IMF Executive Board Completes First Review under the Stand-By Arrangement with Georgia
IMF News, December 21, 2022
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- IMF Executive Board Completes First Review under the Stand-By Arrangement with Georgia
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- Published: December 21, 2022
Review completion and financing
- The Executive Board completed the first review of the three-year Stand-By Arrangement (SBA) for Georgia.
- Completion of the review enables access of SDR 30 million (about US$40 million).
- The Georgian authorities continue to treat the arrangement as precautionary.
Macroeconomic performance and outlook
- Strong growth of 10 percent is projected for 2022.
- Growth drivers in 2022: limited adverse spillovers from Russia’s war in Ukraine; buoyant tourism revenues; a surge in war-related inbound migration and financial inflows; and a rise in transit trade through Georgia.
- Inflation has been slowing but remains elevated at around 10½ percent due to high commodity prices and strong domestic demand.
- Both growth and inflation are expected to moderate in 2023.
- Factors expected to moderate growth and inflation in 2023: a slowdown in global trade; tighter financial conditions; falling commodity prices; recent lari appreciation; and sufficiently tight monetary policy.
- Uncertainty and risks to the outlook remain high.
Policy assessment and recommendations
- The authorities have appropriately used recent positive outturns to rebuild fiscal and external buffers; program performance has been satisfactory.
- Fiscal policy:
- Authorities used revenue overperformance to achieve faster deficit reduction in 2022 and committed to further deficit reduction to comply with their fiscal rule in 2023.
- Further progress recommended on reducing tax expenditures, improving revenue administration, and strengthening public investment management to increase fiscal space for priority spending and improve the quality of capital spending.
- State-owned enterprises and energy:
- Important actions taken on state-owned enterprise governance reform and renewable energy development.
- Continued implementation of strategies is important, including to guard against fiscal risks.
- Monetary and external policy:
- The National Bank of Georgia rebuilt international reserves more quickly than programmed.
- Monetary policy needs to remain sufficiently tight to bring down inflation; policymakers should be ready to tighten monetary policy further if high inflation persists.
- Continued exchange rate flexibility and prudent accumulation of reserves will provide further resilience against external shocks.
- Structural reforms:
- Advancing structural reforms will support stronger and more inclusive growth.
- Priorities include improving competitiveness by strengthening the business environment and enhancing governance.
- Authorities' plans for education reform and training programs will help reduce unemployment and enhance inclusion.
- It will be important to prioritize among key infrastructure projects.
Key statistics (Table 1. Georgia: Selected Economic and Financial Indicators, 2020–24)
- Real GDP (annual percentage change)
- 2020: -6.8
- 2021: 10.5
- 2022: 10.0
- 2023: 4.0
- 2024: 5.2
- Nominal GDP (in billion of laris)
- 2020: 49.3
- 2021: 60.0
- 2022: 72.5
- 2023: 80.1
- 2024: 86.9
- Nominal GDP (in billion of U.S. dollars)
- 2020: 15.8
- 2021: 18.6
- 2022: 24.7
- 2023: 27.1
- 2024: 29.7
- GDP per capita (in thousand of U.S. dollars)
- 2020: 4.3
- 2021: 5.0
- 2022: 6.7
- 2023: 7.3
- 2024: 8.0
- GDP deflator, period average
- 2020: 7.2
- 2021: 10.3
- 2022: 6.5
- 2023: 3.0
- CPI, Period average
- 2020: 9.6
- 2021: 12.0
- 2022: 6.0
- CPI, End-of-period
- 2020: 2.4
- 2021: 13.9
- 2022: 3.8
- Consolidated government operations (in percent of GDP)
- Revenue and grants
- 2020: 25.2
- 2021: 25.5
- 2022: 26.5
- 2023: 25.9
- 2024: 25.8
- o.w. Tax revenue
- 2020: 22.3
- 2021: 22.6
- 2022: 23.9
- 2023: 23.6
- Total Expenditure
- 2020: 34.5
- 2021: 31.6
- 2022: 29.3
- 2023: 28.9
- 2024: 28.0
- Current expenditures
- 2020: 26.3
- 2021: 24.6
- 2022: 21.7
- 2023: 21.9
- 2024: 22.1
- Net acquisition of nonfinancial assets
- 2020: 8.2
- 2021: 6.9
- 2022: 7.6
- 2023: 7.0
- 2024: 5.9
- Net Lending/Borrowing (GFSM 2001)
- 2020: -9.3
- 2021: -6.0
- 2022: -2.8
- 2023: -2.9
- 2024: -2.2
- Augmented Net lending / borrowing (Program definition) 1/
- 2020: -9.4
- 2021: -6.1
- 2022: -3.1
- 2023: -2.3
- Public debt
- 2020: 60.2
- 2021: 49.7
- 2022: 41.2
- 2023: 42.0
- 2024: 41.4
- o.w. Foreign-currency denominated
- 2020: 47.6
- 2021: 39.9
- 2022: 31.4
- 2023: 31.5
- Money and credit (in percent; unless otherwise indicated)
- Credit to the private sector (annual percentage change)
- 2020: 22.4
- 2021: 12.4
- 2022: 8.5
- In constant exchange rate
- 2020: 9.0
- 2021: 18.2
- 2022: 10.9
- 2023: 8.8
- Broad money (annual percentage change)
- 2020: 11.4
- 2021: 7.4
- 2022: 12.6
- 2023: 11.1
- Broad money (excl. fx deposits, annual percentage change)
- 2020: 18.8
- 2021: 17.9
- 2022: 12.8
- 2023: 13.7
- 2024: 12.2
- External sector (in percent of GDP; unless otherwise indicated)
- Current account balance
- 2020: -12.5
- 2021: -10.4
- 2022: -5.6
- 2023: -6.6
- 2024: -5.7
- Trade balance
- 2020: -20.0
- 2021: -20.3
- 2022: -22.0
- 2023: -22.2
- 2024: -18.4
- Terms of trade (percent change)
- 2020: 5.7
- 2021: -13.6
- 2022: 2.5
- 2023: 3.5
- 2024: 1.5
- Gross international reserves (in billions of US$)
- 2020: 3.9
- In percent of IMF Composite measure (floating)
- 2020: 107.4
- 2021: 106.9
- 2022: 98.6
- 2023: 83.3
- 2024: 81.4
- Gross external debt
- 2020: 110.5
- 2021: 99.8
- 2022: 77.7
- 2023: 73.1
- 2024: 68.4
Source: Press Release No. 22/443, IMF, December 21, 2022.
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