Business Insider Georgia conducted an exclusive interview with Alkis Vryenios Drakinos, Regional Director for the Caucasus.

How does the EBRD assess the current economic and geopolitical trends in the Caucasus region for 2025?

The EBRD sees the South Caucasus entering 2025 with moderating but resilient growth, as the post‑2022 boost from intermediated trade and migration flows wanes, while services and connectivity continue to underpin activity. Across the EBRD regions, economies are projected to continue growing well in 2026, amid heightened uncertainty from tariff changes, weaker external demand, and geopolitical tensions. 

What are the main structural challenges affecting the region as a whole, and Georgia in particular?

The South Caucasus faces a complex set of structural challenges that shape its long-term growth trajectory. Regionally, persistent geopolitical uncertainty and trade fragmentation continue to expose economies to external shocks. Energy dependency remains a critical issue: although renewable potential is significant, integration and storage infrastructure are still underdeveloped, slowing the green transition. Skills and productivity gaps further hinder competitiveness, particularly as global demand shifts toward ICT, logistics, and climate-resilient sectors. Connectivity bottlenecks—especially in transport corridors—limit the region’s ability to fully leverage its strategic position as a transit hub between Europe and Asia.

For Georgia, these challenges are compounded by the need to strengthen governance and rule-of-law frameworks to maintain investor confidence. Capital markets, while improving, remain shallow, restricting access to long-term local-currency financing. Accelerating renewable energy deployment and modernizing grid infrastructure are essential for energy security and export ambitions, particularly in light of projects such as the Black Sea Submarine Cable. Human capital alignment is another priority: vocational education and digital skills must scale up to support growth in ICT and green industries. Finally, Georgia’s potential as a logistics and energy hub depends on harmonized standards and infrastructure upgrades to deepen regional integration. According to the EBRD’s latest assessments, addressing these structural issues will be critical to sustaining Georgia’s strong growth momentum and attracting larger-scale private investment.

In terms of infrastructure and energy integration, where does the EBRD see the greatest opportunities in the region?

The EBRD identifies infrastructure and energy integration as pivotal drivers of sustainable growth and regional connectivity in the South Caucasus. The most transformative opportunity lies in the development of cross-border energy corridors, particularly the Black Sea Submarine Cable and the associated Green Energy Corridor. This initiative not only strengthens energy security but also positions the region as a strategic supplier of clean energy to Europe, aligning with global decarbonization goals.

Beyond interconnection, grid modernization within Georgia and Armenia is critical to integrate variable renewable sources such as hydropower, wind, and solar. Investments in smart grids, storage solutions, and transmission upgrades will enable more reliable and efficient power flows across borders. The EBRD is actively supporting these efforts through financing and technical assistance, ensuring compliance with international environmental and social standards.

On the transport side, the Bank sees significant potential in multimodal logistics corridors, including Armenia’s North-South Road Corridor and Georgia’s Black Sea port infrastructure. These projects enhance the region’s role as a transit hub along the Middle Corridor, linking Central Asia to Europe. Upgrading roads, railways, and port facilities, combined with digitalized customs and border systems, will reduce trade costs and improve resilience against geopolitical disruptions.

Finally, the EBRD emphasizes synergies between energy and transport investments. For example, integrating renewable-powered charging infrastructure for freight and passenger transport supports both decarbonization and connectivity objectives. By leveraging blended finance and public-private partnerships, these projects can attract large-scale private investment while delivering long-term economic and environmental benefits.

Which areas of the EBRD portfolio are currently the highest priority in Georgia.

The annual investments for 2025 will reach to almost €350 million that is 12 projects invested in private sector companies from various sectors of economy. Our investments span a diverse mix of sectors—from financial institutions and manufacturing to energy, transport, and ICT—with a growing share dedicated to green projects. In fact, more than half of our private-sector investments in recent years have supported climate resilience, renewable energy, and energy efficiency initiatives. This approach ensures that our financing not only drives economic growth but also aligns with Georgia’s long-term sustainability goals.

Some examples are:

We extended €8.6 million to Crystal Microbank to expand MSME lending and green finance through GEFF, improving access to credit in rural areas and supporting climate-resilient investments. We continued our cooperation with TBC Bank and Credo. In automotive sector we lent €25 million to Tegeta Motors for development of a new service center near Tbilisi and the launch of Tegeta Academy, advancing vocational education and digital training aligned with EU standards.

In Industrial & Manufacturing sector we partnered with Indorama Ventures extending EUR 62 million to finance Rustavi Azot to modernize its operations, focusing on energy efficiency upgrades, resource optimization, and environmental standards compliance, reinforcing Georgia’s role in sustainable industrial supply chains.

Over 56% of private-sector investments in 2025 were green, channelling funds into climate-resilient technologies for businesses and households.

These projects demonstrate EBRD’s commitment to competitiveness, sustainability, and innovation, they strengthen Georgia’s private sector and accelerate its transition toward a low-carbon economy.

Since the start of our operations in Georgia in 1992, the EBRD has invested more than €5.7 billion across over 300 projects, making us one of the largest institutional investors in the country. 

To what extent is Georgia prepared to attract larger-scale private sector investments, and where should reform efforts be focused?

Georgia boasts strong macroeconomic fundamentals, yet further enhancements to investor-friendly frameworks are essential to attract larger-scale capital flows. Unlocking private investment hinges on robust rule-of-law and governance reforms to reduce perceived risk and strengthen confidence. Equally important is the deepening of capital markets—particularly through the implementation of covered bond frameworks—and the introduction of additional liquidity instruments to support long-term local currency financing. Finally, addressing skills gaps and aligning vocational education and training (VET) with industry needs will be critical to sustaining competitiveness across emerging sectors.

How do global digitalization trends impact Georgia’s economy, and in which areas does the EBRD support this process?

Digitalisation is a powerful catalyst for productivity, inclusion, and market integration. The EBRD’s Digital Approach prioritises building robust digital infrastructure and driving enterprise-level digital transformation. Through our Advice for Small Businesses programme, we have supported numerous private-sector clients in adopting innovative solutions and embracing digitalisation. Our initiatives include projects such as the digitalisation of environmental permitting systems, streamlining compliance processes and aligning them with EU standards—making regulatory frameworks more efficient and transparent.

What progress has been observed in hydroelectric power, renewable energy, and energy security initiatives?

Since the early 1990s, the EBRD has been a cornerstone investor in Georgia’s energy sector, driving both green transition and security of supply. Our engagement spans hydropower rehabilitation, grid modernization, and policy support for renewables, complemented by strategic infrastructure initiatives that position Georgia as a regional energy hub.

For example, Enguri Hydropower Plant (HPP) has been a flagship project since 1998. Across multiple phases, the EBRD has committed over €205 million to ensure structural integrity, upgrade tunnels and penstocks, and modernize control systems. Enguri remains Georgia’s largest power station, supplying roughly 30% of national electricity demand, and its rehabilitation has been critical for system reliability and resilience. 

Additional financing supported Vardnili HPP cascade and smaller hydropower facilities, reinforcing Georgia’s renewable backbone and reducing reliance on imports.

Last year we signed Ruisi Wind Farm is a flagship renewable energy project for Georgia, combining large-scale capacity, international financing, and advanced technology. 

All these projects represent a major step toward decarbonization and energy security in the Caucasus region promoting climate resilience and reducing carbon footprints.

We plan to also diversify into solar as well. 

11) How does the EBRD evaluate Armenia’s economic environment? Which sectors are most promising?

The EBRD regards Armenia as an economy with solid short-term growth and macroeconomic stability, buoyed by its resilient sectors and structural reforms. Yet, geopolitical dynamics, low diversification, and institutional weaknesses remain significant headwinds. In response, EBRD assistance is strategically geared toward enhancing private-sector competitiveness, green transition, and social resilience, emphasizing inclusive development and long-term sustainability.

EBRD’s Armenia Country Strategy 2025–30 focuses on enhancing private-sector inclusivity & competitiveness. This encompasses bolstering financial intermediation, MSME support, and inclusion of vulnerable groups like refugees, while promoting economic diversification and trade. And the other important sector is accelerating the sustainable infrastructure, such as scaling public and private investments in energy efficiency, renewables, green urban development, and infrastructure linked to Armenia’s Nationally Determined Contributions. 

So Promising areas include SME finance, ICT/innovation, transport & logistics, to diversify trade routes, renewable energy/energy efficiency, and Green Cities. The Bank invested €396m in 2024 and we will have yet another record year for 2025 up to EUR 430 million with 23 projects.

How is Armenia progressing in energy security and renewables, and what role does the EBRD play?

EBRD’s role includes financing municipal infrastructure and energy projects bringing in private sector capital and policy dialogue to improve market frameworks and bankable pipelines in solar, wind, storage, and efficiency. 

Also, the EBRD has played a pivotal role in shaping Armenia’s solar energy landscape, driving projects that combine scale, innovation, and sustainability. At the heart of this transformation is Masrik-1, Armenia’s first utility-scale solar power plant. Developed by Fotowatio Renewable Ventures and supported by EBRD financing alongside IFC and EU grants, Masrik-1 delivers 55 MW of clean energy—enough to power over 20,000 homes. Generating approximately 128 GWh annually, it prevents more than 40,000 tonnes of CO₂ emissions each year, setting a benchmark for renewable energy in the Caucasus.

Building on this success, EBRD is now supporting Masdar’s 200 MW solar project in Aragatsotn, one of the largest renewable energy investments in Armenia to date. This project will significantly boost the country’s solar capacity, strengthen energy security, and accelerate its transition toward a low-carbon economy. With concessional financing from the Clean Technology Fund complementing EBRD’s commercial loan, Masdar’s project exemplifies how blended finance can unlock large-scale green infrastructure.

Beyond these flagship projects, EBRD’s commitment to Armenia’s solar industry extends through Green Economy Financing Facilities (GEFF), enabling local businesses and households to adopt solar technologies and energy-efficient solutions. From supporting solar panel manufacturing to financing rooftop installations, EBRD is fostering a vibrant ecosystem that empowers Armenia to meet its climate targets and diversify its energy mix.

What potential do you see for transport projects in Armenia?

Significant potential. As you know we financed the North‑South Road Corridor part of Sisian–Kajaran section. It will help significantly reduce travel times, costs, and accidents, and strengthen connectivity to Georgia’s ports. And we look forward to working on more infrastructure projects in Armenia enhancing its connectivity to diversify country’s trade routes.  

What opportunities exist to deepen economic cooperation across the region, particularly involving Georgia?

Three are three promising directions of regional cooperation and growth:

• Energy: Coordinated renewables deployment and interconnection
• Transport & logistics: Upgrading road/rail nodes along the Middle Corridor and North‑South linkages to Black Sea ports; harmonising standards and border processes. 
• Capital & digital markets: Aligning green finance taxonomies, promoting local‑currency instruments, and scaling digital connectivity via parallel fiber in the Black Sea project. 

Considering Georgia’s well-developed banking system and annual growth, how accessible are EBRD financial instruments for local banks?

Accessibility is very high through our partner banks through our numerous on-lending instruments. Through our longstanding cooperation with selected Georgian banks we have provided access to financing to thousands of Georgian SMEs and we shall continue doing so. EBRD also supports capital market instruments to diversify funding sources locally, enhancing long‑term GEL finance availability. 

What volume of investments does the EBRD plan to implement in Georgia this year, and which sectors will be the primary focus?

EBRD maintains a steady pipeline in corporate and financial sectors, including green bonds and sustainability‑linked instruments. Emphasis will be on connectivity, renewables and local currency financing to support the private sector development.  

Volume of operations depends on market demand. We are pleased to observe a growing trend of supporting private sector development in Georgia across all key sectors of the economy. 

Our future work here will focus on fostering a resilient economy built on transparency, innovation, and inclusivity. By strengthening the investment climate and ensuring stability, we aim to support an environment where private businesses thrive.