ADB's Work in Georgia

Located at the crossroads of Europe and Asia, Georgia has become an important node for regional trade flows. 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 is expected to support Georgia’s development and reduce 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.

ADB has partnered with Georgia since 2007 and is one of the country’s largest multilateral development partners. Over $2.8 billion has been approved for Georgia’s development since 2007. This includes $1.4 billion from regular ordinary capital resources (OCR), $902 million from concessional OCR, $455 million in nonsovereign lending, $17 million in technical assistance, and trade finance.

Cumulative loan disbursements to Georgia amount to $1.59 billion. These were financed by regular and concessional OCR.

The Road Corridor Investment Program constructs a 28-kilometer, two-lane bypass road skirting Kobuleti.

The $80 million Secondary Road Improvement Project includes 50 km of road rehabilitation to improve access for both residents and tourists in the Kharagauli district. The $228 million Batumi Bypass Road Project is ADB’s first cofinanced project in Georgia and includes a new two-lane bypass road of 14.3 km skirting Batumi, a Black Sea resort and port city, as well as performance-based maintenance contracts for 200 km of international highways and secondary roads. Project savings have been repurposed to construct Poti bridge and Bakurtsikhe–Tsnori to further improve connectivity and commercial traffic routes in north and eastern Georgia. In 2018, ADB approved $300 million for the East–West Highway (Khevi–Ubisa Section) Improvement Project, including the construction of a 12 km four-lane highway sector and the strengthening of the institutional capacity of the Roads Department. Under the project, $1.05 billion parallel cofinancing has been mobilized with development partners.

The $300 million Sustainable Urban Transport Investment Program runs until July 2020. It is revitalizing Georgia’s public transport network and developing efficient transport systems in key urban areas of the country, including the newly opened University Metro station inaugurated in October 2016. The $500 million Urban Services Improvement Investment Program runs until March 2021. It is delivering safe water and sanitation to thirteen towns and regional cities across Georgia.

Tbilisi subway.

Meanwhile, the $48 million Regional Power Transmission Enhancement Project was completed in 2016, providing four new and upgraded power substations to reinforce Georgia’s energy grid. Between 2014 and 2016, ADB also financed a $250 million program to help strengthen Georgia’s public debt and budget management, reform the pension system, develop capital markets, and promote private investment to help create jobs and provide better social protection to families.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments from ADB’s own funds (in equity and direct loans) in 2018 amounted to $3.14 billion for 32 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2018, ADB mobilized $3.17 billion of long-term cofinancing and $3.99 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $12.7 billion as of 31 December 2018.

Cofinancing

ADB began cofinancing operations in Georgia in 2010. Since then, cumulative direct value-added official cofinancing commitments for Georgia have amounted to $1.35 billion for four investment projects and $2.25 million for two technical assistance projects. Cumulative direct value-added commercial cofinancing for Georgia has amounted to $131.33 million for two investment projects.

In 2018, Georgia received $1.05 billion in loan cofinancing from the World Bank, Japan International Cooperation Agency, and European Investment Bank for the East-West Highway (Khevi-Ubisa Section) Improvement.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

Disparities in income levels and employment opportunities exist between different regions of Georgia, especially between rural and urban areas. One key to addressing these disparities is expanding access to finance and economic opportunities in peri-urban and rural areas. ADB has been helping Georgia’s micro, small, and medium-sized enterprises—considered long-term drivers of sustainable growth—to better access business development support and financing. Through the bank’s sovereign and nonsovereign operations, over 14,000 enterprises have been supported with startup grants and business loans. ADB will continue to support micro, small and mediumsized enterprises, especially outside Tbilisi, to reduce regional poverty and disparities.

The high unemployment rate in Georgia is a reflection of the skills mismatch in the labor market. ADB will support government’s education sector reforms in collaboration with other development partners, to better address skills mismatch and enhance labor productivity.

The challenge for Georgia is to leverage its facilitating infrastructure and bilateral trade agreements to better integrate in global value chains. ADB will continue to support Georgia in regional cooperation and integration.

Future Directions

ADB will provide assistance to create economic corridors within Georgia and for the Caucasus region. The bank has united its many and varied competencies—known as taking the “One ADB” approach—for the Anaklia Regional Development Initiative, a $3 billion flagship project of the government and ADB in Georgia and the Caucasus.

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.

ADB will also support initiatives to deliver public infrastructure through public–private partnerships. The bank has established within its Georgia Resident Mission a regional hub of its private sector department to provide integrated development solutions within the country and across the region.

The bank will continue to support inclusive growth in Georgia through the Livable Cities Development Investment Program and the Education Sector Development Program.