The signing of the Association Agreement with the European Union in June 2014 and the coming into effect of the Deep and Comprehensive Free Trade Area (DCFTA) in September are landmark achievements for Georgia.  With greater policy certainty, there was an uptick in business and consumer confidence leading to an output expansion of 6.0 percent year-on-year in the first half of 2014, up from 3.2 percent in 2013 as a whole.

Favorable domestic conditions and strong external demand supported economic growth in the first half of this year, demonstrating that regional economic tensions have not yet adversely affected Georgia. The large Russian market which opened up for Georgian products in July 2013 helped increase exports, particularly of wine. Greater consumer and business confidence gave a boost to manufacturing and trade. In addition, the construction sector benefited from renewed public infrastructure projects and resumption in business related investments. The agricultural sector grew at a relatively modest pace compared with industry and services.

Georgia’s economic growth is projected to be an average of 5.5 percent per year over the medium term based on greater policy certainty, improved market access, and strong structural reform implementation. Medium-term growth prospects depend on a number of factors, including improved economic ties with the EU and the robust reform program outlined in the Government’s development strategy, which will support growth in private investment. Growth prospects depend on Georgia’s ability to leverage the Deep and Comprehensive Free Trade Area and Association Agreement with the EU, which will improve market access and encourage FDI.

Net FDI is likely to amount to 6.3 percent of GDP on average, while the national savings rate is expected to increase to 20.5 percent of GDP by 2017.

Georgia’s public debt remains sustainable.  Total public sector debt fell from 38.7 percent of GDP in 2010 to 32.2 percent in 2013 due to continued fiscal consolidation efforts.  About 80 percent of public debt in 2013 was external and was dominated by bilateral and multilateral debt.

Located on the shortest route between Europe and Asia, Georgia’s transport system is a key link in the historic “Silk Road.” The Government’s commitment to rehabilitating main, secondary and local road networks has intensified in response to the global economic down-turn, as road rehabilitation will improve access to markets and services, and create short-term employment through civil works.

Georgia has a developed, stable and reliable energy sector but efforts are required to improve the efficiency in domestic energy use. The most promising source of additional energy generation is hydropower and the Government is focused on securing private investments for construction of new hydropower stations. Currently, only 12 % of Georgia’s hydropower potential is being utilized.

Georgia has also adopted a State Strategy for Regional Development to create a favorable environment for regional socioeconomic development and to improve living standards. Addressing regional disparities, poverty, and unemployment has been flagged as a key priority for intervention by the Government in its new Socioeconomic Development Strategy of Georgia: 2020.

One of the potential drivers of economic growth in cities and regions is tourism, which  recently saw rapid growth in Georgia and has become an important source of job creation. The number of visitors increased from 560,000 in 2005 to 5 million in 2013, with 6.3 million expected in 2015. An integrated and demand-driven approach to regional development has been designed with the support of the Bank and is currently seen as critical in spurring growth and job creation in historic cities and cultural villages.

The Country Partnership Strategy (CPS) for FY14–17 was approved by the World Bank Board of Executive Directors in May 2014. The new CPS envisages a new lending envelope of about US$1.18 billion, which is roughly 30 percent higher than the program delivered under the previous CPS (US$823 million in FY10–13). Georgia graduated from IDA as of the end of the IDA 16 Replenishment period.

Since Georgia joined the World Bank in 1992, a total of 62 projects comprising approximately US$ 2.27 billion of IDA credits and grants and IBRD loans have been provided to the country. The current portfolio consists of eleven active investment projects and one development policy operation for a total of around US$ 848 million.

Last Updated: Jan 21, 2015

Georgia joined the World Bank in 1992 and the International Development Association (IDA) in 1993. The Bank has provided financing for 53 projects in different sectors totaling over US$ 2.26 billion of IDA credits and grants and IBRD (International Bank for Reconstruction and Development) loans, of which about 85 % has been disbursed. Approximately 64 % of Bank financing for Georgia is on investment projects while 36 % is directed towards budget assistance through development policy operations (DPOs).

The new Country Partnership Strategy (CPS) for FY14-17 was discussed by the Board in May 2014 and envisages a new lending envelope of about US$1.18 billion, which is approximately 30 percent higher than the program delivered under the previous CPS (US$823 million in FY10–13). Georgia graduated from IDA at the end of the IDA 16 Replenishment period and, starting from the current fiscal year onwards, lending will fully consist of IBRD loans. The objectives under the CPS are to reduce poverty and support inclusive growth, with a focus on job creation. These objectives are fully aligned with the Government’s Socioeconomic Development Strategy and with the Bank’s twin goals. The proposed World Bank engagement supports the achievement of the CPS objectives through two areas of focus: (i) strengthening public service delivery to promote inclusion and equity, and (ii) promoting job creation and competitiveness to enable private sector–led inclusive growth.

The Current Portfolio consists of eleven active investment projects financed by IDA credits/IBRD loans for a total of US$ 756 million, of which US$ 251.5 is IDA. About US$ 352 million is undisbursed.

In addition to IDA/IBRD operations, there is an active program of five Trust Fund operations for about US$7 million, which is financing or co-financing ongoing projects as well as providing sector diagnosis and strategies that underpin the Bank’s dialogue and possible interventions.

Analytical and Advisory Activities (AAA) further contribute to program implementation and provide strategically important knowledge and technical assistance that support programmatic engagements and number of sectoral activities.  

Last Updated: Sep 16, 2014

Since Georgia joined the World Bank in 1992, projects have supported reforms in transportation and infrastructure, health and social welfare, and regional development.

Key accomplishments of the Country Partnership Strategy (CPS) include:

  • Rehabilitation of over 600 km of roads, creating about 20,000 person-months of employment and providing improved public access to markets and social services.
  • Seven new schools were constructed, serving 4,150 students (about half of whom are girls) and employing more than 300 teachers.
  • Over 1,800 health specialists were trained in family medicine, of which 95 percent are women. A 25-bed hospital was constructed in a mountainous area and a primary health care center was opened in Gori serving about 69,000 beneficiaries (of which 10,000 are IDPs).
  • The targeted social assistance (TSA) scheme was scaled up to cover 408,367 beneficiaries, of which about 56 percent are women.
  • Improvements in the business environment have continued. The e-filing system was expanded for all tax payments; as a result, 75 percent of all declarations in 2010 were completed electronically (compared with only 10 percent in 2009).

Recent results from Bank-supported projects include:

World Bank’s DPO Series Supports Economic Recovery and Helps Mitigate Crisis Impact
Supported by a series of three IDA/IBRD development policy operations (DPOs) during 2009–11, Georgia’s economy rebounded strongly by 6.3 % in 2010 and 7 % in 2011. The social safety net was strengthened to help cushion the impact of the crisis on the poor: coverage under the targeted medical insurance and social assistance programs expanded to 900,000 (a fifth of the population) and 440,000 people, respectively, by 2011. Tax, customs, and trade-related reforms helped bolster investor confidence and competitiveness, with the share of electronic tax filings leaping from one percent in January 2009 to over 85 percent by the end of 2010.

Running Water—A Huge Relief for Georgian Cities and Towns
Georgia is steadily improving life for its citizens by reversing the effects of years of neglect on basic urban services like water, sanitation and roads. Over the past decade, the country has invested millions into improving the quality, coverage and maintenance of regional and municipal infrastructure. Overall, the Regional & Municipal Infrastructure Development Project has increased piped water services from an average of seven hours a day to 12. It has brought piped water to 30,000 households that previously were not connected to the system, and given access to improved water to another 90,000 people. And it's making it easier for the private sector to do business. Georgia appears to be on target to achieve the Millennium Development Goals pertaining to water and sanitation by 2015.

Reducing Transport Costs and Improving Access and Traffic Safety on Georgia’s Regional Roads
To promote agricultural and rural development, Georgia’s economic development program for 2008–12, “Georgia without Poverty,” emphasized targeted infrastructure development, which is linked to economic growth. Better infrastructure improves the competitiveness of goods, lowers prices for consumers, improves regional integration, and enhances access to markets and social services. The government has implemented significant measures in the transport sector in recent years to upgrade its infrastructure to international standards. The project was designed primarily to rehabilitate the road link between Tbilisi and the Kakheti region, and also to improve traffic safety measures throughout the region. The Kakheti Regional Roads Improvement Project (KRRIP) has resulted in significant improvements for about 60 percent of the total population of Kakheti Region (about 240,000 people)

Financing Farmers, Strengthening Georgia's Rural Development
Thanks to credit lines backed by the World Bank, farmers around Georgia are able to invest more than labor in their land and their operations, making it easier for them to expand production. The credit line for microfinance institutions has loaned a total of $7.5 million to over 7,000 farmers, with the vast majority of farmers receiving loans under $5,000. Cattle and dairy farmers, greenhouse owners, orchard growers and others have obtained credit on interesting terms through the program. Defaults are less than one percent.

With support, Georgia can significantly improve its agricultural production base and become an exporter of agricultural products. Studies show that exporting wine, nuts, mineral water, herbs, citrus and, fresh fruits, vegetables and livestock could help to cut rural poverty. With help from the line of credit aimed at developing rural areas, Georgia's farmers, agri-business owners and food processors are a step closer to boosting production, exports and their livelihoods.


Georgia: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments