USAID Supports Georgia to Build a Modern Capital Market, Access Diversified Sources of Capital

Speeches Shim

Thursday, December 10, 2020

USAID is supporting Georgia to build a modern, globally-integrated capital market, a key condition for enterprise-driven economic growth.  The recent linking of depositary notes by Silknet is the latest sign that Georgia is making progress toward building this investment ecosystem.

Georgia’s emerging capital market reached an important milestone when Silknet JSC, the largest telecommunications firm in the South Caucasus, linked depositary notes to $200 million in bonds it had previously issued on Euronext Dublin, Ireland’s main stock exchange.  The depositary notes allow investors to hold Silknet bonds listed on the Euronext without the need to trade directly with the exchange.  Instead, investors can work directly with Georgian brokers. 

Law on Investment Funds Creates Framework for Enterprise-Driven Economic Growth

This listing of depositary notes by Silknet is evidence that a modern capital market ecosystem is emerging in Georgia.  Silknet is also setting an example for other companies to follow, demonstrating the opportunities for portfolio trading that are increasingly enabled by Georgia’s Law on Investment Funds, passed in 2020. 

Notably, the new legislation creates the regulatory framework necessary for globally-integrated portfolio investment - i.e., capital markets that can provide Georgian businesses with diversified sources of capital, both foreign and domestic, with which to expand their operations.

In general, portfolio investment supports Georgia’s economic growth in two ways: by making it easier for Georgian investors to trade on foreign markets; and, by allowing Georgian businesses to access a larger pool of international capital for investment and expansion of their enterprises.  This has become even more important as COVID-19 pushes banks to adopt more conservative lending practices, limiting the domestic supply of capital.

USAID Promotes Reform in Partnership with Government of Georgia, Private Sector

USAID contributed significantly to the development of the Law on Investment Funds. First, by providing technical assistance during the drafting and passage of the new law.  Now, the USAID Economic Governance Program is partnering with the Government of Georgia and with the private sector on the law’s implementation.

Moving forward, USAID, through the USAID Economic Governance Program, will partner with the Government of Georgia and the private sector to further develop capital market infrastructure. This is an important step for Georgia to build a modern economy that is better integrated with major international markets, including in the European Union.