Business Insider Georgia conducted an exclusive interview with Lesley Bearman Lahm, ADB Country Director in Georgia. In the interview, Lesley Bearman Lahm discusses Georgia’s macroeconomic environment, ADB’s priority sectors in the country context, the investment climate and competitiveness, the monetary policy of the National Bank of Georgia (NBG), Georgia’s role in regional connectivity and cross-border infrastructure corridors, the country’s energy security and its potential in this area, the effectiveness of ADB’s cooperation with the Government of Georgia, structural reforms, and the current and future economic outlook.

How does ADB assess Georgia’s current macroeconomic environment and growth outlook for 2025–2026? From ADB’s perspective, what is Georgia’s long-term economic potential?

The Georgian economy has demonstrated resilience to global shocks, supported by prudent macroeconomic management and solid fundamentals. Growth remains robust, reaching 7.5% in 2025 and is expected to moderate to 5.5% in 2026 and 5.2% in 2027, reflecting softer internal and external demand.

At the same time, the outlook is becoming more complex. External risks remain elevated, particularly due to the ongoing Russian invasion of Ukraine and conflict in the Middle East. These developments could weigh on global economic activity, disrupt trade and supply chains, and contribute to inflationary pressures, with implications for a small and open economy such as Georgia.

Overall, ADB assesses that Georgia’s long-term growth potential remains solid, provided reform momentum continues, infrastructure gaps are addressed, and external vulnerabilities are managed carefully. The country’s strategic geographic location creates opportunities to deepen its role as a regional transit and trade gateway. Continued commitment to regional integration and connectivity can support trade diversification and strengthen economic resilience. 

What are ADB’s priority sectors in Georgia for the coming year - transport, energy, municipal services, digitalization, infrastructure or private sector development?

ADB’s priority sectors in Georgia are guided by our Country Partnership Strategy for 2024–2028, which was developed through extensive consultations with the Government of Georgia, development partners, the private sector, civil society, and academia. For the coming year, our focus will remain on a select number of high‑impact sectors where ADB can deliver the strongest development results. This includes continuation of Georgia’s strategic transport infrastructure upgrade – strengthen Georgia’s role as a regional transport and logistics hub, particularly along the Central Asian Regional Economic Cooperation (CAREC)’s Corridor 2, which largely coincides with Middle Corridor, expanding multimodal transport and logistical connectivity through linking roads more effectively with ports, rail, and logistics facilities and thus supporting regional cooperation and integration. We also work to increase clean energy generation and export potential, develop domestic value addition, particularly in agriculture and tourism and help accelerate private sector-led growth, along a low-carbon path.

How does ADB assess Georgia’s investment climate and competitiveness relative to regional peers?

Georgia’s investment climate is relatively favorable within the region, supported by a liberal economic framework, open trade policies, and a generally business-friendly regulatory environment. These factors have helped to attract investment and support private sector activity.

At the same time, important challenges remain. Structural constraints such as limited access to finance, particularly outside Tbilisi, skills mismatches, and infrastructure gaps continue to affect competitiveness. Institutional capacity, capital market development, and productivity levels also require further strengthening. In addition, the suspension of progress in the European Union (EU) accession process, together with related signals from the EU, may introduce some uncertainty, with potential implications for export performance and investment sentiment.

Compared with regional peers, Georgia performs well in terms of regulatory simplicity and openness, though continued progress in addressing these structural constraints will be important to sustain and deepen its competitiveness over the longer term.

What is ADB’s view on Georgia’s fiscal framework and public debt sustainability?

Georgia’s fiscal framework is prudent and credible, with recent developments reflecting continued fiscal discipline and effective management of public finances. The fiscal deficit narrowed to 1.2% of GDP in 2025, supported by solid revenue performance and more moderate expenditure growth, while public debt declined to below 35% of GDP, remaining well below commonly referenced prudential benchmarks.

Georgia’s continued access to international capital markets, including the successful Eurobond rollover with strong investor demand and favorable pricing, further reflects confidence in the country’s macroeconomic management and fiscal credibility.

At the same time, maintaining fiscal discipline will remain important given elevated external uncertainties. Close monitoring of fiscal risks, particularly those related to state-owned enterprises, public-private partnerships, and exchange rate exposure in public debt, will be important to safeguard debt sustainability and contain potential pressures on public finances.

How do you assess the National Bank of Georgia’s monetary and regulatory policies in the current environment?

The National Bank of Georgia’s monetary and regulatory stance remains strong in the current environment. Downside risks remain elevated, particularly from Georgia’s exposure to global and regional shocks, persistent external price pressures, and high dollarization. In response to elevated inflation risks, including those driven by higher global oil prices, the policy rate has been maintained at a relatively tight level of 8%. The National Bank of Georgia has also clearly signaled its readiness to tighten further should inflationary pressures intensify or expectations become less anchored.

At the same time, reserve accumulation has strengthened external buffers. Gross international reserves reached a record level of approximately $6.65 billion as of February 2026, exceeding conventional adequacy benchmarks. This is particularly important given the economy’s high dollarization and exposure to external shocks. On the financial sector side, the banking sector remains resilient. Effective de-dollarization and macro–prudential measures implemented by NBG have helped reduce currency-induced credit risk and over-indebtedness, while also strengthening the system through deposit insurance and the establishment of a resolution fund to support banking sector stability and resolution capacity. Strong capital adequacy, high profitability, and low nonperforming loans reflect solid fundamentals of the financial sector.

What role does ADB see for Georgia in regional connectivity and cross-border infrastructure corridors?

Georgia is an anchor country along regional connectivity and cross‑border transport corridors, particularly the CAREC Corridor 2 and the Middle Corridor linking Central Asia, the South Caucasus, and Europe. Georgia is enabling the movement of goods between the Black and the Caspian Sea regions, and beyond, and it is also a logistics node where improved roads, ports, railways, and border facilities can generate local value-added through transport services, trade, tourism, and employment.

ADB’s investments in the East–West highway corridors, including sections connected to international trade routes, directly support this role. Projects like the Batumi Bypass Road and other strategic road sections reduce congestion, improve safety, and shorten travel times for regional freight. At the policy level, ADB has also supported reforms to improve transport efficiency, customs coordination, and cross‑border logistics—critical elements for turning infrastructure into real connectivity.

Georgia is well‑positioned to benefit from diversified trade routes, especially as global supply chains seek resilience. Continued investment in multimodal transport—roads linked seamlessly to ports and rail—will be essential for Georgia to fully capture this opportunity.

What is ADB’s assessment of progress in Georgia’s transport sector modernization?

Georgia has made impressive progress in upgrading its road infrastructure in the last decade, as well as improving the design standards, improving road safety, and incorporating climate resilience into the projects. With the joint support of ADB and our international financing partners, the government has recently completed the Rikoti section of the East–West Highway—one of the country’s most important mobility arteries. We are also advancing upgrades across key transport corridors, including the construction of the new Batumi–Sarpi road, and the earlier bypass projects – Kobuleti and Batumi bypasses, which together strengthen Georgia’s role along the CAREC Corridor 2 and enhance its position as a regional logistics hub. 

There has also been progress on the institutional side, including improved project planning and management, and optimized asset management. These efforts will combine to reduce lifecycle costs and ensure that investments deliver long‑term value. We continue to work with the Roads Department of Georgia to modernize its road asset management systems, providing support for a low-carbon transition and improving road safety awareness.  

However, modernization is not complete. The shift from building infrastructure to managing and optimizing networks—through maintenance, digital systems, and logistics efficiency—is the next stage. ADB therefore sees Georgia entering a more advanced phase, where technology, data, and inter‑modal integration become increasingly important.

How would you evaluate ongoing and future needs in roads, rail, ports, and logistics infrastructure?

Georgia has made real progress in upgrading main highways, including ADB‑supported projects. The next phase must focus more strongly on road safety, climate resilience, and maintenance. Improving secondary and local roads is essential to ensure that regions outside major urban centers are fully connected to markets, jobs, and services.

Better rail–port integration can significantly reduce transport costs and make Georgia more competitive as part of multimodal supply chains connecting Central Asia and Europe. Strong coordination between port development, rail, and road infrastructure is essential to maximize economic impact.

Logistics infrastructure and systems are increasingly important. Physical investments need to be complemented by modern logistics centers, digital freight management, efficient border and customs processes, and data-driven transport management. These “soft infrastructure” elements can deliver significant gains in reducing delays and costs for businesses. As part of the CAREC program, Georgia has been advancing customs digitalization and strengthening seamless connectivity among participating countries.

By aligning investments across roads, rail, ports, and logistics—and by mobilizing private sector participation where feasible—Georgia can strengthen its role as a regional connectivity hub and ensure that infrastructure continues to support inclusive and resilient economic growth.

How does ADB assess Georgia’s energy security, renewable energy potential, and transition to green energy? How do you assess the country’s potential in this area?

Renewable energy can play a central role in strengthening Georgia’s energy security by reducing reliance on imported fuels, diversifying the energy mix, and reducing exposure to external price and supply shocks. ADB supports Georgia’s energy sector through a combination of investment, policy engagement, and capacity building. 

We have helped modernize and strengthen the electricity transmission system to make it more efficient and financially sustainable. In 2025, ADB approved a $104 million investment to establish Georgia’s first battery energy storage facility (BESS) — an important step toward integrating more renewables, improving grid stability, and reducing dependence on neighboring systems for balancing services. This will also help open space for greater private sector participation in clean energy generation. 

ADB works directly with private renewable energy developers. In 2020, ADB anchored the $250 million green bond issued by Georgia Global Utilities, and in 2022, subscribed to the $80 million green bond issued by Georgian Renewable Power Operations – both of which had underlying hydro and wind power assets totaling over 70MW. Earlier, ADB financed the Adjaristskali Hydropower Plant (HPP) Project, a 185 MW hydropower plant in Adjara. The hydropower cascade — including the Shuakhevi HPP is contributing to Georgia’s renewable energy supply and enabling cross-border electricity trade. 

ADB helps governments design transparent procurement frameworks, improve sector planning, and integrate climate resilience and sustainability standards into projects. This integrated approach ensures that renewable energy investments are not only built but are financially viable, environmentally sound, and aligned with long‑term energy transition goals. To support the next wave of innovation, ADB is providing technical assistance funding for several initiatives, including electricity market assessment, capacity building for renewable energy developers, rehabilitation of small and medium Soviet-era HPPs, assessment of the potential for green hydrogen, and identification of policy and investment needs to stimulate private sector involvement in the energy sector. 

What steps should Georgia take to strengthen its private sector and SME competitiveness?

Strengthening private sector development and SME competitiveness requires a comprehensive and integrated approach. Key priorities include improving access to finance — particularly long-term and local-currency financing—enhancing firm capabilities through skills development and innovation support, and addressing infrastructure gaps that constrain productivity, especially outside Tbilisi. Expanding access to finance for women-owned or women-led enterprises and increasing the availability of funding beyond major urban and regional centers are critical for creating sustainable livelihoods in rural communities and reinforcing Georgia’s economic resilience. In this regard, ADB has been partnering with local commercial banks to channel affordable financing to SMEs through investments in gender, green, and sustainable bonds, supporting inclusive and environmentally responsible growth and providing guarantees for trade finance. Strengthening local enterprises will also help reduce Georgia’s reliance on exports and mitigate vulnerability to price volatility for essential goods.

How does ADB assess Georgia’s capital market development and what are the key recommendations for deepening local financial markets?

Building a resilient and inclusive economy demands stable, long‑term financing in local currency. Over recent years, ADB has played a catalytic role in strengthening Georgia’s capital market by supporting local-currency bond issuance and reducing reliance on foreign‑currency financing.

By participating as an anchor investor in several GEL‑denominated bond issuances, ADB helped improve investor confidence and support longer maturities in the market. ADB’s local‑bond investments also supported sustainable finance. By backing green and sustainability‑linked bonds in local currency, ADB helped channel capital toward priority sectors such as renewable energy, climate‑resilient infrastructure, and energy efficiency. 

Beyond sovereign instruments, ADB’s support for GEL-denominated bonds issued by local financial institutions helped expand access to long-term financing for businesses—particularly small and medium-sized enterprises. With more funding available in local currency, Georgian firms are better positioned to invest, expand, and create jobs without taking on excessive currency risk.

The impact reaches beyond individual transactions. ADB’s involvement sent a strong signal to the market: Georgia’s capital market is investable, resilient, and moving toward international best practice. The result has been greater market liquidity, a broader investor base, and growing momentum for local‑currency financing.

Are there upcoming ADB investment plans in Georgia for 2026 that you can highlight? And how do you assess ADB’s contribution in this area over the past years? What volume of investment are you planning to undertake in Georgia this year?

ADB plans to expand support for private sector development and sustainable finance. This includes initiatives to deepen capital markets, promote local currency financing, and mobilize private capital for green investment and support micro, small and medium-sized enterprises, and trade and supply chain financing, with priority given to rural community development and women-owned and led businesses.

How would you evaluate the effectiveness of the Asian Development Bank’s cooperation with the Government of Georgia? How would you assess ADB’s cooperation with key institutions, including the Ministry of Economy and Sustainable Development of Georgia, the Ministry of Infrastructure, the Ministry of Finance of Georgia, and the National Bank of Georgia?

Over the years, we have built a trusted partnership with the government of Georgia rooted in shared priorities, steady reform progress, and timely implementation of investments. Our cooperation has delivered tangible results. With nearly $6 billion in cumulative ADB financing since 2007 and close to $1 billion in 2025 alone, we are supporting transformational and forward-looking projects. These include strengthening Georgia’s role in the CAREC Corridor 2 and Middle Corridor, supporting transport and energy infrastructure, and promoting private sector development. Across all areas, regional cooperation remains central, and ADB will continue to support Georgia’s role in connecting markets between Asia and Europe. 

What are the key structural challenges that ADB believes Georgia must address to sustain long-term, inclusive economic growth? What reforms are most important for Georgia to attract higher levels of foreign direct investment?

Georgia aims to position itself as a regional hub for transport, trade, and logistics within global value chains. Achieving deeper integration into these value chains will require coordinated policy efforts to close remaining infrastructure and regulatory gaps. The logistics sector, in particular, holds significant potential to drive integration by expanding trade flows, fostering cluster development, and supporting the establishment of integrated economic zones. Stronger multilateral cooperation can spur economic growth, generate higher-quality jobs, and contribute to poverty reduction. With transparent and predictable policies from its partners, Georgia is well placed to capitalize on its strategic location and institutional capacity to strengthen supplier networks and progress toward higher value-added activities. ADB remains firmly committed to supporting Georgia’s reform priorities through investment, policy dialogue, and close collaboration with both public and private sector partners.