Press Release: IMF Executive Board Completes Fifth Review of Georgia's PRGF Arrangement and Approves US$21.1 Million Disbursement
March 1, 2007Press Release No. 07/36
The Executive Board of the International Monetary Fund (IMF) completed today the fifth review of Georgia's 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' requests for a waiver for the nonobservance of the end-June 2006 structural performance criterion on the introduction of a poverty alleviation program targeted on households living in extreme poverty and for an extension of the arrangement until September 30, 2007.
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$147.5 million). Completion of this review will enable Georgia to draw the equivalent of SDR 14 million (about US$21.1 million), bringing total disbursements under the arrangement to the equivalent of SDR 84 million (about US$126.4 million).
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 economy has continued its remarkable performance, in spite of the loss of major export markets and higher energy prices. This resilience is a testament to the success of the administration's emphasis on improving the business climate while maintaining macroeconomic stability. In addition, implementation of the government's well-targeted extreme poverty benefit program should help to reduce poverty in Georgia.
"The authorities are advancing their structural reform agenda to consolidate and upgrade revenue administration, create greater accountability and transparency in the public sector, and establish the conditions for the development of a nascent financial sector. Moving ahead in these areas is important for sustainable growth in the medium term. In this regard, prompt enactment of fit and proper and anti-money laundering legislation will be crucial.
"In addition to maintaining high growth, the authorities' economic program for 2007 aims to keep inflation in single digits by restraining government demand pressures, and limiting foreign exchange market interventions in the face of inflows, thereby allowing more exchange rate flexibility. Going forward, the government should be ready to tighten fiscal and monetary policies beyond levels now envisaged, if inflationary pressures pick up.
Strong and sustained implementation of the authorities' reform policies this year should further protect Georgia's economy from external shocks and maintain its attractiveness to investors," Mr. Kato said.