IMF Executive Board Approves US$280 million Stand-By Arrangement for Georgia
June 15, 2022
- The IMF approved today a three-year Stand-By Arrangement (SBA) for Georgia of US$280 million.
- The program focuses on rebuilding fiscal buffers, strengthening fiscal frameworks, reducing external vulnerabilities and inflation, maintaining financial sector resilience, and fostering stronger and more inclusive growth.
- The authorities intend to treat the arrangement as precautionary.
Washington, DC : The Executive Board of the International Monetary Fund (IMF) today approved a US$280 million (100 percent of quota and SDR 210.4 million) Stand-By Arrangement for Georgia which provides support for the authorities’ economic policies over the next three years. The Board’s decision makes about US$40 million (SDR 30 million or 14.3 percent of Georgia’s quota) immediately available. The Georgian authorities intend to treat the new arrangement as precautionary.
The authorities’ IMF-supported program seeks to further entrench macroeconomic stability, build resilience, and strengthen medium-term growth as the country emerges from the COVID-19 pandemic and contends with spillovers from the war in Ukraine.
Following the Executive Board’s discussion on Georgia, Mr. Bo Li, Deputy Managing Director, made the following statement:
“The Georgian economy has been resilient to the COVID-19 pandemic, reflecting the authorities’ strong policy response, which helped to cushion the impact of the shock. The robust recovery from the pandemic is likely to slow, given Georgia’s vulnerability to spillovers from the war in Ukraine, which are also expected to increase inflation and widen the current account deficit.
“The Georgian authorities have adopted a program focused on addressing macroeconomic challenges, including reducing the fiscal deficit, inflation, and external vulnerabilities, and advancing the necessary structural reforms to strengthen growth. The program will be supported by a Stand-by Arrangement, which the authorities intend to treat as precautionary.
“Rebuilding fiscal buffers, while reducing debt and protecting the vulnerable will be key. The authorities recognize the importance of adhering to the fiscal rule to anchor policy credibility, and are targeting full compliance with the fiscal rule’s deficit ceiling by 2023. Important measures, such as saving revenue overperformance, strengthening tax administration, streamlining tax expenditures, and developing a medium-term revenue strategy would help facilitate priority spending while rebuilding fiscal buffers. Strengthening public financial management and reforming state-owned enterprises would help to mitigate fiscal risks.
“The central bank’s monetary policy stance remains appropriately focused on bringing down high inflation. The authorities are committed to maintaining exchange rate flexibility, strengthening reserves, and enhancing the central bank’s communication strategy. They have managed the initial impact of sanctions, with the central bank requiring banks to adhere to international sanctions, which has limited risks.
“The authorities have made commendable progress on enhancing financial sector regulation and supervision, aiding financial sector resilience to recent shocks. The next steps focus on enhancing financial safety nets, fostering capital market development, and strengthening the AML/CFT framework. A sound financial sector along with sustained strong macroeconomic policy implementation will help reduce dollarization and related vulnerabilities.
“A reinvigorated structural reform agenda will help support stronger and more inclusive growth. Measures to strengthen the business environment and enhance governance would help to improve competitiveness. The authorities are focused on tackling entrenched high unemployment by advancing education reform and strengthening active labor market policies. Efforts to increase investment in information technology infrastructure and accelerate digitalization are welcome.”
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Georgia: Selected Economic and Financial Indicators, 2019–23 |
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|
2019 |
2020 |
2021 |
2022 |
2023 |
|
|
Actual |
Preliminary |
Projections |
||
|
National accounts and prices |
(annual percentage change; unless otherwise indicated) |
||||
|
Real GDP |
5.0 |
-6.8 |
10.4 |
3.2 |
5.8 |
|
Nominal GDP (in billions of laris) |
49.3 |
49.3 |
60.2 |
69.0 |
77.0 |
|
Nominal GDP (in billions of U.S. dollars) |
17.5 |
15.8 |
18.7 |
22.3 |
24.2 |
|
GDP per capita (in thousands of U.S. dollars) |
4.7 |
4.3 |
5.0 |
6.0 |
6.5 |
|
GDP deflator, period average |
4.9 |
7.3 |
10.6 |
11.3 |
5.3 |
|
CPI, Period average |
4.9 |
5.2 |
9.6 |
10.9 |
5.1 |
|
CPI, End-of-period |
7.0 |
2.4 |
13.9 |
8.1 |
3.4 |
|
Consolidated government operations |
(in percent of GDP) |
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|
Revenue and grants |
27.1 |
25.2 |
25.4 |
25.2 |
25.3 |
|
o.w. Tax revenue |
23.7 |
22.3 |
22.5 |
22.8 |
23.1 |
|
Expenditures |
28.9 |
34.5 |
31.4 |
29.1 |
28.0 |
|
Expense |
21.4 |
26.3 |
24.5 |
21.7 |
21.9 |
|
Net acquisition of non-financial assets |
7.6 |
8.2 |
6.9 |
7.4 |
6.1 |
|
Capital spending |
8.0 |
8.6 |
7.6 |
8.0 |
6.4 |
|
Privatization proceeds |
-0.4 |
-0.4 |
-0.7 |
-0.7 |
-0.3 |
|
Net lending / borrowing after adjustment |
-1.8 |
-9.3 |
-6.0 |
-3.9 |
-2.6 |
|
Net budget lending |
0.2 |
0.1 |
0.1 |
0.1 |
0.2 |
|
Augmented Net lending / borrowing (program definition) 1/ |
-2.1 |
-9.4 |
-6.1 |
-4.0 |
-2.8 |
|
General government debt 2/ |
40.4 |
60.2 |
49.5 |
47.1 |
45.8 |
|
o.w. Foreign-currency denominated |
32.0 |
47.6 |
39.8 |
37.5 |
35.5 |
|
Money and credit |
(annual percentage change; unless otherwise indicated) |
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|
Credit to the private sector |
20.7 |
22.4 |
12.4 |
20.9 |
11.6 |
|
In constant exchange rate |
16.1 |
9.0 |
18.2 |
21.2 |
9.9 |
|
Broad money |
17.6 |
24.6 |
11.3 |
19.9 |
14.0 |
|
In constant exchange rate (estimate) |
14.3 |
14.4 |
15.4 |
20.4 |
11.8 |
|
Broad money (excl. fx deposits) |
18.8 |
18.8 |
17.8 |
16.8 |
14.6 |
|
External sector |
(in percent of GDP; unless otherwise indicated) |
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|
Current account balance |
-5.5 |
-12.4 |
-9.8 |
-10.9 |
-7.5 |
|
Trade balance |
-21.4 |
-20.0 |
-20.1 |
-20.3 |
-19.6 |
|
Terms of trade, goods (percent change) |
-0.6 |
4.1 |
-14.0 |
-8.9 |
1.4 |
|
Gross international reserves (in billions of US$) 3/ |
3.5 |
3.9 |
4.3 |
3.3 |
3.3 |
|
In percent of IMF Composite measure (floating) |
101.1 |
108.1 |
107.7 |
79.4 |
74.9 |
|
Gross external debt |
87.7 |
109.6 |
98.2 |
85.8 |
80.6 |
|
Sources: Georgian authorities; and Fund staff estimates. |
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1/ Augmented Net lending / borrowing (program definition) = Net lending / borrowing - Budget lending. |
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2/ Excludes domestic legacy debt amounting to 1.2 percent of GDP. |
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3/ Using current exchange rates; includes SDR allocations (SDR 144 million before 2021 and SDR 346 million since 2021). |
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MEDIA RELATIONS
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Phone: +1 202 623-7100Email: MEDIA@IMF.org