Will the Greek crisis affect Georgia?

Georgia’s economy could possibly be impacted by the Greek crisis as Georgian diaspora, one of the main donors to the country’s economy, are facing immense challenges to send money back to their home country.

Banks in Greece closed on Monday and will not reopen until July 7, as officials scrambled to avoid financial panic. Daily withdrawal limits were imposed on ATM machines and money transfers to destinations outside of Greece have been banned.

This could raise problems for Georgians who are financially depended on financial assistance from diaspora in Greece.

But Greece’s Deputy Foreign Minister Giorgos Tsipras told his Georgian counterpart that "in all likelihood” after the referendum on July 5 (where voters will choose ‘yes’ or ‘no’ for further bailout air), the existing banking crisis "will be defused”.

Today Georgia’s Deputy Foreign Minister Vladimer Gurgenidze met Tsipras in Greece to talk about the Greek financial crisis and its impact on the country’s residents, including Georgian diaspora.

The officials discussed the possibility of Greece fast-tracking its ratification of the Association Agreement (AA) signed between Georgia and the European Union (EU) in June 2014.

Tsipras thanked Gurgenidze for the solidarity Georgia expressed towards Greece. He promised the Greek government would "do its best” to protect Georgians’ interests.

Meanwhile while in Greece Gurgenidze will meet with Georgian diaspora to learn more about the current situation and the effect the current crisis was having on their living conditions.

About 150,000 ethnic Georgians live in Greece. In April this year Greece was the second largest source of remittances to Georgia, with money transfers worth $13.3 million USD. Russia was the largest source of remittances ($37 million USD) while Italy placed third ($8.2 million).

From January to May 2015, remittances from Greece dropped 18.1 percent to $68.9 million (from $84.2 million) year-on-year.

Meanwhile Georgia’s Deputy Finance Minister Giorgi Kakauridze said: "The situation in Greece will of course affect money transfers to Georgia but remittances are already significantly reduced not only from Greece, but from other sources as well, so it will not have a significant effect on the Georgian economy anymore.”

In total remittances to Georgia were down by 23.2 percent to $438.1 million USD in the first five months of 2015 from $570.6 million USD in the same period last year.

The data, published by the National Bank of Georgia (NBG) showed Georgia experienced 24.4 percent less money transfers in April this year than in the same time in 2014.

NBG noted the total sum of money transfers from abroad constituted $91.1 million, which was $29.4 million less than the sum of money transfers in the same period of 2014.