The International Monetary Fund (IMF) expects economic activity to remain strong in Georgia, supported by a favourable global environment and the firm implementation of programme policies.
The Executive Board of the IMF approved the completion of the second review of the three-year Extended Fund Facility (EFF) arrangement for Georgia on June 27, 2018.
Following the Executive Board discussion, Deputy Managing Director and Acting Chair Tao Zhang said that Georgia had made notable progress under the IMF-supported programme.
Zhang also said that all end-December quantitative performance criteria were met, mostly with significant margins, while most structural benchmarks have been implemented.
Economic growth has been stronger than initially predicted, inflation has declined, the fiscal and external positions have improved, and public debt continues to decline. Important progress has also been made in implementing the structural reform agenda. Although risks to the outlook are balanced, Georgia remains vulnerable to external shocks, including from market volatility in major trading partners. Prudent macroeconomic policies and implementation of structural reforms are critical to address remaining vulnerabilities and promote higher and more inclusive growth”, said Zhang.
The main messages from Zhang’s comment were:
- “The inflation targeting framework, supported by the floating exchange rate regime, has served Georgia well, and efforts to strengthen the framework should advance”.
- “Financial sector reforms under the programme have strengthened financial supervision and regulation. However, Georgia’s crisis management framework needs to be brought in line with best international practices, including by improving crisis management procedures and the frameworks for bank resolution and emergency liquidity assistance”.
- “Growth-enhancing structural reforms have been initiated and should be accelerated to foster private sector-led activity over the medium term. Advancing reforms to scale up infrastructure spending and improve education and competitiveness are key to promote sustainable and inclusive growth”.
