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Loan money spent inefficiently harms economy

Loan money spent inefficiently harms economy

The Report.ge News Agency asked President of the Association of Young Financiers and Businessmen Shota Gulbani whether or not a rise in debt loans harms the country’s economy. As per him, loan money spent inefficiently harm economy rather than increased loans.

“As a rule, foreign or domestic debt is used to implement significant projects in the country, ensure the country’s financial stability or implement other targeted projects. In other words, this money must make economy more viable to enable the country to fulfil its obligations and raise the standard of living. However, this isn’t always the case, and debt loans are just spent indiscriminately.,” stated Mr. Gulbani and added that in 2008, the Government issued $500 million euro-obligations, with its money spent for vague reasons, while in 2011, the country faced the risk of failure to pay its debts. Also, as per him, obscure loans have damaged the country’s economy by around 400 million USD.

As Mr. Gulbani states, in accordance with The International Monetary Fund standards, the debt-to-GDP ratio must be within 40-50% with this implying that we do not face emergency situation at this point. 

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