Analyzing Balance Sheet Vulnerabilities in a Dollarized Economy : The Case of Georgia

Author/Editor:

Andreas Billmeier ; Johan Mathisen

Publication Date:

July 1, 2006

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Balance-sheet analysis (BSA) complements traditional flow-oriented macroeconomic analysis by gauging mismatches in aggregate and sectoral balance sheets of an economy. Enabled by recent progress in data availability, this paper applies BSA to Georgia, focusing on currency mismatches. In reviewing developments over the last five years, the paper finds that the still-high level of dollarization continues to create financial vulnerabilities, but that the overall level of currency mismatch has fallen and that liquidity problems are unlikely, in part owing to a strengthening of sectoral buffers, hedges, and insurance against shocks. Policy recommendations include accumulating reserves, strengthening securities markets, enhancing banking supervision, and maintaining a flexible exchange rate.

Series:

Working Paper No. 06/173

Subject:

Frequency:

Monthly

English

Publication Date:

July 1, 2006

ISBN/ISSN:

9781451864335/1018-5941

Stock No:

WPIEA2006173

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

29

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