IMF Executive Board Concludes 2025 Article IV Consultation with Georgia
IMF News, July 22, 2025
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Bibliographic details
- Published: July 22, 2025
Executive summary
- The Executive Board completed the Article IV Consultation for Georgia on a lapse of time basis on July 21, 2025. The authorities consented to the publication of the Staff Report.
- Georgia has shown remarkable resilience amid heightened domestic and geopolitical uncertainty, with strong growth, near target inflation, and moderate debt levels.
- Near-term priorities include building further reserve buffers, strengthening central bank and state-owned enterprise governance, and advancing structural reforms to improve labor market outcomes and expand economic opportunities.
Economic performance and outlook
- Recent performance:
- Annual growth has averaged over 9 percent since 2021.
- Headline inflation has returned to target after undershooting for two years.
- Public debt declined to 36 percent of GDP in 2024.
- Projections:
- Real GDP growth: 7.2 percent in 2025; converge to 5 percent in the medium term.
- Inflation: projected to remain near the 3 percent target.
- Current account deficit: projected to stabilize around 5 percent of GDP.
- Reserves: projected to improve gradually, supported by opportunistic FX purchases and a recovery in FDI.
- Sector drivers: continued strength in tourism, ICT, and transport services; immigration, financial inflows, and transit trade linked to the war in Ukraine have supported growth.
Risks to the outlook
- Balanced risks amid high global uncertainty and political tensions.
- External risks:
- Resolution of the war in Ukraine could reverse migration and transit trade gains; reconstruction and regional stability could offset impacts.
- Indirect effects from weaker investor sentiment, slower trading partner growth, or supply chain disruptions could weigh on exports and raise import costs.
- Potential benefit from lower oil prices and trade diversion.
- Domestic risks:
- Heightened political uncertainty and potential sanctions could dampen FDI and tourism and pressure the lari.
- Buffers: Georgia’s fiscal and financial buffers expected to help cushion adverse shocks.
Monetary policy and National Bank of Georgia (NBG) governance
- Policy stance:
- NBG should maintain a broadly neutral policy stance, remain flexible and data driven.
- With inflation near target and the policy rate close to neutral, the current stance is appropriate; caution warranted given global uncertainty and rising domestic food prices.
- Opportunistic reserve accumulation should be prioritized while preserving exchange rate flexibility.
- Operational recommendations:
- Avoid actions that could undermine policy transmission and credibility, such as sustained deviations between interbank and policy rates.
- Provide clearer communication on the balance of risks and policy rationale.
- Governance recommendations:
- Strengthen NBG governance and independence: ensure a non-executive board majority; limit discretionary financial transfers to the government; clarify succession rules for the governor; strengthen board member qualifications; adopt a collegial decision-making model.
Fiscal policy, SOEs, and public finances
- Fiscal stance and targets:
- Fiscal policy is well calibrated; a neutral medium-term fiscal stance with deficits below 2.5 percent of GDP would help stabilize the debt ratio well below the fiscal rule ceiling.
- Revenue and spending:
- Advance revenue mobilization via tax policy and administration reforms to expand the tax base and streamline tax expenditures, based on a strengthened medium-term revenue strategy with timelines and expected yields.
- Improve spending efficiency through better public investment management processes and spending reviews.
- Better target social assistance to the most vulnerable; improve public works program and employment incentives.
- SOE reform:
- Move expeditiously to develop and implement a reform roadmap.
- Ensure a strong oversight role for the Ministry of Finance.
- Separate the state’s shareholder, regulatory, and policy functions and strengthen corporate governance to contain fiscal risks.
Financial sector and macroprudential framework
- System soundness and vulnerabilities:
- Financial sector is sound; reforms have advanced, but further steps needed to strengthen resilience and address evolving risks.
- Continue efforts to reduce dollarization and monitor rapid consumer loan growth and lari funding pressures.
- Policy priorities:
- Enhance macroprudential and crisis management frameworks.
- Fully operationalize the resolution framework and strengthen deposit insurance by resolving remaining legal and operational issues.
- Establish an effective supervisory framework for virtual asset service providers and develop a consolidated supervision framework for cross-border and nonbank activities.
- Improve competition in financial services, including through open banking.
Structural reforms for inclusive, job-rich growth
- Priorities:
- Address high structural unemployment, low agricultural productivity, and skill gaps through improved vocational training, teacher quality, and targeted agricultural support.
- Harness emigration benefits by promoting return migration, leveraging remittances, and attracting foreign talent.
- Continue infrastructure investment and regional integration to reduce transport and logistics costs and boost competitiveness.
- Reinforce judicial independence, empower the Anti-Corruption Bureau, and ensure effective enforcement of asset declaration reforms in light of recent governance backsliding.
Staff recommendation
- Staff recommend that the next Article IV consultation take place on the standard 12-month cycle.
Key statistics (selected indicators, 2024-30)
- Real GDP (annual percentage change): 2024: 9.4; 2025: 7.2; 2026: 5.3; 2027: 5.0
- Nominal GDP (in billions of laris): 2024: 91.9; 2025: 102.5; 2026: 111.7; 2027: 121.5; 2028: 131.9; 2029: 143.4; 2030: 155.9
- Nominal GDP (in billions of U.S. dollars): 2024: 33.8; 2025: 36.7; 2026: 39.2; 2027: 41.4; 2028: 43.6; 2029: 46.1; 2030: 48.6
- GDP per capita (in thousands of U.S. dollars): 2024: 9.1; 2025: 9.9; 2026: 10.6; 2027: 11.2; 2028: 11.8; 2029: 12.5; 2030: 13.2
- GDP deflator, period average: 2024: 3.8; 2025: 4.1; 2026: 3.5
- CPI, period average: 2024: 1.1; 2025: 3.4; 2026: 3.1; 2027: 3.0
- CPI, end-of-period: 2024: 1.9; 2025: 3.6
- Consolidated government operations (in percent of GDP): Revenue and grants: 2024: 28.0; 2025: 27.7; 2026: 27.8; 2027: 27.6
- o.w. Tax revenue: 2024: 25.3; 2025: 25.0; 2026: 25.6; 2027: 25.8
- Total Expenditure: 2024: 30.3; 2025: 30.0; 2026: 30.1; 2027: 29.9; 2028: 29.8
- Current expenditures: 2024: 22.5; 2025: 22.6
- Net acquisition of nonfinancial assets: 2024: 7.7; 2025: 7.4; 2026: 7.5; 2027: 7.3
- Net lending/borrowing (GFSM 2001): 2024: -2.3; 2025: -2.2
- Augmented net lending/borrowing 1/: 2024: -2.4
- Public debt: 2024: 36.1; 2025: 34.7; 2026: 34.1; 2027: 34.3; 2028: 34.5; 2029: 34.9; 2030: 35.7
- o.w. Foreign-currency denominated: 2024: 25.2; 2025: 23.1; 2026: 22.0; 2027: 21.7; 2028: 20.9; 2029: 20.0; 2030: 18.9
- Money and credit:
- Credit to the private sector: 2024: 18.5; 2025: 13.7; 2026: 9.0; 2027: 8.7; 2028: 8.6
- In constant exchange rate: 2024: 17.0; 2025: 15.5; 2026: 8.5
- Broad money: 2024: 14.5; 2025: 13.3; 2026: 11.5; 2027: 11.3
- Excluding FX deposits: 2024: 10.4; 2025: 11.9; 2026: 11.7; 2027: 11.6
- Deposit dollarization (in percent of total): 2024: 52.7; 2025: 52.1; 2026: 51.9; 2027: 51.7; 2028: 51.4; 2029: 51.2; 2030: 51.0
- Credit dollarization (in percent of total): 2024: 42.9; 2025: 42.5; 2026: 42.1; 2027: 41.7; 2028: 41.3; 2029: 40.9; 2030: 40.5
- Credit to GDP (in percent) 2/: 2024: 66.0; 2025: 67.4
- External sector (in percent of GDP; unless otherwise indicated):
- Current account balance (in billions of US$): 2024: -1.5; 2025: -1.6; 2026: -1.8; 2027: -2.0; 2028: -2.1
- Current account balance: 2024: -4.4; 2025: -4.6; 2026: -4.8; 2027: -4.9; 2028: -5.0
- Trade balance: 2024: -19.2; 2025: -18.9; 2026: -19.1; 2027: -19.3; 2028: -19.4
- Terms of trade (percent change): 2024: -2.8; 2025: -0.2; 2026: 0.1; 2027: -0.3; 2028: 0.5; 2029: -0.6
- Gross international reserves (in billions of US$): 2024: 4.4; 2025: 4.7; 2026: 4.9; 2027: 5.5; 2028: 6.2; 2029: 6.8; 2030: 7.1
- In percent of IMF ARA metric 3/: 2024: 79.6; 2025: 81.1; 2026: 82.4; 2027: 88.0; 2028: 95.5; 2029: 100.5; 2030: n.a.
- In months of next year's imports: 2024: 2.7; 2025: 2.6; 2026: 2.9
- Gross external debt: 2024: 66.8; 2025: 62.4; 2026: 58.5; 2027: 55.9; 2028: 53.0; 2029: 49.4; 2030: 45.7
Source: IMF Executive Board Concludes 2025 Article IV Consultation with Georgia (Press Release No. 25/259, July 22, 2025).