Brussels, 14/01/2011 (Agence Europe) - On Thursday 13 January, the European Commission proposed to provide macro-financial assistance to Georgia of up to €46 million, with half of the assistance to be disbursed in the form of grants and half in the form of loans. This assistance is part of a comprehensive EU package of up to €500 million to support Georgia's economic recovery in the aftermath of the August 2008 conflict with Russia and the global financial crisis.
Assistance is provided within an adjustment programme agreed between Georgia and the International Monetary Fund (IMF), subject to compliance with the programme and implementation of reform measures to be agreed between the EU and Georgia. The amount of assistance will be paid out in two instalments, in principle during the second and fourth quarters of 2011. EU macro-financial assistance will help Georgia to cover its external financing needs in 2011. After two years of weak or negative growth in the country, there was a revival of economic activity in 2010, with real GDP growing at 6.3%. The country's external economic situation remains vulnerable as the financing of the large current account deficit remains uncertain. Exports from Georgia continue to suffer from the trade embargo imposed by Russia, while foreign direct investment (FDI) inflows remain low being negatively affected by the crisis. (L.C./transl.jl)