IMF Executive Board Concludes 2018 Article IV Consultation and Completes Second Review of Georgia’s Extended Fund Facility
IMF News, June 27, 2018
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- Published: June 27, 2018
Executive Board action and financing
- On June 27, 2018, the Executive Board approved completion of the second review of the three-year Extended Fund Facility (EFF) arrangement for Georgia.
- The EFF was approved on April 12, 2017 for an of SDR 210.4 million (about US$285 million or 100 percent of quota at the time of approval of the arrangement)).
- The Executive Board’s approval allows for an immediate purchase of SDR30 million (or about US$ 42.25 million).
- The remaining amount will be phased over the duration of the program, subject to four semi-annual reviews.
- The Executive Board also concluded the 2018 Article IV Consultation with Georgia; a respective press release will be issued separately.
Management assessment and outlook
- Quote from Mr Tao Zhang, Deputy Managing Director and Acting Chair:
- "Georgia has made notable progress under the IMF-supported program. All end-December quantitative performance criteria were met, most with significant margins, while most structural benchmarks have been implemented."
- "Economic growth has been stronger than initially envisaged, inflation has declined, the fiscal and external positions have improved, and public debt continues to decline."
- "Although risks to the outlook are balanced, Georgia remains vulnerable to external shocks, including from market volatility in major trading partners. Prudent macroeconomic policies and implementation of structural reforms are critical to address remaining vulnerabilities and promote higher and more inclusive growth."
Fiscal policy and public finances
- Fiscal policy will remain slightly contractionary in 2018.
- Policy measures and priorities:
- Tight control of current spending.
- Higher fiscal revenues, supported by improved economic activity.
- Use of resources to refund additional VAT credits, increase capital spending, and narrow the fiscal deficit.
- Continue reforms to strengthen revenue administration, monitor and contain fiscal risks, and improve the fiscal rule.
Monetary policy and financial sector
- The monetary policy stance is appropriate to bring inflation toward the target by the end of 2018.
- The inflation targeting framework, supported by the floating exchange rate regime, has served Georgia well; efforts to strengthen the framework should advance.
- The central bank should continue close monitoring of price and wage pressures, and monetary and financial conditions, to support an adequate monetary stance.
- Financial sector reforms under the program have strengthened financial supervision and regulation.
- Remaining vulnerabilities and recommended actions:
- Georgia’s crisis management framework needs to be brought in line with best international practices.
- Improve crisis management procedures and the frameworks for bank resolution and emergency liquidity assistance.
- Growth-enhancing structural reforms have been initiated and should be accelerated to foster private sector-led activity over the medium term.
- Priority structural reforms include advancing reforms to scale up infrastructure spending and improve education and competitiveness to promote sustainable and inclusive growth.
Georgia: Selected Economic and Financial Indicators, 2015–19 (selected series and exact figures as reported)
- Real GDP (annual percentage change)
- 2015: 2.9
- 2016: 2.8
- 2017: 4.3
- 2018 (CR 17/361 Prel. Projections): 5.0
- 2019: 4.2
- 2019 (second column): 4.8
- Nominal GDP (in billion of laris)
- 2015: 31.8
- 2016: 34.0
- 2017: 37.3
- 2018: 38.0
- 2019: 40.1
- 2019 (second column): 41.4
- (additional figure): 44.8
- Nominal GDP (in billion of U.S. dollars)
- 2015: 14.0
- 2016: 14.4
- 2017: 15.0
- 2018: 15.2
- 2019: 16.3
- 2019 (second column): 16.9
- (additional figure): 18.3
- GDP per capita (in thousand of U.S. dollars)
- 2015: 3.8
- 2016: 3.9
- 2017: 4.1
- 2018: 4.4
- 2019: 4.5
- (additional figure): 4.9
- GDP deflator, period average
- 2015: 5.9
- 2016: 5.4
- 2017: 6.5
- 2018: 3.4
- 2019: 3.3
- CPI, Period average
- 2015: 4.0
- 2016: 2.1
- 2017: 5.8
- 2018: 6.0
- CPI, End-of-period
- 2015: 1.8
- 2016: 5.6
- 2017: 6.7
- 2018: 3.2
- 2019: 2.7
- (additional figure): 3.0
- Investment and saving (in percent of GDP)
- Gross national saving
- 2015: 19.5
- 2016: 19.9
- 2017: 20.6
- 2018: 23.2
- 2019: 22.5
- (additional figures): 25.5, 26.0
- Investment
- 2015: 31.5
- 2016: 32.7
- 2017: 31.0
- 2018: 31.9
- 2019: 33.1
- (additional figures): 34.7, 35.2
- Public (investment)
- 2015: 6.1
- 2016: 6.8
- 2017: 7.4
- 2018: 8.1
- 2019: 7.9
- Private (investment)
- 2015: 25.9
- 2016: 27.7
- 2017: 25.2
- 2018: 25.8
- 2019: 26.6
- (additional figure): 27.9
- Consolidated government operations
- Revenue and grants
- 2015: 28.1
- 2016: 28.3
- 2017: 28.9
- 2018: 29.0
- 2019: 28.6
- (additional figure): 27.3
- o.w. Tax revenue
- 2015: 25.1
- 2016: 25.7
- 2017: 25.6
- 2018: 25.0
- 2019: 24.7
- Expenditures
- 2015: 32.0
- 2016: 32.5
- 2017: 33.0
- 2018: 31.1
- Current expenditures
- 2015: 24.2
- 2016: 24.0
- 2017: 23.1
- Capital spending and budget lending
- 2015: 7.0
- 2016: 8.3
- 2017: 8.5
- Net Lending/Borrowing (GFSM 2001)
- 2015: -1.3
- 2016: -1.6
- 2017: -1.1
- 2018: -0.5
- 2019: -1.5
- Augmented Net lending / borrowing (Program definition) 2/
- 2015: -2.7
- 2016: -3.0
- 2017: -3.6
- 2018: -2.9
- 2019: -2.8
- (additional figure): -2.6
- Public debt
- 2015: 44.4
- 2016: 42.3
- 2017: 44.9
- 2018: 42.7
- 2019: 42.8
- (additional figure): 43.5
- o.w. NBG debt to the IMF
- (missing for 2015): …
- 2016: 0.5
- 2017: 0.6
- 2018: 1.0
- o.w. Foreign-currency denominated
- 2015: 35.1
- 2016: 35.6
- 2017: 33.2
- Money and credit (in percent; unless otherwise indicated)
- Credit to the private sector (annual percentage change)
- 2015: 22.1
- 2016: 19.6
- 2017: 10.1
- 2018: 17.6
- 2019: 14.3
- (additional figures): 14.1, 10.6
- In constant exchange rate
- 2015: 12.0
- 2016: 15.5
- 2017: 20.1
- 2018: 18.0
- 2019: 10.7
- Broad money (annual percentage change)
- 2015: 19.2
- 2016: 20.4
- 2017: 9.8
- 2018: 14.8
- 2019: 12.6
- (additional figures): 11.0
- Broad money (incl. fx deposits, annual percentage change)
- 2015: 23.4
- 2016: 19.1
- 2017: 13.7
- 2018: 13.4
- 2019: 10.5
- (additional figures): 10.0
- (additional figures): 5.1, 13.3, 14.7, 16.2, 11.1
- Deposit dollarization (in percent of total)
- 2015: 66.8
- 2016: 69.9
- 2017: 64.8
- 2018: 63.7
- 2019: 64.1
- (additional figures): 59.7, 57.5
- Credit dollarization (in percent of total)
- 2015: 63.1
- 2016: 64.6
- 2017: 54.7
- 2018: 56.1
- 2019: 54.1
- (additional figures): 50.7, 48.3
- Credit to GDP
- 2015: 49.2
- 2016: 54.9
- 2017: 55.3
- 2018: 57.8
- 2019: 58.5
- (additional figures): 60.6, 61.9
- External sector (in percent of GDP; unless otherwise indicated)
- Current account balance
- 2015: -12.0
- 2016: -12.8
- 2017: -10.4
- 2018: -8.7
- 2019: -10.6
- (additional figure): -9.2
- Trade balance
- 2015: -28.1
- 2016: -26.9
- 2017: -25.8
- 2018: -25.3
- 2019: -26.4
- (additional figures): -27.2, -27.1
- Terms of trade (ratio)
- 2015: 100.0
- 2016: 98.9
- 2017: 99.1
- 2018: 96.1
- 2019: 99.3
- (additional figures): 94.3, 94.5
- Gross international reserves (in billions of US$)
- 2015: 2.5
- 2016: 3.6
- In percent of IMF Composite measure (floating)
- 2015: 89.9
- 2016: 90.9
- 2017: 93.3
- 2018: 90.1
- 2019: 95.2
- (additional figure): 98.8
- Gross external debt
- 2015: 107.6
- 2016: 109.3
- 2017: 106.9
- 2018: 112.8
- 2019: 106.4
- (additional figure): 107.9
- Gross external debt, excl. intercompany loans
- 2015: 86.1
- 2016: 91.8
- 2017: 87.4
- 2018: 95.6
- 2019: 86.5
- (additional figure): 90.6
- Laris per U.S. dollar (period average)
- 2015: 2.27
- 2016: 2.37
- 2017: 2.51
- Laris per euro (period average)
- 2015: 2.52
- 2016: 2.62
- 2017: 2.83
- REER (period average; CPI based, 2010=100)
- 2015: 104.0
- 2016: 107.5
Sources: Georgian authorities; and Fund staff estimates.
