Georgia faces financial meltdown

Georgia is facing default because it cannot pay out its debts and interest, the RIA Novosti correspondent quotes Zurab Soselia, Georgian deputy finance minister.

According to him, the Georgian government "has put up with the inability of International Monetary Fund to appear in September before the Paris Club of creditors as a partner in rescheduling Georgia's external debt".

"A sitting of the IMF Board of Governors will be held in Washington on October 12. They will consider Georgia and the Paris Club will gather only in September. This is why Georgia should not rely on the IMF", Soselia said.

According to the Paris Club schedule, Georgia is to pay $160.6 mln in 2003. Since the IMF has suspended its program of financial aid to Georgia, its budget cannot repay the sum: it lacks at least $50 mln, the deputy minister said. The Georgian government has decided to begin in September bilateral negotiations with creditor countries on the rescheduling of debt in order to prevent a default.

"If the talks fail and the country can not gain a deferment, the danger of seizure of its foreign bank accounts may become a reality", Soselia said.

RIA Novosti has learnt from the budget-finance service of the State Chancellery that, in Moscow on September 3 to 6, the Georgian delegation will have the first round of such talks with the creditor countries of the Commonwealth of Independent States.

According to the Georgian Finance Ministry, Georgia's debt to Russia is $159 mln, $315 mln to Turkmenia, $27.7 mln to Kazakhstan, $19.5 mln to Armenia, and $16.1 mln to Azerbaijan. The debt to Turkmenia is bartered - the Georgian aircraft-manufacturing factory Tbilaviastroitel is making free overhaul of Turkmenia's Su-25 jet fighters.

Georgia's external state debt totals almost $2 bln.