GEO-98-008
Total budget: USD 450,451
UNDP Sector: Monetary and financial issues and policies
Starting date: July 1998
Duration: 3 years

Background:

The Government of Georgia has embarked on a transformation from a centrally planned economic system to a market-oriented one, which has implied the formidable task of reorganising and reorienting public sector management. The efficient public debt management constitutes one of the national priorities of the Government of Georgia. The Government’s policy in the area of public debt represents a strategy of borrowing primarily on external market. The two main governmental institutions participating in the management of Georgia’s debt are the Ministry of Finance, and the National Bank of Georgia. However, the two institutions do not have an integrated financial management information system for recording, monitoring, and forecasting external debt and analysing debt-related problems. Furthermore electronic exchange of the relevant information should be performed on a regular basis.

The project will strengthen the debt monitoring and management capacity of the Government by providing support to the installation and operation of DMFAS, a computerised debt management system, in the debt units located in the Ministry of Finance, as well as to the establishment of adequate information flows between the National Bank of Georgia and the Ministry of Finance. The project will minimise the difficulties and delays in obtaining, disbursing and repaying the funds obtained from abroad for development financing, and also improve the government’s possibilities to monitor its domestic debt. The project will therefore lead to rationalising the financing of the country transition reforms and its development process.

The Government of Georgia through the Ministry of Finance executes the project. The project strategy is to assist the Government in the establishment of the external debt office, using UNCTAD’s expertise. Technological conditions in the relevant government institutions are being established to efficiently manage Georgia’s debt. Training is provided on accessing capital markets and alternative borrowing sources. Country-tailored reports on external debt are being developed.

Expected outcomes:

Recommendations for the establishment of the Debt Office with the concrete distribution of main debt management functions among divisions produced;

The Government capable to assess the status of its public debt and to analyse and evaluate its debt servicing capacity providing a valuable basis for negotiating new agreements with bilateral agencies, suppliers, international financial institutions and capital markets, and the rescheduling, financing or refinancing of current obligations with creditors, minimising the cost of borrowing.