Georgia has received funding from the International Monetary Fund (IMF), European Bank for Reconstruction and Development (EBRD), and the World Bank Group’s International Development Association (IDA) and International Finance Corporation (IFC) since the mid-1990s. More recently, Georgia joined the Asian Development Bank (ADB) in 2007. Combined, these international financial institutions (IFIs) have invested over $2.3 billion in the country as of early 2008.
Georgia has struggled through its transition period. Its fragile relationship with Russia produces tension in the region, heightened by the instability of breakaway provinces. Abkhazia and South Ossetia have both declared independence, and disputes over Georgia’s unity remain. The 2003 Rose Revolution also evidenced Georgia’s political challenges, particularly rampant corruption and election rigging. Popular protests and opposition groups forced the resignation of Eduard Shevardnadze, president since 1992. The Rose Revolution was followed by a wave of similar protests in Eastern Europe and Central Asia, namely the Orange Revolution in Ukraine and the Tulip Revolution in the Kyrgyz Republic.
Despite these political upheavals, GDP growth has been steady, reaching 12% in 2007. Corruption has also reportedly declined since the Rose Revolution. In 2003, Georgia fell near the end of Transparency International’s Corruption Perceptions Index (CPI), ranking 124 out of 133 countries with a score of 1.8, where 0 means highly corrupt and 10 constitutes the least corruption. By 2007, Georgia had improved its score to 3.4 and its ranking to 79 of 179 countries.
These improvements are positive signs for Georgian development. However, a key area of concern is Georgia’s role in extractive industries. As a significant player in pipeline politics, Georgia faces the ecological and social risks of oil development, particularly with the construction of the Baku-Tbilisi-Ceyhan (BTC) and South Caucasus pipelines. IFI support of these projects requires careful monitoring.