MANILA, PHILIPPINES - The President of the Asian Development Bank (ADB), Haruhiko Kuroda, today met with Georgian Prime Minister Grigol Mgaloblishvili.
At the meeting, they discussed ADB's recent approval of a $70 million loan for emergency assistance for post-conflict recovery in Georgia.
The recent conflict between Georgia and Russia has led to a sharp contraction in economic growth in 2008, down from a projected 9% to 3.5%, precipitated by a steep decline in domestic and foreign investment. Around 120,000 people have become internally displaced, and 100,000 people have become newly unemployed.
The Government will use the ADB emergency assistance loan to help meet the current budget financing gap arising from revenue shortfalls, a decline in privatization proceeds, new social and rehabilitation expenditures arising from the August conflict, and other essential expenditures.
Over the past five years, Georgia has implemented far-reaching macroeconomic, structural, and sector reforms that helped attract significant foreign direct investments and strengthen public finances. Private sector-led economic growth averaged 10.5% from 2005-2007, reaching 12.4% in 2007.
"The conflict has negatively affected Georgia's economic growth," said Mr. Kuroda. "Action is now needed to ensure the aftershocks of the conflict don't derail economic reforms or deter private investment, which have been at the heart of Georgia's strong economic performance over the past five years."
This loan is the latest in a series of swift responses by ADB to support Georgia in the aftermath of the August crisis. ADB's previous assistance included a $40 million loan to support municipal services across the country and a $30 million loan to a large private bank in Georgia to facilitate on-lending to small and medium enterprises.
The ADB has been working in close coordination with other principal development partners in Georgia, particularly the World Bank, the International Monetary Fund, the European Union, and the United States.