PRESS STATEMENT
IMF Resident Representative Office
Tbilisi, Georgia
October 30, 2003

An IMF team led by Mr. Paulo Neuhaus, Assistant Director in the European II Department, visited Georgia from October 23 through October 29. The mission met with President Eduard Shevardnadze, State Minister Avtandil Jorbenadze, and senior members of the government economic team. The team visited Georgia to discuss preparation of the 2004 budget and plans for structural reforms. The mission also reviewed recent economic developments and discussed with the authorities the economic outlook for the remainder of 2003.

The mission was encouraged by the robust economic growth through September 2003, driven by construction of the Baku-Ceyhan pipeline, a boom in residential construction, and recovery in agriculture and some industrial sectors. The mission expressed, however, its concern that indicative fiscal targets for September 2003 agreed in the summer were missed. In particular, tax revenues fell short of expectations.

The mission was pleased to learn that the government has initiated work on a possible liberalization and simplification of the foreign trade regime and that the audits of Georgian Railways, Poti Port and Madneuli Mining are under way. The mission encouraged the government to adhere to its donor-supported strategy for reform of the energy sector by providing its full support to the management companies hired by the government to introduce best international practices in the sector and improve electricity bill collections.

The mission urged the government to take quickly a number of actions to build a strong foundation for program negotiations in early 2004. These include submission of a revised draft 2004 budget bill to parliament consistent with a strong program; efforts to minimize deviations from the indicative macroeconomic targets for December 2003; continued progress on the audits of state-owned enterprises; and finalization of the strategies for a broad civil service reform, which is viewed as critical to anti-corruption efforts, and trade liberalization.