Press Release: IMF Executive Board Completes Sixth and Final Review of Georgia's PRGF Arrangement and Approves US$21.3 Million Disbursement
August 20, 2007Press Release No. 07/182
The Executive Board of the International Monetary Fund (IMF) today completed the six and final review of Georgia's economic performance under the three-year program supported by the Poverty Reduction and Growth Facility (PRGF) arrangement. In completing the review, the Board approved the authorities' request for a waiver for the nonobservance of the end-December 2006 structural performance criterion on the enactment of legislation bringing Georgian fit and proper regulations in line with international best practice.
The Executive Board approved the PRGF arrangement on June 4, 2004 (see Press Release No. 04/107) for an amount equivalent to SDR 98 million (about US$149.4 million). Completion of this review will enable Georgia to make the final drawing for an amount equivalent to SDR 14 million (about US$21.3 million) under the arrangement.
Following the Executive Board discussion of Georgia's economic performance, Mr. Takatoshi Kato, Deputy Managing Director and Acting Chair, made the following statement:
"Georgia's economic performance has been impressive in recent years, with rapid growth maintained over the last year despite the loss of major export markets. Such resilience reflects the authorities' pursuit of consistently strong policies, allowing them to achieve macroeconomic stability and remarkable improvements in fiscal performance and the business environment.
"This success has, however, brought challenges, in the form of large foreign inflows and a widening current account deficit. In response, the government plans to implement a tighter-than-budgeted fiscal stance this year to avoid overheating and limit pressures for lari appreciation, which could undermine international competitiveness. The National Bank of Georgia will maintain its focus on keeping inflation in single-digits. In the medium term, budget surpluses are likely to be needed as long as foreign inflows remain strong.
"The authorities intend to press ahead with an ambitious structural reform agenda which, supported by prudent fiscal policies, will be key to maintaining competitiveness in the medium term. In this regard, passage of fit and proper legislation will be important for the healthy development of the banking sector.
"The authorities intend to remain closely engaged with the Fund after the expiration of the PRGF arrangement," Mr. Kato said.