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A number of firms are quite enthusiastic about the 2010-11 period in Georgia. "In the last six to eight months there has been growth in finance work, which is astonishing given what you hear about the market, [and] we have seen commercial banks offering some offside services, letters of credit, financing and so forth," says a lawyer....

A number of firms are quite enthusiastic about the 2010-11 period in Georgia. "In the last six to eight months there has been growth in finance work, which is astonishing given what you hear about the market, [and] we have seen commercial banks offering some offside services, letters of credit, financing and so forth," says a lawyer.

Another explains that the "political situation has stabilised, Russia won't attack again. There has been quite an impressive growth of 6.2% – 6.4% in the economy in 2010 when the World Bank was only predicting 4% at the start, and some projects were earmarked a couple of years ago and they are now starting". "2010 was not as before the economic crisis but figures are not far behind and there are some longer term investments," concludes one partner.

However, some prominent commentators argue that in reality, from 2010 to 2011, Georgia has experienced a flat-lining economy. "Some firms have been getting work and great mandates, but overall the quality has not continued on an upwards trend," says a partner.

International financial institutions still drive the economy, most prominently the International Finance Corporation (IFC), Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB). The government has been working very hard to attract private investment to Georgia and, says one partner: "We have got to have the most modernised government in the world - all notifications are on a database, you can do everything online, all licensing is computerised."

But it is not yet enough, and one example of a shortfall is in corporate tax, which is very favourable on the surface. "They are really trying a deep tax reform, tax law reform and administrative reform to liberalise the rules of enforcement and support tax payers' rights, lessen the extremity of tax penalties," says one partner adding the caveat: "They find violations where there were none and this becomes a way to raise tax; low taxes but high penalties."

There have been some very large private transactions in the market. The Georgian Railways $250 million Eurobond issue, the first ever by a government entity, BP's $30 billion project to increase capacity in the South Caucuses pipeline from the Caspian Sea to Turkey, Maersk's investment into the Poti Port on the Back Sea and a series of investments in hydropower have been the highlights of 2010-11.

The deals exploit Georgia's strongest assets: its strategic geographical location and vast hydropower reserves (which an estimated 70-80%, or about $3 billion worth of investment, is yet untapped). Mining has also seen some activity on the back of high copper and gold prices. There has also been talk of Ryanair opening a direct route from London to Tblisi.