{
  "title": "IMF Staff Concludes Virtual Visit to Georgia",
  "publication": "IMF News, September 15, 2020",
  "sourceUrl": "https://www.imf.org/en/news/articles/2020/09/15/pr20293-georgia-imf-staff-concludes-virtual-visit",
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  "summary": "Press Release No. 20/293",
  "publishDate": "2020-09-15",
  "sections": [
    {
      "heading": "Mission overview",
      "content": "- Press Release No. 20/293\n- Mission dates: virtual meetings during September 8-14, 2020\n- Mission leader: Ms. Mercedes Vera-Martin\n- Statement issuer: IMF staff team (views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board)\n- Note: This mission will not result in a Board discussion."
    },
    {
      "heading": "Health and economic impact of COVID-19",
      "content": "- The COVID-19 pandemic’s health impact has been well-contained, but it has had a significant impact on economic activity.\n- The external position has deteriorated as tourism revenues have come to a virtual standstill.\n- Preliminary data suggest a tentative recovery in domestic demand beginning in June.\n- Growth in credit to the private sector remains robust, partly supported by government subsidies on lari-denominated mortgages.\n- Slack demand and the post-lockdown recovery in supply have recently put downward pressures on inflation."
    },
    {
      "heading": "Growth outlook and risks",
      "content": "- Growth projection: expected to contract by 5 percent.\n- Rationale for revision: slightly higher contraction than at the time of the Sixth Review, partly reflecting a more severe slowdown in the second quarter of 2020 and a more protracted recovery in external demand.\n- Risk assessment:\n  - Given pervasive uncertainty about the pandemic, downside risks to the outlook dominate.\n  - Realization of risks (e.g., more prolonged slowdown in major trading partners, slower-than-envisaged recovery in tourism) may require:\n    - continued exchange rate flexibility\n    - additional policy support"
    },
    {
      "heading": "Fiscal policy response and recommendations",
      "content": "- Authorities’ response: launched a sizable fiscal package to mitigate social and economic impact, enabled by prudent pre-pandemic macroeconomic policies and external and fiscal buffers, and strong international support.\n- Measures taken:\n  - expanded social transfers\n  - enacted temporary tax relief measures for businesses and households\n  - provided subsidies to sustain activity in the sectors most affected\n- Medium-term priorities and recommendations:\n  - Address the decline in revenues in 2020 to formulate a gradual fiscal consolidation, as required by the fiscal rule.\n  - Build fiscal space for needed spending on education and infrastructure.\n  - Continue structural fiscal reforms, including:\n    - enhance tax administration\n    - expand the coverage and monitoring of fiscal risks\n    - formulate a strategy to improve the corporate governance of state-owned enterprises"
    },
    {
      "heading": "Monetary and financial sector policy",
      "content": "- National Bank of Georgia (NBG) measures:\n  - eased capital and regulatory requirements at the onset of the COVID-19 shock\n  - provided lari and FX liquidity\n  - preemptively requested additional provisioning for banks\n  - reduced the policy rate in response to declining economic activity and easing inflation pressures\n- Recommendation: Maintaining exchange rate flexibility remains essential to manage the shock."
    },
    {
      "heading": "Structural reforms and legislative progress",
      "content": "- Implementation of structural reforms under the EFF has progressed well.\n- Recent legislative developments:\n  - Parliament approved the legislation to index basic public pensions in July.\n  - The new insolvency law is expected to be approved soon.\n- Recommendations:\n  - Timely implementation of legislation related to corporate insolvency and banking resolution to help improve the business environment and financial sector resilience.\n  - Continue structural reforms to limit scarring in Georgia’s medium-term economic potential and promote higher and more inclusive growth."
    },
    {
      "heading": "Engagement and next steps",
      "content": "- The team met with:\n  - Governor of the National Bank Gvenetadze\n  - Minister of Finance Matchavariani\n  - other senior officials\n  - representatives of the private sector\n- Next engagement: Continue the dialogue during the October mission for the seventh review of Georgia’s economic reform program supported by the IMF.\n- IMF Communications Department contact for media relations:\n  - PRESS OFFICER: Nadya Saber\n  - Phone: +1 202 623-7100\n  - Email: MEDIA@IMF.org\n  - Twitter: @IMFSpokesperson\n\nIMF staff statement issued at the end of the mission (September 15, 2020).\n\n---\n\n Content in this bundle\n\n- სსფ-მ საქართველოში მისია ვირტუალურად წარმართა\n  - სსფ-მ საქართველოში მისია ვირტუალურად წარმართა (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - სსფ-მ საქართველოში მისია ვირტუალურად წარმართა (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Georgia and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2020/09/15/pr20293-georgia-imf-staff-concludes-virtual-visit"
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    "Published: September 15, 2020",
    "Press Release No. 20/293",
    "Mission dates: virtual meetings during September 8-14, 2020",
    "Mission leader: Ms. Mercedes Vera-Martin",
    "Statement issuer: IMF staff team (views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board)",
    "Note: This mission will not result in a Board discussion.",
    "The COVID-19 pandemic’s health impact has been well-contained, but it has had a significant impact on economic activity.",
    "The external position has deteriorated as tourism revenues have come to a virtual standstill.",
    "Preliminary data suggest a tentative recovery in domestic demand beginning in June.",
    "Growth in credit to the private sector remains robust, partly supported by government subsidies on lari-denominated mortgages.",
    "Slack demand and the post-lockdown recovery in supply have recently put downward pressures on inflation.",
    "Growth projection: expected to contract by 5 percent.",
    "Rationale for revision: slightly higher contraction than at the time of the Sixth Review, partly reflecting a more severe slowdown in the second quarter of 2020 and a more protracted recovery in external demand.",
    "Risk assessment:",
    "Authorities’ response: launched a sizable fiscal package to mitigate social and economic impact, enabled by prudent pre-pandemic macroeconomic policies and external and fiscal buffers, and strong international support.",
    "Measures taken:",
    "Medium-term priorities and recommendations:",
    "National Bank of Georgia (NBG) measures:",
    "Recommendation: Maintaining exchange rate flexibility remains essential to manage the shock.",
    "Implementation of structural reforms under the EFF has progressed well.",
    "Recent legislative developments:",
    "Recommendations:",
    "The team met with:",
    "Next engagement: Continue the dialogue during the October mission for the seventh review of Georgia’s economic reform program supported by the IMF.",
    "IMF Communications Department contact for media relations:",
    "**სსფ-მ საქართველოში მისია ვირტუალურად წარმართა**",
    "[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/home](https://www.imf.org/en/home)"
  ],
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