Georgia

March 2011

The EBRD established a regional office in Tbilisi in September 2006 and since then has significantly expanded investment in the country, focusing on the enterprise, financial and infrastructure sectors. In 2010 the Bank signed projects worth 350 million, a record amount for the EBRD in Georgia. In just five years the Banks portfolio in the country has tripled to reach a net cumulative volume of 1.4 billion.
In recent years the Bank has been helping the Georgian economy to recover from both the global financial crisis and the RussiaGeorgia conflict of 2008. This has led the EBRD to dramatically scale up its investments in the Georgian financial sector and in 2010, twofifths of the Banks portfolio was invested in this sector. The Bank provided new credit lines worth over 71.9 million via the countrys leading banks. These credit lines will provide facilities for onlending to small and mediumsized enterprises and to organisations planning smallerscale energy efficiency and renewable energy projects. The EBRD is also actively engaged in promoting local currency lending and the dedollarisation of the Georgian banking system. To support this the Bank provided its first local currency loan, equivalent to 0.4 million, to a local microfinance organisation, Crystal. The proceeds from the loan will be used to expand Crystals operations, improve its corporate governance and boost lending to micro and small enterprises throughout Georgia. In the infrastructure sector the Bank signed six projects for a total of 246.6 million. These included 112 million to finance the construction of the Tbilisi Railway ByPass, a new railway route that will move hazardous cargo away from busy locations in the capital and improve the efficiency and safety of rail operations within Georgia. Other projects in this sector include the rehabilitation of the Enguri Hydro Power Plant facility, an 18.6 million loan to electricity supply and distribution company Telasi, 3 million to construct the first regional landfill fully compliant with the EU directives and an 80 million loan to finance the Black Sea Transmission Line (see case study overleaf). In 2010 the Bank also signed seven transactions in the industry, commerce and agribusiness sectors for a total 28.4 million. This included five projects worth over 17 million under the MediumSized CoFinancing Facility (MCFF), which has proved popular with mediumsized businesses in Georgia. These projects include loans to a pharmaceutical chain and a local motor vehicle service centre and financing for a property company to promote the development of a Europeanstandard business centre in Tbilisi. In agribusiness the Bank supported projects such as a loan to restructure a flour mill company. The Banks projects pipeline remains strong for 2011 covering various sectors of the economy, in line with the latest EBRD strategy for Georgia that was approved in 2010.

At a glance
Number of projects

134

Net business volume

1,419.6 million
Total project value

4,495.6 million
Gross disbursements

736.4 million
Current portfolio

691.3 million
Portfolio share in private sector

66%

Cumulative, as at March 2011 Includes regional projects

Volume ( millions)
500 400 300 200 100

EBRD projects 2000-10

Number of projects
50 40 30 20 10

0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10

Investment climate
Over the past five years Georgia has made significant progress towards improving the business climate, introducing reforms and further promoting privatisation. The Bank has very good cooperation with donors and IFIs in the aftermath of the August conflict of 2008. The Bank will continue its fruitful and regular policy dialogue with the authorities with a special focus on energy and agriculture, in close coordination with the local business community, other IFIs and international donors. It will address critical bottlenecks to local private sector investments and help to boost the return of confidence among foreign investors. The Bank will continue to promote active policy dialogue between the government and the business community.

Sector breakdown of current projects

1 2

Contacts
EBRD Georgia office
6 Marjanishvili street, (Green Building, IV V floor) Tbilisi 0102, Georgia Tel: +995 32 44 74 00 Fax: +995 32 92 05 12

Turkey, Eastern Europe, Caucasus and Central Asia 4 1 2 3 4 Corporate Energy Financial institutions Infrastructure 3 15% 25% 14% 47% Caucasus, Moldova and Belarus EBRD Headquarters

Managing Director: Olivier Descamps (based in London) Director, PaulHenri Forestier (based in Tbilisi) One Exchange Square London EC2A 2JN United Kingdom Switchboard: +44 20 7338 6000 Central fax: +44 20 7338 6100

1 Corporate comprises agribusiness, manufacturing and services, property and tourism and telecommunications 2 Energy comprises natural resources and the power sector 3 Financial sector includes investments in micro, small and medium-sized enterprises via nancial intermediaries 4 Infrastructure comprises municipal environmental infrastructure and transport

Project proposals

Tel: +44 20 7338 7168 Fax: +44 20 7338 7380 Email: newbusiness@ebrd.com

Country web site www.ebrd.com/georgia

Improving electricity networks in Georgia

The EBRD has extended an 80 million sovereign guaranteed loan to finance the Black Sea Transmission Line in Georgia, helping provide energy security to the country. The project will enable EnergoTrans to construct a 315 km high voltage transmission line from west to east Georgia, enabling it to increase electricity exports to the neighbouring countries, as well as improve and balance the electricity supply throughout the country. The project provides more energy security for Georgia by ensuring domestic grid reliability, and it will also increase future power trading in the region particularly with Turkey. In addition, the project will boost the development of hydro generation plants in Georgia, which have great potential in the region. The project involved extensive policy dialogue with the authorities to provide vital support for the ongoing reform of the Georgian power sector. The Banks Technical Cooperation Funds have also been used to further improve the transmission tariffs structure. The project has been cofinanced with the European Investment Bank (EIB) and KfW.
Read more about the project www.ebrd.com/english/pages/news/press/2010/101215b.shtml