{
  "title": "IMF Executive Board Completes the Sixth Review under the Extended Fund Facility and Approves the Request for Augmentation of Access to Support Georgia Address the COVID-19 Pandemic",
  "publication": "IMF News, May 1, 2020",
  "sourceUrl": "https://www.imf.org/en/news/articles/2020/05/01/pr20202-georgia-imf-execbrd-complete-6threv-eff-approves-request-support-address-covid19",
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  "summary": "The IMF Executive Board completed the Sixth Review of Georgia’s economic reform program supported by a three-year extended arrangement under the Extended Fund Facility (EFF).",
  "publishDate": "2020-05-01",
  "sections": [
    {
      "heading": "Executive Board action and program status",
      "content": "- The IMF Executive Board completed the Sixth Review of Georgia’s economic reform program supported by a three-year extended arrangement under the Extended Fund Facility (EFF).\n- The Executive Board approved an augmentation of access of 130 percent of quota, bringing total access under the EFF to SDR484 million (230 percent of quota).\n- The completion of the review will release SDR147 million (about $200 million) for budget support to help Georgia meet urgent balance of payments and fiscal needs stemming from the COVID-19 pandemic.\n- Total disbursements so far under the arrangement amount to SDR327 million (about $448 million).\n- The Executive Board approved the authorities’ request for a waiver of nonobservance for the performance criteria on the ceiling on the augmented general government deficit."
    },
    {
      "heading": "Financial support and intended use",
      "content": "- SDR147 million (about $200 million) disbursement designated for budget support to address urgent balance of payments and fiscal needs related to the COVID-19 pandemic, including increased spending on health services and social protection.\n- The IMF financial support is expected to contribute substantially toward increasing health spending and social safety nets."
    },
    {
      "heading": "Economic outlook and pandemic impact",
      "content": "- The pandemic is expected to have a significant impact on Georgia’s economy, interrupting the positive economic trajectory of past years.\n- Observed and cited economic effects include:\n  - A drop in external demand and tourism.\n  - A widened current account deficit.\n  - Depreciation of the exchange rate.\n  - A substantial decline in economic activity.\n- Authorities’ response measures noted:\n  - Sweeping containment measures.\n  - Targeted support to households and most affected sectors.\n  - Increased public spending and mobilization of external financing."
    },
    {
      "heading": "Policy advice and recommendations (from IMF Deputy Managing Director Tao Zhang)",
      "content": "- Maintain vigilance to safeguard debt sustainability, particularly against fiscal risks arising from state-owned enterprises.\n- Monetary policy:\n  - The National Bank of Georgia has appropriately maintained a moderately tight monetary policy stance while allowing the exchange rate to remain flexible.\n  - Monetary policy decisions should be based on close monitoring of inflationary expectations.\n- Structural reforms recommended to support medium-term growth potential and faster recovery:\n  - Adopt the indexation rule for public pension to help sustain pensioners’ incomes.\n  - Complete the banking resolution framework.\n  - Implement the insolvency framework.\n- The augmentation of access under the EFF should support authorities’ policies to address the COVID-19 shock and help meet urgent balance-of-payments needs."
    },
    {
      "heading": "Selected economic and financial indicators (2018–21) — key figures from Table 1",
      "content": "- Real GDP (annual percentage change):\n  - 2018: 4.8\n  - 2019: 4.6\n  - CR 19/3721/ New GDP Proj. 2020: 5.1\n  - 2021: 4.3\n  - 2020 (projection reflecting COVID shock): -4.0\n  - 2021 (alternate/new projection): 4.0\n- Output gap:\n  - 2018: -1.5\n  - 2019: -1.0\n  - 2020: -0.5\n  - 2021: -1.7\n- Nominal GDP (in billion of laris):\n  - 2018: 44.6\n  - 2019: 49.0\n  - CR 19/3721/ New GDP Proj. 2020: 50.0\n  - 2021: 53.4\n  - 2020 (projection reflecting COVID shock): 50.3\n  - 2021 (alternate/new projection): 54.5\n- Nominal GDP (in billion of US$):\n  - 2018: 17.6\n  - 2019: 17.5\n  - CR 19/3721/ New GDP Proj. 2020: 17.7\n  - 2021: 18.7\n  - 2020 (projection reflecting COVID shock): 15.1\n- GDP per capita (in thsnd. of US$):\n  - 2018: 4.7\n  - 2019: 4.1\n- CPI, period average:\n  - 2018: 2.6\n  - 2019: 4.5\n  - CR 19/3721/ New GDP Proj. 2020: 3.6\n- CPI, end-of-period:\n  - 2018: 1.5\n  - 2019: 7.2\n  - CR 19/3721/ New GDP Proj. 2020: 7.0\n  - 2021: 3.0\n  - 2020 (projection reflecting COVID shock): 3.5\n- Investment and saving (in percent of GDP):\n  - Gross national saving:\n    - 2018: 26.5\n    - 2019: 26.2\n    - CR 19/3721/ New GDP Proj. 2020: 28.7\n    - 2021: 20.3\n    - 2020 (projection reflecting COVID shock): 25.5\n  - Investment:\n    - 2018: 33.3\n    - 2019: 31.2\n    - CR 19/3721/ New GDP Proj. 2020: 33.8\n    - 2021: 31.1\n    - 2020 (projection reflecting COVID shock): 31.6\n    - 2021 (alternate/new projection): 33.0\n  - Public investment share:\n    - 2018: 7.9\n    - 2019: 6.6\n  - Private investment share:\n    - 2018: 26.9\n    - 2019: 24.0\n    - CR 19/3721/ New GDP Proj. 2020: 25.9\n    - 2021: 24.4\n    - 2020 (projection reflecting COVID shock): 25.2\n    - 2021 (alternate/new projection): 26.6\n- Consolidated government operations (percent of GDP):\n  - Revenue and grants:\n    - 2018: 26.4\n    - 2019: 26.7\n    - CR 19/3721/ New GDP Proj. 2020: 25.4\n    - 2021: 24.1\n    - 2020 (projection reflecting COVID shock): 24.7\n  - o.w. Tax revenue:\n    - 2018: 23.4\n    - 2019: 23.5\n    - CR 19/3721/ New GDP Proj. 2020: 23.7\n    - 2021: 23.0\n    - 2020 (projection reflecting COVID shock): 21.4\n    - 2021 (alternate/new projection): 22.2\n  - Expenditures:\n    - 2018: 29.2\n    - 2019: 28.8\n    - CR 19/3721/ New GDP Proj. 2020: 29.1\n    - 2021: 28.3\n    - 2020 (projection reflecting COVID shock): 32.9\n    - 2021 (alternate/new projection): 29.9\n  - Current expenditures:\n    - 2018: 21.3\n    - 2019: 21.0\n    - CR 19/3721/ New GDP Proj. 2020: 23.2\n  - Capital spending and budget lending:\n    - 2018: 7.6\n    - 2019: 8.1\n    - CR 19/3721/ New GDP Proj. 2020: 6.9\n    - 2021: 6.7\n    - 2020 (projection reflecting COVID shock): 6.8\n  - Net lending/borrowing (GFSM 2001):\n    - 2018: -0.8\n    - 2019: -1.8\n    - CR 19/3721/ New GDP Proj. 2020: -2.2\n    - 2021: -8.2\n    - 2020 (projection reflecting COVID shock): -4.4\n  - Augmented net lending / borrowing (program definition) 3/:\n    - 2018: -2.3\n    - 2019: -2.1\n    - CR 19/3721/ New GDP Proj. 2020: -2.0\n    - 2021: -2.5\n    - 2020 (projection reflecting COVID shock): -8.5\n    - 2021 (alternate/new projection): -4.8\n- Public debt 4/ (percent of GDP):\n  - 2018: 41.3\n  - 2019: 44.1\n  - CR 19/3721/ New GDP Proj. 2020: 42.7\n  - 2021: 44.5\n  - 2020 (projection reflecting COVID shock): 62.8\n  - 2021 (alternate/new projection): 59.6\n  - o.w. Foreign-currency denominated:\n    - 2018: 32.5\n    - 2019: 34.3\n    - CR 19/3721/ New GDP Proj. 2020: 33.7\n    - 2021: 50.6\n    - 2020 (projection reflecting COVID shock): 45.6\n  - Public debt net of government deposits 4/:\n    - 2018: 38.8\n    - 2019: 40.9\n    - CR 19/3721/ New GDP Proj. 2020: 39.8\n    - 2021: 54.0\n    - 2020 (projection reflecting COVID shock): 51.2\n- Money and credit:\n  - Credit to the private sector (annual % change):\n    - 2018: 19.3\n    - 2019: 17.3\n    - CR 19/3721/ New GDP Proj. 2020: 19.9\n    - 2021: 8.5\n    - 2020 (projection reflecting COVID shock): 5.9\n  - In constant exchange rate:\n    - 2018: 17.0\n    - 2019: 11.5\n    - CR 19/3721/ New GDP Proj. 2020: 15.2\n    - 2021: 7.5\n    - 2020 (projection reflecting COVID shock): 8.2\n  - Broad money (annual % change):\n    - 2018: 14.0\n    - 2019: 14.7\n    - CR 19/3721/ New GDP Proj. 2020: 16.1\n    - 2021: 9.2\n  - Broad money (incl. FX deposits, annual % change):\n    - 2018: 13.3\n    - 2019: 14.9\n    - CR 19/3721/ New GDP Proj. 2020: 16.0\n    - 2021: 3.1\n    - 2020 (projection reflecting COVID shock): 8.3\n    - 2021 (alternate/new projection): 11.9\n    - Additional entries displayed in table: 11.8, -4.6, 16.7\n  - Deposit dollarization (in percent of total):\n    - 2018: 62.1\n    - 2019: 62.9\n    - CR 19/3721/ New GDP Proj. 2020: 61.9\n    - 2021: 62.7\n    - 2020 (projection reflecting COVID shock): 62.4\n    - 2021 (alternate/new projection): 58.4\n  - Credit dollarization (in percent of total):\n    - 2018: 55.8\n    - 2019: 53.7\n    - CR 19/3721/ New GDP Proj. 2020: 54.4\n    - 2021: 51.3\n    - 2020 (projection reflecting COVID shock): 51.6\n    - 2021 (alternate/new projection): 49.2\n  - Credit-to-GDP ratio:\n    - 2018: 58.8\n    - 2019: 62.5\n    - CR 19/3721/ New GDP Proj. 2020: 66.2\n    - 2021: 63.3\n- External sector:\n  - Current account balance (in billions of US$):\n    - 2018: -1.2\n    - 2019: -0.9\n    - CR 19/3721/ New GDP Proj. 2020: -1.3\n  - Current account balance (percent of GDP):\n    - 2018: -6.8\n    - 2019: -5.0\n    - CR 19/3721/ New GDP Proj. 2020: -5.1\n    - 2021: -4.9\n    - 2020 (projection reflecting COVID shock): -11.3\n    - 2021 (alternate/new projection): -7.5\n  - Trade balance (percent of GDP):\n    - 2018: -23.4\n    - 2019: -20.9\n    - CR 19/3721/ New GDP Proj. 2020: -21.0\n    - 2021: -20.5\n    - 2020 (projection reflecting COVID shock): -20.4\n    - 2021 (alternate/new projection): -19.8\n  - Terms of trade (percent change):\n    - 2018: 0.2\n    - 2019: 1.8\n    - CR 19/3721/ New GDP Proj. 2020: 3.9\n  - Gross international reserves (in billions of US$):\n    - 2018: 3.3\n    - 2019: 3.4\n  - Gross international reserves (in percent of IMF Composite measure (floating)):\n    - 2018: 95.4\n    - 2019: 96.4\n    - CR 19/3721/ New GDP Proj. 2020: 99.0\n    - 2021: 95.9\n    - 2020 (projection reflecting COVID shock): 103.9\n    - 2021 (alternate/new projection): 98.5\n  - Gross external debt:\n    - 2018: 100.3\n    - 2019: 109.3\n    - CR 19/3721/ New GDP Proj. 2020: 103.4\n    - 2021: 108.1\n    - 2020 (projection reflecting COVID shock): 136.3\n    - 2021 (alternate/new projection): 124.1\n  - Gross external debt, excl. intercompany loans:\n    - 2018: 82.2\n    - 2019: 87.7\n    - CR 19/3721/ New GDP Proj. 2020: 85.0\n    - 2021: 86.7\n    - 2020 (projection reflecting COVID shock): 111.4\n    - 2021 (alternate/new projection): 102.2\n- Exchange rates and REER:\n  - Lari per US$ (period average):\n    - 2018: 2.53\n    - 2019: 2.82\n  - Lari per euro (period average):\n    - 2018: 2.99\n    - 2019: 3.15\n  - REER (period average; CPI based, 2010=100):\n    - 2018: 104.1\n    - 2019: 98.1\n\nIMF Communications Department, May 1, 2020.\n\n---\n\n Content in this bundle\n\n- Press Release-English\n  - Press Release-English (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Press Release-English (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Georgia and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/Publications/CR/Issues/2019/12/18/Republic-of-Georgia-Fifth-Review-Under-the-Extended-Arrangement-Requests-for-Waivers-of-48888\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2020/05/01/pr20202-georgia-imf-execbrd-complete-6threv-eff-approves-request-support-address-covid19"
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    "Published: May 1, 2020",
    "The IMF Executive Board completed the Sixth Review of Georgia’s economic reform program supported by a three-year extended arrangement under the Extended Fund Facility (EFF).",
    "The Executive Board approved an augmentation of access of 130 percent of quota, bringing total access under the EFF to SDR484 million (230 percent of quota).",
    "The completion of the review will release SDR147 million (about $200 million) for budget support to help Georgia meet urgent balance of payments and fiscal needs stemming from the COVID-19 pandemic.",
    "Total disbursements so far under the arrangement amount to SDR327 million (about $448 million).",
    "The Executive Board approved the authorities’ request for a waiver of nonobservance for the performance criteria on the ceiling on the augmented general government deficit.",
    "SDR147 million (about $200 million) disbursement designated for budget support to address urgent balance of payments and fiscal needs related to the COVID-19 pandemic, including increased spending on health services and social protection.",
    "The IMF financial support is expected to contribute substantially toward increasing health spending and social safety nets.",
    "The pandemic is expected to have a significant impact on Georgia’s economy, interrupting the positive economic trajectory of past years.",
    "Observed and cited economic effects include:",
    "Authorities’ response measures noted:",
    "Maintain vigilance to safeguard debt sustainability, particularly against fiscal risks arising from state-owned enterprises.",
    "Monetary policy:",
    "Structural reforms recommended to support medium-term growth potential and faster recovery:",
    "The augmentation of access under the EFF should support authorities’ policies to address the COVID-19 shock and help meet urgent balance-of-payments needs.",
    "Real GDP (annual percentage change):",
    "Output gap:",
    "Nominal GDP (in billion of laris):",
    "Nominal GDP (in billion of US$):",
    "GDP per capita (in thsnd. of US$):",
    "CPI, period average:",
    "CPI, end-of-period:",
    "Investment and saving (in percent of GDP):",
    "Consolidated government operations (percent of GDP):",
    "Public debt 4/ (percent of GDP):",
    "Money and credit:",
    "External sector:",
    "Exchange rates and REER:",
    "**Press Release-English**",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Georgia and the IMF](http://www.imf.org/external/country/GEO/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/Publications/CR/Issues/2019/12/18/Republic-of-Georgia-Fifth-Review-Under-the-Extended-Arrangement-Requests-for-Waivers-of-48888](https://www.imf.org/en/Publications/CR/Issues/2019/12/18/Republic-of-Georgia-Fifth-Review-Under-the-Extended-Arrangement-Requests-for-Waivers-of-48888)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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