On April 12, 2011, the Prime Minister of Georgia, Nika Gilauri, held a briefing for media representatives. We present the Prime Minister's speech:
"Good day. Georgia issued new 10-year Eurobond last week. Transaction is to be finished today but all operations have been carried out during the last week. I would like to explain to the public and journalists how important this transaction is and what this is going to bring to our country in the nearest future.
Three main aspects are to be singled out with respect to issuing of the Eurobond. The first of them is the part of debt. Georgia had quite a large amount of debt to be covered by 2013. One of them was a debt to the IMF, and the other - $500 million - to Eurobond. This debt is almost completely covered and Georgia has nothing to pay till 2021. In parallel to the new bond issue, Georgia redeemed the debt, which was due in 2013. Accordingly, Georgia is completely released from the problem of loan till 2021.
Georgia will restructure or cover this loan easily by 2021. The country will manage it without any problem. Apart from this, the interest rate is very important. We used to pay 7.5% of $500 million annually and the amount was to be covered by 2013. Now, this $500 million is due in 2012 and we will pay only 6.9% of the sum, so the interest rate will be lower than the previous one.
It should be pointed out that when a country gets loan for a longer term than it had previously received, the interest rate gets higher. But in our case, it is on the contrary, the interest rate has decreased. This is a very important result which has not achieved by any other country during the last few years. The fact is acknowledged by investment bankers.
The second important aspect with respect to the Eurobond issue is the trust of investors in the economic policy of our country. In 2008, we issued $500 million five-year Eurobond with interest rate of 7.5%. In 2008, it was an economic boom in the world with solid investments flowing towards developing countries. Georgia had a 12% economic gr
owth. Taking into consideration the economic and investment environments in the world, the situation is not simple at all in 2011.
Our country has undergone confrontation with Russia, internal political problems, global financial crisis. In spite of this, the world investment environment, bankers and financial experts trusted Georgia for a longer term and less interest rate. This means, that the country's economy is healthy and steady and that foreign investors trust Georgian economy. Our country is more trusted than any other country in our region. Ukraine, Montenegro and several other countries have issued 10-year Eurobonds this year but with the higher interest rates.
It should be mentioned that we carried out the transaction when Portugal was given loan with a 10-12% interest rate, Greece - with a 10-11% interest rate and Ireland - with an 11-12% interest rate. At present, Georgia is more trusted at the world financial markets compared with the member states of EU and NATO. This is very important.
The third important aspect is opening of new markets for the private sector. Up to now, opportunity of the private sector - banks or other representatives of the private sector - to reach international financial markets or get cheaper loans for longer terms has somehow been restricted. This transaction will enable Georgian banks, representatives of the private sector and large companies to reach international financial markets and bring cheaper loans for longer terms in the country, consequently supporting the country's economy. This will also decrease the interest rates and increase the economic activity of the country.
Georgia has proven itself to be a very good, reliable partner for world investors. Both the country and its economy are trusted, that will cause bigger and bigger private and direct investment flow, economic growth and creation more and more jobs in the country. This is our ultimate goal."
Prime Minister's Press Service