Chinese Government provides a RMB 20 million grant - via a 2005 ETCA - to help Georgia meet its outstanding debt obligations to China

On December 20, 2005, the Chinese Government provided a RMB 20 million grant — through an Economic and Technical Cooperation Agreement (ETCA) — to the Georgian Government it meet its loan repayment obligations under a 1997 loan agreement with the Chinese Government. By way of background, on December 12, 1997, the Government of Georgia contracted an RMB 5,418,617 loan with the Chinese Government (with an interest rate of 4%, maturity period of 8 years, and a grace period of 3 months). The RMB 20 million grant from December 20, 2005 was used by the Government of Georgia to repay approximately $2.6 million USD of its outstanding debt obligations to China under this 1997 loan agreement. The Government of Georgia also agreed to repay an additional $400,000 USD to the Chinese Government with its own budgetary resources. The use of remaining proceeds was under debate in 2006, but one possibility was that it would be used to support a fruit juice processing plant. On April 11, 2006, President of China Hu Jintao and President of Georgia Mikheil Saakashvili, during the latter's official visit to China (a first for a Georgian president) announced that a debt forgiveness deal had been reached and it would soon go into effect. According to August 2018 email correspondence between Georgia’s Ministry of Finance and AidData, this project reached completion status on October 1, 2006.

Additional details

This project is known as the 12.12.1997 Credit Support Project. It is unclear why debt forgiveness was signed in December 2005 but only announced in April 2006; they do not appear to be separate projects, because debt forgiveness signed in December 2005 was the only debt forgiveness involving China noted in Georgian government documents reviewed by AidData. No source explicitly names the Chinese Ministry of Commerce as the source of financing, but since this is an ETCA AidData has assumed it was and coded accordingly. This project is not marked as umbrella since the grant went towards a loan contracted prior to 2000, so there is no risk of double counting.

Number of official sources

3

Number of total sources

7