Shalva Papuashvili: “The budget does not receive any funds from France.”
Verdict: FactCheck concludes that Shalva Papuashvili’s statement is HALF TRUE.
The 2024 state budget plans to mobilise over GEL 2 billion from foreign sources, including GEL 150 million in grants and GEL 1.8 billion in credit.
Whilst the direct tranche of the French government is GEL 0, the French Development Agency (AFD) has allocated GEL 134 million in targeted credit for transitioning to green energy. Additionally, the AFD has allocated a planned budget of GEL 2.4 million to improve the Khashuri water system.
The funding from the AFD reached considerably high levels in 2020 and 2021, exceeding GEL 500 million annually. Shalva Papuashvili only acknowledged the existence of the aforementioned programmes when directly asked about them.
Three quarters of the government international debt is owed to international financial institutions such as the World Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, etc. France holds the highest share amongst bilateral creditors with GEL 758 million of the total GEL 1.5 billion in debt.
Notably, the debt to France has surged during the Georgian Dream political party’s governance. Georgia owed GEL 52 million to France as of 31 December 2012, constituting 7% of total bilateral debt. Currently, the same proportion has increased to 50%.
Whilst no direct funds have been allocated from the French government in the current state budget, the targeted credit volume is substantial in the current and previous years which the Chairperson of Parliament acknowledged only when directly asked. The initial statement gave the impression that France had not allocated any funding for Georgia leading FactCheck to conclude that Shalva Papuashvili’s statement is HALF TRUE.
Analysis
Shalva Papuashvili, the Chairperson of Parliament, commented that France does not participate in funding the Georgian budget in response to the statement made by Sheraz Gasri, the French Ambassador, that France would halt direct funding of the Georgian state budget: “There are no direct funds from the French budget allocated for the Georgian budget. Thus, to be honest, the purpose of that statement is unclear… The French Ambassador’s statement is not accurate. The Georgian budget receives no funding from the French budget and France allocates no direct budget funding to Georgia.” When asked about specific programmes, Shalva Papuashvili stated: “Obviously, certain programmes exist… Look, budget aid is a specific financial aid instrument that budget funding. In this context, no budget funding has been allocated from the French government to the Georgian budget.”
Almost one-tenth of the state budget (over 30% during the pandemic) is financed by donor funds. The aforementioned funding primarily consists of credits with a smaller but still significant portion constituting grants. Creditors are categorised into two main groups: bilateral and multilateral. Bilateral creditors include individual countries whilst multilateral creditors consist of country unions and international financial institutions such as the European Union and the World Bank.
Government debt can be contextually categorised into two parts: direct budget funding, consisting of funds that donors directly allocate to the budget, granting the government authority over the sum, and targeted credit, referring to funds provided for specific projects.
External debt constituted USD 8.9 billion, or GEL 24 billion, including government debt of USD 8.5 billion and USD 402 million owed by the National Bank of Georgia, as of 31 December 2023. The government owed USD 6.4 billion to multilateral creditors and USD 1.6 billion to bilateral creditors. Furthermore, USD 500 million was held in Euro-obligations. The French held the largest share amongst bilateral creditors with Georgia owing USD 786 million.
Notably, Georgia’s debt to bilateral creditors declined by USD 100 million as of 30 June 2024 with debt to France decreasing by USD 28 million to USD 758 million (over GEL 2.1 billion). Despite this slight decline, Georgia still owes the largest amount to France amongst specific countries. Germany follows with USD 583 million in debt. Whilst Japan holds the third place, it substantially lags behind the two aforementioned countries, with a debt of USD 119 million.
Graph 1: Bilateral Creditors as of 30.06.2024 (USD million)
Source: Ministry of Finance of Georgia
Whilst Georgia owes the largest portion of its debt to France, the projected 2024 state budget does not include any direct donations from France. However, the French Development Agency (AFD) has allocated GEL 134 million in targeted credit for transitioning to green energy. Additionally, the AFD has allocated a planned budget of GEL 2.4 million to improve the Khashuri water system.
France has been financially supporting similar projects for several years. French aid constituted GEL 30 million in 2013, followed by an allocation of GEL 14 million for the development of ski infrastructure in Zemo Svaneti.
France allocated GEL 1.5 million in grants and GEL 41 million in credit in 2023. Additionally, GEL 173 million was provided in 2022 to reform the energy sector.
French aid reached a record high in 2020 when Georgia received a total of GEL 615 million from the AFD, consisting of GEL 390 million aimed at reforming the energy sector and GEL 225 million provided to improve social well-being. Furthermore, GEL 533 million was allocated to reform the energy sector in 2021.
Credit received from France has exceeded GEL 2 billion from 2013 to the present, including the amounts to be received in 2024. Whilst the majority of the funding being channelled through the AFD, there have also been direct government tranches. The aforementioned credit was primarily aimed at supporting energy and infrastructure projects.
It should also be noted that financial relations with France have significantly strengthened under Georgian Dream’s governance. Georgia owed USD 52 million to France as of December 2012, constituting 7% of the total debt to bilateral creditors. However, these figures have risen to USD 758 million and 50%, respectively by 2024.
Graph 2: Bilateral Creditors (USD million)
Source: Ministry of Finance of Georgia
Whilst Shalva Papuashvili acknowledged the existence of the aforementioned programmes, he only did so when asked about them directly. Notably, funding received from the AFD surpasses USD 100 million in the current year and has exceeded USD 500 million in previous years.
Donor funds are frequently targeted; hence it is inaccurate to claim that targeted credit does not contribute to budget support.
Whilst no direct funds have been allocated from the French government in the current state budget, credit received from the AFD exceeds USD 100 million and Georgia owes over GEL 2 billion to France due to previous credits. Thus, FactCheck concludes that Shalva Papuashvili’s statement is HALF TRUE.
