On June 27, 2018, the Executive Board of the International Monetary Fund
(IMF) approved the 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$285 million or 100
percent of quota at the time of approval of the arrangement)) to support
the authorities’ economic reform program (Press Release
17/130).
The Executive Board’s approval allows for an immediate purchase of SDR30
million (or about US$ 42.25 million). The remaining amount will be phased
over the duration of the program, subject to four semi-annual reviews.
The Executive Board today also concluded the 2018 Article IV Consultation
with Georgia. A respective press release will be issued separately.
Following the Executive Board discussion, Mr Tao Zhang, Deputy Managing
Director and Acting Chair, said:
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. Important progress has also been made in implementing
the structural reform agenda. 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 will remain slightly contractionary in 2018. Tight control of
current spending and higher fiscal revenues, supported by improved economic
activity, will be used to refund additional VAT credits, increase capital
spending, and narrow the fiscal deficit. Reforms should continue to
strengthen revenue administration, monitor and contain fiscal risks, and
improve the fiscal rule.
The monetary policy stance remains adequate. The inflation targeting
framework, supported by the floating exchange rate regime, has served
Georgia well, and 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. However, Georgia’s crisis management framework
needs to be brought in line with best international practices, including by
improving 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.
Advancing reforms to scale up infrastructure spending and improve education
and competitiveness are key to promote sustainable and inclusive growth.
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Georgia: Selected Economic and Financial Indicators,
2015
– 19
|
|
|
2015
|
2016
|
2017
|
2017
|
2018
|
2018
|
2019
|
|
|
Actual
|
CR 17/3611/
|
Prel.
|
CR 17/3611/
|
Projections
|
|
National accounts and prices
|
(annual percentage change; unless otherwise indicated)
|
|
Real GDP
|
2.9
|
2.8
|
4.3
|
5.0
|
4.2
|
4.8
|
4.8
|
|
Nominal GDP (in billion of laris)
|
31.8
|
34.0
|
37.3
|
38.0
|
40.1
|
41.4
|
44.8
|
|
Nominal GDP (in billion of U.S. dollars)
|
14.0
|
14.4
|
15.0
|
15.2
|
16.3
|
16.9
|
18.3
|
|
GDP per capita (in thousand of U.S. dollars)
|
3.8
|
3.9
|
4.1
|
4.1
|
4.4
|
4.5
|
4.9
|
|
GDP deflator, period average
|
5.9
|
4.2
|
5.4
|
6.5
|
3.4
|
3.8
|
3.3
|
|
CPI, Period average
|
4.0
|
2.1
|
5.8
|
6.0
|
2.8
|
2.8
|
2.9
|
|
CPI, End-of-period
|
4.9
|
1.8
|
5.6
|
6.7
|
3.2
|
2.7
|
3.0
|
|
Investment and saving
|
(in percent of GDP)
|
|
Gross national saving
|
19.5
|
19.9
|
20.6
|
23.2
|
22.5
|
25.5
|
26.0
|
|
Investment
|
31.5
|
32.7
|
31.0
|
31.9
|
33.1
|
34.7
|
35.2
|
|
Public
|
5.6
|
5.0
|
5.8
|
6.1
|
6.5
|
6.8
|
7.4
|
|
Private
|
25.9
|
27.7
|
25.2
|
25.8
|
26.6
|
27.9
|
27.7
|
|
Consolidated government operations
|
(in percent of GDP)
|
|
Revenue and grants
|
28.1
|
28.3
|
28.9
|
29.0
|
28.6
|
27.9
|
27.3
|
|
o.w. Tax revenue
|
25.1
|
25.7
|
25.9
|
26.0
|
25.6
|
25.0
|
24.7
|
|
Expenditures
|
32.0
|
32.5
|
33.0
|
32.7
|
32.0
|
31.1
|
31.0
|
|
Current expenditures
|
25.0
|
26.0
|
24.7
|
24.2
|
24.0
|
23.1
|
22.5
|
|
Capital spending and budget lending
|
7.0
|
6.5
|
8.3
|
8.5
|
8.1
|
7.9
|
8.5
|
|
Net Lending/Borrowing (GFSM 2001)
|
-1.3
|
-1.6
|
-1.1
|
-0.5
|
-1.5
|
-1.6
|
-1.5
|
|
Augmented Net lending / borrowing (Program definition) 2/
|
-2.7
|
-3.0
|
-3.6
|
-2.9
|
-3.0
|
-2.8
|
-2.6
|
|
Public debt
|
41.4
|
44.4
|
42.3
|
44.9
|
42.7
|
42.8
|
43.5
|
|
o.w. NBG debt to the IMF
|
…
|
…
|
0.5
|
0.6
|
1.0
|
0.5
|
1.0
|
|
o.w. Foreign-currency denominated
|
32.5
|
35.1
|
33.1
|
35.6
|
34.0
|
33.2
|
33.1
|
|
Money and credit
|
(in percent; unless otherwise indicated)
|
|
Credit to the private sector (annual percentage change)
|
22.1
|
19.6
|
10.1
|
17.6
|
14.3
|
14.1
|
10.6
|
|
In constant exchange rate
|
4.3
|
12.0
|
15.5
|
20.1
|
14.3
|
18.0
|
10.7
|
|
Broad money (annual percentage change)
|
19.2
|
20.4
|
9.8
|
14.8
|
15.0
|
12.6
|
11.0
|
|
Broad money (incl. fx deposits, annual percentage change)
|
23.4
|
19.1
|
7.9
|
13.7
|
13.4
|
10.5
|
10.0
|
|
In constant exchange rate
|
5.1
|
13.3
|
14.7
|
16.9
|
15.0
|
16.2
|
11.1
|
|
Deposit dollarization (in percent of total)
|
66.8
|
69.9
|
64.8
|
63.7
|
64.1
|
59.7
|
57.5
|
|
Credit dollarization (in percent of total)
|
63.1
|
64.6
|
54.7
|
56.1
|
54.1
|
50.7
|
48.3
|
|
Credit to GDP
|
49.2
|
54.9
|
55.3
|
57.8
|
58.5
|
60.6
|
61.9
|
|
External sector
|
(in percent of GDP; unless otherwise indicated)
|
|
Current account balance
|
-12.0
|
-12.8
|
-10.4
|
-8.7
|
-10.6
|
-9.2
|
-9.2
|
|
Trade balance
|
-28.1
|
-26.9
|
-25.8
|
-25.3
|
-26.4
|
-27.2
|
-27.1
|
|
Terms of trade (ratio)
|
100.0
|
98.9
|
99.1
|
96.1
|
99.3
|
94.3
|
94.5
|
|
Gross international reserves (in billions of US$)
|
2.5
|
2.8
|
3.2
|
3.0
|
3.4
|
3.3
|
3.6
|
|
In percent of IMF Composite measure (floating)
|
89.9
|
90.9
|
93.3
|
90.1
|
95.2
|
93.3
|
98.8
|
|
Gross external debt
|
107.6
|
109.3
|
106.9
|
112.8
|
106.4
|
107.9
|
107.9
|
|
Gross external debt, excl. intercompany loans
|
86.1
|
91.8
|
87.4
|
95.6
|
86.5
|
90.9
|
90.6
|
|
Laris per U.S. dollar (period average)
|
2.27
|
2.37
|
2.5
|
2.51
|
…
|
…
|
…
|
|
Laris per euro (period average)
|
2.52
|
2.62
|
2.8
|
2.83
|
…
|
…
|
…
|
|
REER (period average; CPI based, 2010=100)
|
104.0
|
107.5
|
…
|
…
|
…
|
…
|
…
|
|
Sources: Georgian authorities; and Fund staff estimates.
|
|
1/ Staff report for the second review.
|
|
2/ Augmented Net lending / borrowing (Program definition) =
Net lending / borrowing - Budget lending.
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