The meeting was opened by the President of the European Commission (EC), Jose Manuel Barroso, the current European Union (EU) Presidency representative, French Foreign Minister Bernard Kouchner, and the prospective EU Presidency representative, Czech Foreign Minister Karel Schwarzenberg. The meeting continued under the co-chairmenship of Shigeo Katsu, World Bank Vice President, and B. Ferrero-Waldner, EC Commissioner.
In his welcoming remarks, Jose Manuel Barroso, praised the spirit of partnership between Georgia and the EC, "We are here today to show solidarity with the people of Georgia. It is a moral imperative to help a neighbor in need. Peace needs the creative efforts of all gathered here." Commissioner Ferrero-Waldner added that "We must not let the crisis distract Georgia from its political and economic reform efforts."
French Foreign Minister Kouchner endorsed the broader gathering in support of Georgia. Kouchner and called on the international community - "What is at stake is to show by the generosity of our contributions that we do not forget and that we want a political solution to the crisis."
World Bank Vice President Shigeo Katsu reminded audiences that "Georgia has made enormous development progress over the past five years since the Rose Revolution." He stressed that, "We cannot afford to lose ground in the many areas where hard-won development gains have been so impressive." These include a strengthened infrastructure base, the modernization of its education system, and the introduction of a well targeted social assistance program for the most vulnerable.
Georgia is now confronting two deep economic shocks - the first from the impact of the August conflict, and the second from the contagion effects on emerging markets of the current international financial crisis. At the same time, Georgia was commended for launching a swift and effective post-conflict recovery program. Repair of damaged infrastructure and social assistance and housing for internally displaced people began quickly.
The amount pledged is based on a Joint Needs Assessment (JNA) coordinated by the World Bank with the participation of the European Commission, the United Nations, the Asian Development Bank, the International Finance Corporation, the European Investment Bank, and the European Bank for Reconstruction and Development.
Donor contributions fall into a number of priority areas. First, there are clearly urgent social needs related to internally displaced people, as well as damaged infrastructure. Donors pledged a total US$ 450 million, or €340 million, to support these more immediate needs.
Second, Georgia faces a severe budgetary shortfall, both as a result of the fall in foreign investment as well as the slowdown in economic activity. If basic government services are to be maintained, donor support will be needed. Donors pledged a total of €445 million, or US$586 million, to offset this budget shortfall.
Third, Georgia's banking sector has been particularly hard hit with the fall in investor confidence as well as the overall international financial environment. Donors pledged a total of US$850 million, or €650 million, to backstop the commercial banks in Georgia through loans, equity, and guarantees.
Finally, the conflict has highlighted the priority need for several core investments, particularly in transportation, energy, and municipal infrastructure. As a temporary measure to offset the fall in foreign investment in these areas, donors pledged a total of US$2.65 billion, or €2 billion, for core investment priorities.
The total contributions pledged today are in addition to ongoing programs. These contributions are also in addition to the recent approval of a new US$750 million standby program by the International Monetary Fund (IMF). IMF funds are provided for international reserves and cannot be used for budget or investment purposes. However, donors welcomed the IMF program as a solid foundation for donor contributions to be used effectively.
The Government of Georgia welcomed the donor pledges as vital for Georgia's speedy recovery. The Prime Minister of Georgia, Lado Gurgenidze, stated that "On behalf of the Georgian people we thank the international community for their solidarity. With their help, I know Georgia's recovery will be swift."
For the Joint Needs Assessment (JNA) report, please go to:www.worldbank.org/georgia
Tel: +32 22991196
World Bank: Alexander Rowland
Tel: +32 2 504 0992
Mobile: +32 478 319939