After hot allegations, opposition’s demonstrative quit from the Parliament Hall and on the background of vigorous emotions, the Parliament of Georgia accepted so called “Zero Agreement” applauding, which gave an opportunity to Georgian delegation to agree on extension of an external debt to Paris Club.
However, questions concerning this matter are still on top. Is that a huge success really or only the part of draft drawn up by world policy? Anyway, Paris Club has already prepared the scheme on extending the Georgian external debt.
An agreement between government of Georgia and Paris Club was a great success. What does the above agreement stipulate actually? First was the 4% interesting rate Georgia is due to pay next two consecutive years with special allowances. The second part intends to prolong the above allowance for one more year, in case if economic environment in Georgia improves even for a bit. Thus, it challenged difference in opinions. Not only the government of Georgia is suspected of improving economic environment, as IMF, population, and opposition do the same. Third, success is that Georgia will have to settle commercial debts 18 years later and noncommercial – 20 years. Leaving for Paris, Minister for Finance of Georgia took away the different versions of extension. prior, to the opinion of Paris Club members, version is known as the Houston one. Before getting through the pattern, we’d like to point that methods, principles and procedures by Club are not contained in any of concrete documents. Five basic principles club relies on when working are as follows: 1) Paris Club accepts no decision, if all of the donor countries do not agree with (right, what caused ratification of much disputed “Zero Agreement” required by Russia); 2) Each creditor country is prohibited trying to deal with debtors in different to other donors conditions; 3) Club approves extension only in case if IMF supporting program exists in the debtor country; 4) Club member country is prohibited to require the different to others conditions; 5) Each conclusion by Paris Club has to be relied on concrete economic and financial assumption. After stipulating these principles, club negotiates with debtor and finally chooses the relevant pattern. Selected for us Houston one is usually used with countries incomes of which are below the average. This scheme does not imply to remit a debt. Government has spoken much about remission however it did not happen. It was included in the second pattern that is known as Naples one and is usually used, when external debt exceeds GDP. One important nuance within defined the attitude of our government to the second pattern: accepting the Naples pattern, future credits for Georgia would limit. Thereof, the only substitute Georgia handed with is to negotiate with creditor countries and financial organizations and assign the agreement. Georgia is due to payment to Russia, Turkmenistan, Austria, Germany, Japan, China, Armenia, Iran, World Bank and International Monetary Fund. External debt increased within consecutive years as follows: 1,14 billion dollars by 1995 and up to 1,630 billions by the end of 1999. Georgia has to serve each creditor country in equal conditions. As the warrant of the above equity, appears the club itself. However, in current case, Turkmenistan is vs. club decision to remit Georgian external debt of 400 million dollars for gas received in 1993-1994 from Turkmenistan.
Opposition considers crucial for Georgia achieving the deal with Paris Club at the expense of ratifying “Zero Agreement” and releases itself from the responsibility of the above ratification outcome. It blames government in accepting the irrelevant decisions and contemplates this act as if officials care of only own sites.
Nodar Javakhishvili, Parliamentarian: The outcome of Paris meeting could be similar to act, accepted by state without government. Indeed, nothing has happened. Paris Club extended the debt that was due to payment in 2001-2002. The debt we are owing to settle in 2003 is not so crucial, as comprises 40 million GEL. We have to meet it in the same period. And all that practically without extending debt. Indeed, there was no success. Nevertheless, when speaking about agreeing at the expense of “Zero Agreement”, we see that it is the hardest Georgia could face present times. Georgian media has been arguing much that neither journalists nor economists or parliamentarians like me have counted the active part of so called “Zero Agreement”. Moreover, two months before ratifying “Zero Agreement”, President Shevardnadze has announced that Georgia would obtain eight billions, which is tiny if comparing to passive part of 22 millions. Should also be mentioned that before arriving in Paris, President as well as the most of officials were arguing that would do their best to achieve the partial remission of external debt. Thus, returning back, Minster for Finance of Georgia declared at the Committee sitting that the above remission was practically impossible. Doing that, Minister italicized the fact that we have been betrayed before Paris visit to agree with ratification. Seems like our government needs lies to form the public opinion.
To me, Georgia had a chance of remitting the debts. First of all, I have no idea of what government do we have, when it is unable to change 8 billions for 160 millions. I mean Sheverdnadze’s government in this case. We have neither changed Russian debts nor remitted the part of debts. In this case, Nogaideli as well as others in government declares that Georgia was not in need of remitting a debt, as it would limit the future credits. It would be genius for our people if Georgia could receive no more credits. I mean that during Shevardnadze’s governance, none of credits for Georgia was allocated in population’s favour.
As to stretching out the commercial and noncommercial debts for 18-20 years, it is normal for country like us. Period really impresses, I say this as a banker. Entire world works with credits, because good credit is more favourable for loaner then investment. In this case, this rally is crucial for Georgia. Another question is, will this benefit work in favour of development of industry or not? Thus, it does not seem so, as we see how the amounts of not only the State Budget, but also those of World Bank and European Bank credits are embezzled. The above benefit will work for tiny part of government and not population.
Jondi Bagaturia, Chairman of National Democratic Party Faction at Sakrebulo: This was the conclusion against the interests of state and society. The thing was about bestowing to Russia the activities of seven billions gratis. We could have political or financial favour up from this however did nothing. Therefore, it was the decision against statehood.
According to agreement with Paris Club, Georgia has been given two more years for improving economic environment in country. Then we’ll be setting about to work for meeting the debts. What will these two years give? Will we be able to achieve in two years what we could not in much longer period? Does the government have strategy or even a draft for advancing economic growth etc?? List of questions appears endless. Time is on.
Nodar Javakhishvili: Government was free of any responsibilities past two years. Government did not used ten years and I do not understand why should it employ next two years effectively. Despite enough optimism, I am always surprised with that of others. Two years ago we had no IMF programs as well as extended debt. We paid the same as today and could not build country. It is unimaginable how will they change policy and start restoring country from Monday.
Jondi Bagaturia: There is no chance of improving economy in two years. This was only attempt to extend the governing period. Decision was made stipulating not social and state, but private interests. Today’s environment is in absolute regress. This government does not contain elements able to improve anything. Take even a look at State Budget. Does it give a hope? Budget is corrupted and it shows how do the Mafiosi Clans watch State. 75% in this balance belongs to Mafiosi Clans and 25% to State. There does not exist even a trend of bettering. I would be glad of seeing government patriotic, but do not believe. I think our children will have to meet the debts of ours. Thus, it may be our bigger “Brother”. Seems like, next step of urged reverence will be our unification with Russia-Belarus Union.