing the gas via Georgia, using either an Iran-Armenia-Georgia-Russia-Ukraine-Europe pipeline or an Iran-Armenia-Georgia-Black Sea-Ukraine-Europe route. "We'd welcome any of these projects and do all we can to facilitate them," Gilauri said. "This would be an additional source of gas for Georgia and bolster the country's energy security," he added. Asked whether the United States might respond negatively to these projects, Gilauri said the US government had not yet made any comment. "If a question arises, we will definitely consider it," he said. 

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FINANCIAL NEWS

Georgia trade deficit increases 25.6% in H1 

Georgia's trade deficit in January-June amounted to 586.2m Euro, up 25.6 per cent from 466.8m Euro a year earlier, a source in the Georgian statistics department told Interfax News Agency reported recently. 
Georgian trade in the first half reached 1.335bn Euro (up 25.4 per cent). Exports increased 26.1 per cent to 374.2m Euro, with imports up 25.1 per cent to 960.4m Euro. The CIS accounted for 41.5 per cent of Georgia's trade in the first half (39.7 per cent in the first half of 2004), or 46.32 per cent of exports (52.8 per cent) and 39.8 per cent of imports (34.7 per cent). Russia is still Georgia's main trading partner, accounting for 17 per cent of trade. Georgia's main export is iron and steel scrap (14 per cent), and its main import is oil and oil products (12.8 per cent). 

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TELECOMMUNICATIONS

New services for Georgian mobile users unveiled 

The Georgian telecommunications company Geocell recently announced new services that were branded as Geo-msxneli, Geo-zumer and Geo-kadr, Interfax News Agency reported.
These services which were described by company officials as innovative and affordable, were presented for users as part of a summer promotion, reported Interfax. During the presentation ceremony, the chairman of the Georgian national commission on communications, Dimitri Kitoshvili, praised the telecom industry for introducing new services and technology. Also Magticom introduced a new service for its customers. "I hope that Geocell and other communications companies will continue this tendency and present more new services this summer," Kitoshvili said. 
The service Geo-kadr allows customers to send photos taken by their mobiles to special numbers at Konika offices where they will be automatically printed. The company stated that the Geo-zumer service is similar to a very popular service in South-Eastern Asia. According to Geocell, the company is the first to introduce it to CIS countries. It enables customers to replace the standard ringing tone by a song or sound, which callers hear when calling the individual. The cost of one zumer is one lira. The service Geo-Mxsneli was described by the manager of Geocell's marketing communications department Maka Neidze as a saving tool for customers with no money on their account.

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