EBRD Annual Meeting Opens in Tbilisi

About 2,000 delegates, among them government delegations from over 60 countries and business executives are gathered in Tbilisi for a two-day Annual Meeting and Business Forum of the European Bank for Reconstruction and Development (EBRD).

The meeting, which is the first of this kind in the South Caucasus region, opened on May 14 and along with EBRD board of governors’ annual meeting also includes panel discussions and countries investment outlook sessions, among them on Georgia.

Georgian officials say the event is a good chance to showcase country’s investment opportunities.

Speaking at the opening of the meeting, Georgian PM Irakli Garibashvili said that Georgia is “an ideal place for investments” with one of “the simplest tax systems” and “lower tax rates.” He also hailed Georgia’s “long-lasting and productive cooperation” with the EBRD, noting that investments from the Bank “doubled last year to over EUR 200 million.”

EBRD President Suma Chakrabarti told the meeting on May 14, that the Bank responded “flexibly and successfully” to continuing geopolitical and economic uncertainty facing the region.

Also on May 14 EBRD released its new Regional Economic Prospects, according to which growth will stagnate in Bank’s area of operations.

EBRD expects Georgia’s economic growth to slow to about 2.3% in 2015 as Russia’s recession and conflict in Ukraine is having a large negative spillover effect.

“Even though [Georgia’s] economic links [with Russia] are less than they used to be in the past… it still has an impact in Georgia when Russia is in recession. We expect 2-2.3% growth in Georgia this year – that compares quite well with much of the rest of the region,” Hans Peter Lankes, EBRD acting chief economist, said in Tbilisi.

Lower exports and remittances have negatively affected growth and the external balance of payments with Georgian currency lari depreciating by about 18% since the start of the year and by 34.6% against U.S. dollar since early November, when lari started weakening.

EBRD estimated that Belarus, Georgia and Moldova experienced the largest depreciations of their currencies since the start of the year of around 15 to 25% against the U.S. dollar.
 
“The lari has depreciated significantly, which, given the significant dollarization in the economy, is leading to increase in NPLs [nonperforming loan],” reads EBRD’s Regional Economic Prospects.

“Domestic political uncertainty is also weighing on confidence and growth. In 2016, growth is expected to remain still subdued at 2.6 per cent, affected by negative external environment, and increasing NPLs, as effects of the slide of lari in 2014-15 and downturn in economy will begin to crystallize,” it says.