The FINANCIAL -- The Asian Development Bank (ADB) has approved a $75 million loan to assist government reforms aimed at increasing savings and domestic resources and creating investment opportunities to address inequality of income.
“The program will be supporting the government’s agenda to make more money available for social protection programs and small businesses in the face of economic contraction caused by economic slowdown in the region,” said Tariq Niazi, Principal Public Management Specialist in ADB’s Central and West Asia Department.
Georgia’s economy grew at an annual average rate of 5.8% in 2004-2014, but the slowdown in the Russian Federation led the government to cut its growth projection for 2015 by more than half to 2%
The program will further improve the government’s debt management capacity by strengthening processes; increasing transparency; and introducing a medium-term debt management strategy, according to ADB.
“This will help develop the domestic debt market to facilitate expansion of Georgian bond and capital markets,” said Kathie Julian, ADB’s Country Director in Georgia. “It will also boost fiscal risk management by implementing a strategy to deal with different types of risks and to better manage and assess contingent liabilities.”
To generate more domestic savings, the program introduces a supplementary pensions system based on defined contributions. This will streamline the existing pension system—which currently accounts for almost 20% of public expenditure but barely provides a lifeline for many elderly people—so it is affordable for both individuals and society, and fiscally sustainable in the long term.
Finally, the program will enhance access to finance for micro, small, and medium-sized enterprises, especially those run and managed by women. A Gender Action Plan will ensure equal opportunities for women in economic activities, and provide business training for future female entrepreneurs.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion. As of 2014, ADB assistance to Georgia totaled more than $1.6 billion, including approved loans and technical assistance grants.