|
|
|
|
|
|
|
|
|
|
  |
 |
  |
GEORGIA
>> Regional Overview >> Georgia Overview 
Introduction
Strengthening democracy and open markets in Georgia serves long-term U.S. regional, economic and humanitarian interests. As the western portal to the Great Silk Road and the newest conduit of Caspian oil to world markets, Georgia has become a strategic gateway of energy and trade routes linking East and West. With a vibrant, free-market democracy, Georgia can become a stabilizing force in the region.
Two primary themes establish the underlying basis for U. S. foreign policy objectives in Georgia: (1) the requirement for a politically and economically stable Caucasus region at a geographic crossroads that borders states with potential volatility, such as Russia and Iran; and (2) the vital position of Georgia as a Caucasus transit country of oil and gas for the United States and the West.
Achieving stability goes to the core of Georgia’s need to restore its territorial integrity, strengthen its sovereign status, and build a nation with socio-economic and political standa pian Basin oil and Transcaucasus gas transport to western markets, the importance of a stable Georgia cannot be overstated. Georgia maintains a policy of openness to the West, and actively seeks closer and stronger formal ties with the United States and Europe.
The Development Challenge
Since independence in 1991, Georgia has endured civil war, armed conflict with the breakaway region of Abkhazia, separatist movements in Adjara and South Ossetia, several assassination attempts on President Shevardnadze, and economic devastation following the Soviet Union breakup. Recent difficulties have included the conflict in bordering Chechnya, the Russian economic crisis, a severe drought, a low growth economy, and a budget crisis caused by falling revenues.
Despite these problems, Georgia continues to build the foundation for an open market and western-style democracy in partnership with international donors. The Government of Georgia has affirmed its western orientation by regular passage of legislation in economic, legal, and fiscal policy reform, and the strengthening of democratic institutions. With support from the United States and other donors, notable headway was made this past year. Major accomplishments include accession to the World Trade Organization, the Supsa pipeline opening, land privatization, relatively free and democratic parliamentary elections last October, and qualifying exams for the judiciary. Formidable challenges remain, however. The international community and the Georgians themselves see endemic corruption, a lack of fiscal discipline, and regional separatism as serious obstructions to building a more democratic and prosperous state.
During the past year, USAID reassessed the assistance environment in Georgia and developed a new four-year program strategy. Several important problems were identified during that exercise. Unemployment, under-employment and constraints on credit conspire to keep living standards low, while state social programs are inadequate to address the population’s needs, especially in the regions outside the capital city. Civil service reform is needed to introduce more responsive and effective government professionalism. Health care and education do not receive sufficient human or monetary resources to address the basic needs of the population. Without improvements in tax and customs collection rates, many reforms passed into law will be rendered ineffectual. The pace of privatization and restructuring of state-owned enterprises must increase to encourage more foreign investors to enter the Georgian market. Pervasive corruption continues to seriously undermine Georgia’s development efforts and threatens its status as a sovereign, democratic nation. In order to establish a stronger market economy and a better standard of living for its citizenry, the Government of Georgia must address these and other urgent issues.
With backing from the International Monetary Fund (IMF) and the World Bank, and technical support from the United States and other donors, significant progress has been made in economic reform. The largest state-owned electrical distribution company in the country was privatized, the national currency was liberalized, and income-generating excise taxes have been introduced on cigarettes and alcohol products. Consequently, inflation has been stabilized, GDP has grown four years in a row, and the trade deficit has been reduced. USAID and other donors have also worked successfully with Georgian counterparts to effect democratic reforms, resulting in newly qualified judges appointed to the bench, the first local government elections held, and more active civic participation through political parties, independent media and the non-governmental organizations (NGOs).
USAID works closely with the Government of Georgia in the areas of legal and regulatory reform, anti-corruption, economic and energy sector restructuring, and tax and fiscal reform, and is the lead donor in democracy-related assistance. The Government of Georgia has cited USAID food and fuel programs as crucial assistance enabling the survival of Georgia as an independent country. Immunization levels have been restored to minimally acceptable levels, and the needs of internally displaced persons for shelter and other basics have been addressed. USAID programs strive for more government transparency and fairness by working with the Government of Georgia, and private and NGO sectors to establish a system of checks and balances, including open and fair local and national elections, independent regulatory bodies, and a transparent budgeting system.
External Debt and U.S. Debt Assistance
The IMF reports that Georgia’s public sector external debt has remained just below 30% of GDP since 1996, indicating that public sector debt is not a problem at this time. Approximately 40% of Georgia’s foreign debt is with the IMF, World Bank, and the European Bank for Reconstruction and Development. The remaining 60% of foreign debt is bilateral, mostly with Russia, Turkey, Turkmenistan, Germany, and Austria.
Other Donors
The four largest donors to Georgia are the World Bank, the United States, The European Bank for Reconstruction and Development (EBRD), and the European Union (EU). Since 1993, U.S. assistance to these programs has totaled approximately $441 million. The World Bank has provided approximately $509 million to Georgia. World Bank assistance includes structural adjustment credits, agricultural development loans, assistance to the health and power sectors, and technical assistance to strengthen the private sector. USAID works closely with the World Bank and supports its economic reform conditionalities. EBRD provides direct funding for the power and transport sectors and in support of private sector development. The EU's technical assistance program for the Commonwealth of Independent States has focused on the rehabilitation of transportation infrastructure, strengthening the private sector and food security. Since joining the IMF in 1992, Georgia has borrowed about $280 million through annual structural adjustment loans. USAID provides technical assistance to the Ministry of Finance and works closely with the IMF to address fiscal policy issues.
Country Background Information Resources CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
 |
|||
Last Updated on: December 12, 2000 |
