Statement by IMF Executive Directors at the Conclusion of their Visit to Georgia

Press Release No. 09/359
October 10, 2009

A mission of Executive Directors of the International Monetary Fund (IMF) comprising Ms. Meg Lundsager, Messrs. Age Bakker, HE Jianxiong, Thomas Moser, Klaus D. Stein, and Jens Henriksson issued the following statement on October 10, 2009 in Tbilisi at the conclusion of its visit to Georgia:

“We are grateful for the opportunity to visit the country and thank the people of Georgia, President Michael Saakashvilli, Prime Minister Nika Gilauri and other members of his economic team for their warm hospitality and productive discussions. This visit has provided us with the opportunity to meet with the authorities and a range of stakeholders, including representatives of the public and private sectors. We discussed the challenges facing the country in the context of the armed conflict of last summer and the global economic crisis.

“Georgia’s economy has been hit by the crisis and the economic and financial impact will continue into 2010. Given the uncertain outlook, the authorities’ commitment to exchange rate flexibility, and prudent monetary and fiscal policies remain crucial.

“We support the fiscal stimulus put in place by the authorities to alleviate the impact of the crisis, and their commitment to begin fiscal adjustment in 2010 consistent with a steady reduction in the budget deficit to more sustainable levels. We also welcome steps being taken to further strengthen fiscal policy through reforms in the monitoring, planning, execution, and auditing of public expenditures.

“In the area of exchange rate policy, we commend the authorities for a successful transition from the daily fixing session to foreign exchange auctions. This should set the stage for more exchange rate flexibility in response to market conditions.

“On the monetary policy front, we support the authorities’ actions to ease monetary conditions in support of the economic recovery but also recognize the limits of traditional monetary policy instruments in the current environment.

“Georgia’s banking sector has weathered pressures so far. However, as elsewhere, heightened bank vulnerabilities will require continued close monitoring, backed by adequate crisis preparedness.

“We support the IMF continuing excellent relationship with the Georgian authorities.”



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