Abstract 

One of the prerequisites for the stability of a country's financial system is to minimize financial risks caused by the uncontrolled growth of the state's (domestic and foreign) debt. In the first part of the study, the state of Georgia's (foreign and domestic) debt was examined, studied, and analyzed after the restoration of its independence from 1996 to 2023 using official statistical data.

The dynamics of the growth of the "State External Debt of Georgia," as recorded in the laws of Georgia on the state budget, and the "Total External Debt of Georgia," calculated by the National Bank of Georgia based on the methodology of the International Monetary Fund, have been determined and analyzed in relation to the main macroeconomic parameters of the country.

Based on the search and systematization of the annual budget allocations presented in the article of the reduction of liabilities (i.e., the amount intended for servicing previously taken debt(s)) in the laws of Georgia on the state budget, and an analysis in comparison with the important macroeconomic parameters of the country, an opinion is presented regarding the consideration of the aforementioned process as a significant risk to the country's financial system.

Based on the research results, recommendations are presented in the final part of the paper:

- Based on the research findings, it is recommended to prioritize the improvement of the methodological framework for determining and calculating the state debt of Georgia, with a particular emphasis on its external component. It is advisable to consider the suggestions of international financial institutions and draw on the experiences of other countries to enhance the methodological principles that align with the country's economic reality. This should encompass the determination and calculation of both domestic and foreign elements that constitute the state debt of Georgia.

- To ensure the sustainability of Georgia's state debt and implement protective mechanisms against negative impacts on the country's economy, it is recommended to consider introducing new indicators in the process of forming the state budget. This includes maintaining the established threshold parameter of the state (domestic and foreign) debt to the gross domestic product, as well as introducing new indicators such as the state foreign debt of Georgia and the budgetary allocations for its annual services, and marginal indicators of the ratio to the country's exports.

- Since the restoration of Georgia's independence on April 9, 1991, there has been an urgent need to accurately determine the dynamics of the country's gross domestic product and compare it with other important economic parameters. It is also important to recalculate the data for the current year and previous periods using the new 2008 methodology (SNA 2008) to ensure accuracy and consistency in the data.

Keywords:public debt; budget expenses; export