ADB: infrastructure as a key to economic growth

Asian Development Bank is Georgia’s one of the largest partners, which has approved over 2 bln USD for the country since 2007. The president of the bank assessed the investments of the bank within the framework of the Silk Road Forum in Tbilisi and stated that since 2016, Georgia has been playing a significant role together with the 11 countries, which which Asia Development Bank is closely cooperating. Wencai Zhang claims that the goal of the ADB’s business plan is to facilitate development of regional links, sustainable transport and infrastructure.

In Tbilisi, second Silk Road Forum was held. What does ADB sees today as the main challenge and what could it mean for the participating countries?

This is my third visit to Georgia, so I can myself see the changes and achievements in Georgia. The country has really achieved a lot with regard to macroeconomic development, reform implementation and financial consolidation. I would particularly emphasize the easiness of starting business. The government is willing to implement reforms in the country and, most importantly, develop infrastructural projects. In the last 10 years, ABD has been actively supporting the government of Georgia and we are proud of this. We are happy to be part of development process. We support capital market development and implementation of infrastructural projects in the country. In the coming years, we will continue supporting important infrastructural and transport projects.

Why is it so important to implement infrastructural projects?

With such projects, you will be able to reduce transportation costs. They will also help local population to sell their produce much easier. Infrastructural project will first of all help to link different regions of the country with each other and also, connecting neighboring countries will become easier, which is very important. As a result, regional investments and trading will develop. Georgia wants to be a regional hub for trading and logistics. You are capable of exporting your own products, e.g., electricity, to countries like Turkey. This connection is crucial for economic activities, more investments and trading between the countries of the region. Without a developed road infrastructure you won’t be able to attract investments.

You mentioned energy and my next question is about this field – ADB is supporting implementation of two major energy projects. I mean, Nenskra HPP and construction of underground gas storage – both are aiming at energy independence of the country. How can a country like Georgia achieve energy independence and why is this project so important?

Some of the countries have extra energy, while some are experiencing energy shortage and this is the reality. If you have sufficient energy within the country, you will be able to sell it to other countries. Georgia has abundant resources with regard to both hydro and renewable energies. We are going to support development of solar and wind energy generation in Georgia. In future, we could help the country not only to seek for existing resources and use them but also to export them to neighboring countries.

Does Georgia have a potential for that?

Yes, it has. We support development of HPPs in Georgia; we will also facilitate energy export to neighboring countries.

In the coming years, the government should focus on infrastructural projects.

Can we say that today infrastructure is one of the main challenges for Georgia?

The government knows how important infrastructure is and we see that such projects are the priority for the government. Countries like Georgia should create technical grounds for future development. When transport, infrastructure and energy is well regulated, you will be able to develop software systems, which will make business start-up process easier. After that, you can achieve higher rate of economic growth. For 6-7% economic growth, you will need appropriate infrastructure. Georgia is a geographically unique country. I believe that the country has huge potential to become a hub. So, the private sector should take the advantage of such geographic attractiveness with the prospective of easiness of exporting to Russia or Europe.

However, relations between Georgia and Russia are accompanied with known problems…

There is economic contact and activity between Georgia and Russia. Now, you should continue with the reforms. I think, you will be able to attract more foreign investments. I have talked to the government about development of free economic zones and industrial parks in Georgia, and other countries do that. Foreign investors bring capital, technologies, knowledge and management skills to the country.

Georgia has already created such zones, however, there are questions regarding their successfulness. What kind of model would you recommend to the government?

Georgia is now at an early stage of development of such zones, however, I am sure that you will create very good economic zones. We can see that the country is willing to improve the business environment. That is why the government asks for the advice of the Asia Development Bank and we from our side support the so-called public-private partnership projects, to attract more investments.

Do you support such projects?

Yes, we had several projects of that type, but we need more of them. We talked about that with the government.

But the International Monetary Fund had some concerns about such projects…

International Monetary Fund supports private sector development. They are more focused on tax reform. We can see that the government is trying to turn capital and public expenses into a priority direction. These priorities should be properly selected and then the economic growth will be advanced. 

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