ADB's Work in Georgia

Located at the crossroads of Europe and Asia, Georgia is an important node for regional trade flows and has a unique geographic advantage for market integration with the rest of the world, including the European Union.

The Government of Georgia has taken steps to deregulate the economy, streamline bureaucracy, and combat corruption. Committed to an inclusive growth process, the government has considerably increased social sector funding and made public expenditure transparent. Solid economic growth driven by the private sector has supported Georgia's development and reduced the country's poverty and unemployment.

Old Town (Altstadt) is the historic city center of Tbilisi – Georgia's capital – boasting of old architecture, cobblestoned streets, and great finds.

The coronavirus disease (COVID-19) pandemic has had a significant impact on the Georgian economy, with disruptions to foreign inflows from trade and tourism and the drain on public finances needed for stimulus measures. However, Georgia’s steadfast commitment to sustainable, inclusive, and resilient growth positions it well for recovery.

The Asian Development Bank (ADB) began its partnership with Georgia in 2007 and is one of the country’s largest multilateral development partners. ADB has committed loans worth $3.92 billion and technical assistance projects worth $28.9 million for Georgia.

In line with its country partnership strategy for Georgia, which envisages extensive support for education, ADB also committed $72 million for the Modern Skills for Better Jobs Sector Development Program in 2020—the bank’s first loan in the country’s education sector. The program is helping increase labor productivity by improving access to quality vocational education and training, promoting job creation in high-value sectors, and supporting private sector participation in skills training.

From 2017 to 2020, ADB committed more than $1.3 billion to Georgia’s strategic transport corridor and secondary road projects. These investments are helping to build about 61 kilometers (km) of the East–West Highway; construct 23 km of climate-resilient highway along the North–South Corridor; construct a 14.3 km bypass road skirting the port and resort city of Batumi; and rehabilitate a 50 km secondary road to improve access for residents and tourists in the Kharagauli district. Under these ongoing projects, ADB has mobilized an additional $1.2 billion in cofinancing. Through these investments, ADB has also helped strengthen the institutional capacity of the Roads Department in project implementation and asset management.

A new 23-km highway bypassing the Jvari Pass in northeast Georgia will enhance road safety and boost the country's position as a regional trade hub and tourist destination.

From 2011 to 2016, ADB committed $500 million to the Urban Services Improvement Investment Program and then $157 million in 2020 for the Sustainable Water Supply and Sanitation Sector Development Program. These two programs will deliver safe water and sanitation to 12 cities and towns across the country, while enabling corporatization and modernization of Georgia’s United Water Supply Company.

Among other achievements over the past decade, ADB has helped provide four new and upgraded power substations to reinforce the energy grid, supported the strengthening of the country’s public debt and budget management, backed reforms to the pension system, helped develop capital markets, and promoted private investment to create jobs and provide better social protection to families.

Tbilisi subway.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments in loans and equity investments from ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020.

In 2020, ADB played an active role as anchor investor of the first-ever $240 million green bond issuance in Georgia by Georgia Global Utilities JSC with $20 million investment from ADB. The bond proceeds will help upgrade water supply and sanitation in Tbilisi and nearby municipalities. Total outstanding balances and commitments of ADB’s nonsovereign transactions in the country as of 31 December 2020 was $240.7 million, representing 2% of ADB’s total nonsovereign portfolio.

Financing Partnerships

Financing partnerships enable ADB’s financing partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade and Supply Chain Finance Program and Microfinance Program.

ADB began cofinancing operations in Georgia in 2010. Since then, sovereign cofinancing commitments for Georgia have amounted to $1.04 billion for four investment projects and $2.48 million for three technical assistance projects. Non-sovereign cofinancing for Georgia has amounted to $289.51 million for four investment projects.

A summary of cofinanced projects is available at Georgia: Cofinancing.

Operational Challenges

Inclusive growth and parity between rural and urban areas remain key development goals for Georgia, particularly in view of the severe impacts of the COVID-19 pandemic on the country’s economy and its subdued growth prospects.

On a broader scale, pandemic-related assistance will support Georgia’s inclusive growth and lay a foundation for postpandemic economic diversification.

Old woman sells pottery along the roadside in Kutaisi, Georgia.

Future Directions

ADB will continue to help Georgia respond to the pandemic and build a foundation for post-crisis growth that is more resilient and inclusive. A greater focus on policies and institutional strengthening will help make public services more efficient and set the stage for private sector participation.

ADB will help unlock Georgia’s potential for agribusiness, tourism, and regional trade, and to address unemployment and growing skills gaps. The bank will seek to finance climate-resilient solutions in water resource management, irrigation, urban transport, and infrastructure to drive increased green energy exports to neighboring countries. ADB will also support the development of capital markets, improvements in state-owned enterprises, and active involvement of the private sector, including small and medium-sized enterprises. ADB investments will incorporate gender equality, green development, and innovation as key elements of business sector development.