On 14 February 2023, the Power of the People movement initiated a draft law on the Transparency of Foreign Influence. According to the draft law, the notion of an “agent of foreign influence” was to be introduced and a registrar of “agents of foreign influence” was to be created where all those non-commercial legal entities and media organisations which receive more than 20% of their non-profit income from foreign powers would have been registered. As a result of mass protest rallies, the Parliament of Georgia dropped the draft law at the second reading.
Non-government sectors and media outlets are not the only beneficiaries of the foreign funding in Georgia. The state sector is also a recipient and many important projects in Georgia were or are carried out by the financial support of foreign international organisations.
Some part of Georgia’s annual budget is also filled by foreign credits and grants. According to the 2023 budget plan, total revenues are GEL 21,914 million. Of this amount, grants amount to GEL 280 million, loans are GEL 3.644 million and foreign debt is GEL 2,244 million. According to this year’s budget plan, foreign credits and grants account for 11.5% of the revenues. In regard to the share of foreign credits and grants in the Georgian budget under the Georgian Dream’s rule, the yearly figures are as follows:
Table 1: Share of Foreign Credits and Grants in the State Budget (%)
Source: Ministry of Finance of Georgia
As illustrated by the table, the share of foreign finances and grants in the state budget was particularly high in 2020-2021 which was largely precipitated by the increased foreign debt because of the pandemic (see the article for more details).
Of additional note is that bulk of the budget of large infrastructural projects is a foreign credit or a grant. According to the 2023 budget plan, the structure of the budgets of major infrastructural projects is as follows:
Table 2: Budget Structure of Large Infrastructural Projects
Source: Ministry of Finance of Georgia
According to the data, credits and grants always constitute an important share - always more than one-third - in funding the aforementioned infrastructural projects.
The government’s official portal, eaims.ge, provides important information about international financial assistance delivered to Georgia over the years.
According to the latest report from 2020 published on the website, total foreign aid for Georgia at that moment was GEL 27.9 billion. The total amount of foreign aid for 2020 was GEL 4.8 billion and five of the largest donors accounted for 75% of this aid. These donors are as follows: Germany, EU institutions, Asian Development Bank (ADB) and the International Monetary Fund (IMF). Most of the aid was credit (66%), followed by grants (27%) and expert assistance (4%).
Table 3 shows the total amount of financial assistance to Georgia in 2020 provided by the largest international institutions
Table 3: Foreign Aid to Georgia in 2020 – Largest Donors
Source: Aid Information Management System
As illustrated by the data, Georgia’s largest donors were the EU institutions followed by the Asian Development Bank and Germany.
The information in this article makes it clear that foreign grants and credits had their role in shaping the Georgian budget and foreign grants and credits account for over 10% of annual revenues under the Georgian Dream’s rule. In specific projects, which the Prime Minister often highlights as important and indicates the government’s role in their implementation, the share of foreign capital is even higher and amounts to at least one-third of total funding.
