An International Monetary Fund (IMF) team, led by Ms. Mercedes Vera-Martin,
visited Tbilisi during February 7-13, 2018 to discuss recent economic and
financial developments and progress with structural reforms. At the
conclusion of the visit, Ms. Vera-Martin issued the following statement:
“Economic developments in 2017 were positive. Growth reached 4.8 percent
driven by consumption and external demand. Rapid growth in exports,
tourism, and remittances supported economic activity and narrowed the
current account deficit to 7 percent of GDP through 2017Q3. Inflation in
2017 was above the target due to higher excise rates on fuel and tobacco
and reached 6.7 percent by end-year. In response to a pickup in inflation
expectations towards the end of the year, the National Bank of Georgia
increased the policy rate by 25 basis points, to 7¼ percent, in
mid-December. As expected, annual inflation declined to 4.3 percent in
January 2018.
“Preliminary estimates show a better-than-expected fiscal performance in
2017. The fiscal deficit (program definition) reached 2.9 percent of GDP, ½
percentage point lower than projected. The performance was driven by
broad-based revenue strength. Current primary expenditure remained
contained and public investment expanded. Going forward, containing current
spending and improving revenue collection remain critical for increasing
public investment to address infrastructure bottlenecks.
“The IMF mission discussed with the Georgian authorities
progress towards implementing structural reforms to support higher,
sustainable, and more inclusive growth. The authorities have taken steps to
strengthen revenue administration, support capital market development,
improve financial safety nets, and have submitted to Parliaments draft laws
on public-private partnership and pension reforms. The recent rebound in
growth offers an opportunity to advance these reforms, with a view to
mobilize domestic savings, increase private investment, and diversify the
economy. These reforms are needed to boost medium-term growth, create jobs,
and improve living standards.
“The team met with First Deputy Prime Minister Kumsishvili, Governor of the
National Bank Gvenetadze, Minister of Finance Bakhtadze, other senior
officials, and representatives of the private sector, civil society, and
the diplomatic community. The team would like to thank the authorities for
the open and constructive dialogue during the visit. The IMF team looks
forward to continuing its engagement with the authorities in the context of
the forthcoming Article IV consultation and second review of Georgia’s
IMF-supported program in April.”
