## IMF Staff Concludes Virtual Visit to Georgia

_IMF News, September 15, 2020_

## Source details

**Canonical URL:** [IMF Staff Concludes Virtual Visit to Georgia](https://www.imf.org/en/news/articles/2020/09/15/pr20293-georgia-imf-staff-concludes-virtual-visit)

## Other formats

- [Markdown version](/en/news/articles/2020/09/15/pr20293-georgia-imf-staff-concludes-virtual-visit/index.md)
- [Structured JSON version](/en/news/articles/2020/09/15/pr20293-georgia-imf-staff-concludes-virtual-visit/index.json)
- [Bundle manifest](/en/news/articles/2020/09/15/pr20293-georgia-imf-staff-concludes-virtual-visit/bundle-manifest.json)

## Bibliographic details
- Published: September 15, 2020

---

### Mission overview
- 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.

### Health and economic impact of COVID-19
- 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 outlook and risks
- 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:
  - Given pervasive uncertainty about the pandemic, downside risks to the outlook dominate.
  - Realization of risks (e.g., more prolonged slowdown in major trading partners, slower-than-envisaged recovery in tourism) may require:
    - continued exchange rate flexibility
    - additional policy support

### Fiscal policy response and recommendations
- 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:
  - expanded social transfers
  - enacted temporary tax relief measures for businesses and households
  - provided subsidies to sustain activity in the sectors most affected
- Medium-term priorities and recommendations:
  - Address the decline in revenues in 2020 to formulate a gradual fiscal consolidation, as required by the fiscal rule.
  - Build fiscal space for needed spending on education and infrastructure.
  - Continue structural fiscal reforms, including:
    - enhance tax administration
    - expand the coverage and monitoring of fiscal risks
    - formulate a strategy to improve the corporate governance of state-owned enterprises

### Monetary and financial sector policy
- National Bank of Georgia (NBG) measures:
  - eased capital and regulatory requirements at the onset of the COVID-19 shock
  - provided lari and FX liquidity
  - preemptively requested additional provisioning for banks
  - reduced the policy rate in response to declining economic activity and easing inflation pressures
- Recommendation: Maintaining exchange rate flexibility remains essential to manage the shock.

### Structural reforms and legislative progress
- Implementation of structural reforms under the EFF has progressed well.
- Recent legislative developments:
  - Parliament approved the legislation to index basic public pensions in July.
  - The new insolvency law is expected to be approved soon.
- Recommendations:
  - Timely implementation of legislation related to corporate insolvency and banking resolution to help improve the business environment and financial sector resilience.
  - Continue structural reforms to limit scarring in Georgia’s medium-term economic potential and promote higher and more inclusive growth.

### Engagement and next steps
- The team met with:
  - Governor of the National Bank Gvenetadze
  - Minister of Finance Matchavariani
  - other senior officials
  - representatives of the private sector
- 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:
  - PRESS OFFICER: Nadya Saber
  - Phone: +1 202 623-7100
  - Email: MEDIA@IMF.org
  - Twitter: @IMFSpokesperson

*IMF staff statement issued at the end of the mission (September 15, 2020).*

---

## Content in this bundle

- **სსფ-მ საქართველოში მისია ვირტუალურად წარმართა**
  - [სსფ-მ საქართველოში მისია ვირტუალურად წარმართა (Markdown version)](/-/media/files/news/press-release/2020/pr20293-geo-georgia.pdf.md){rel="alternate" type="text/markdown"}
  - [სსფ-მ საქართველოში მისია ვირტუალურად წარმართა (PDF)](/-/media/files/news/press-release/2020/pr20293-geo-georgia.pdf){rel="external" type="application/pdf"}

---

## References

- [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)

_Source: https://www.imf.org/en/news/articles/2020/09/15/pr20293-georgia-imf-staff-concludes-virtual-visit_