July 22, 2025
PRESS OFFICER: Mayada Ghazala
Phone: +1 202 623-7100Email: MEDIA@IMF.org
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Georgia on a lapse of time basis on July 21, 2025.[1] The authorities have consented to the publication of the Staff Report prepared for this consultation.[2]
The Georgian economy has performed remarkably well despite elevated domestic and geopolitical uncertainty. Annual growth has averaged over 9 percent since 2021, headline inflation has returned to target after undershooting for two years, and public debt declined to 36 percent of GDP in 2024.
Looking ahead, growth is projected to ease to 7.2 percent in 2025 and converge to its potential rate of 5 percent in the medium term as domestic demand decelerates. Inflation is expected to remain near target and public debt to stabilize near current levels with continued prudent monetary and fiscal policy.
Amid heightened domestic and global uncertainty, priorities are building further reserve buffers and advancing structural reforms to safeguard resilience to shocks and sustain strong, inclusive, and job-rich growth.
Executive Board Assessment[3]
Georgia’s economy has demonstrated impressive resilience despite heightened domestic and geopolitical uncertainty. Since 2021, real GDP growth has averaged over 9 percent annually, driven by a strong post-pandemic recovery and sustained expansion in the information and communication technology (ICT) and transport services sectors, supported by immigration, financial inflows, and transit trade linked to the war in Ukraine. These trends have boosted per capita income and reduced unemployment and poverty. Inflation has remained low, aided by tight monetary policy and a strong lari, while public debt returned to pre-pandemic levels. However, challenges persist due to high structural unemployment, income inequality, outward migration, and informality.
Economic activity is projected to remain strong in the near term and gradually converge to potential. Real GDP growth is expected to reach 7.2 percent in 2025, driven by resilient domestic demand and continued strength in tourism, ICT, and transport—and converge to its medium-term potential of 5 percent. Inflation is projected to remain near the 3 percent target, and the current account deficit to stabilize around 5 percent of GDP. Reserves are projected to improve gradually, supported by opportunistic foreign exchange (FX) purchases and a recovery in foreign direct investment (FDI). The external position in 2024 was broadly in line with the level implied by fundamentals and desirable policies.
Risks to the outlook are broadly balanced, amid high global uncertainty and political tensions. A resolution of the war in Ukraine may reverse some gains from migration and transit trade, but greater regional stability and reconstruction could offset these effects. Direct exposure to global trade tensions is limited, given Georgia’s low export share to the U.S. and exemptions for key products. However, indirect effects from weaker investor sentiment, slower trading partner growth, or supply chain disruptions could weigh on exports and raise import costs. Georgia might benefit from lower oil prices and increased trade diversion. Domestically, heightened political uncertainty and potential sanctions could dampen FDI, tourism, and pressure the lari. Georgia’s fiscal and financial buffers would help cushion adverse shocks.
The National Bank of Georgia (NBG) should maintain a broadly neutral policy stance while remaining flexible and data driven. With inflation near target, the policy rate close to neutral, and demand pressures easing, the current stance is appropriate. However, heightened global uncertainty and rising domestic food prices warrant a cautious approach to further easing. Opportunistic reserve accumulation—while preserving exchange rate flexibility—should be prioritized. While recent FX interventions may have mitigated market disorder, the NBG should avoid actions that could undermine policy transmission and credibility, such as sustained deviations between interbank and policy rates. Clearer communication on the balance of risks and policy rationale would enhance transparency and reinforce the effectiveness of the monetary policy framework.
Strengthening NBG governance and independence remains an important priority. There has been progress on implementing past recommendations, including filling board vacancies and appointing a governor. However, proposed amendments to enhance governance and financial autonomy in the NBG Law remain outstanding. Reforms should ensure a non-executive board majority, limit discretionary financial transfers to the government, further clarify succession rules for the governor, and strengthen board member qualifications. Adopting a collegial decision-making model would further enhance governance.
Fiscal policy is well calibrated, and efforts should focus on strengthening revenue mobilization and improving spending efficiency. Public debt is at prudent levels, and a neutral medium-term fiscal stance—with deficits below 2.5 percent of GDP—would help stabilize the debt ratio well below the fiscal rule ceiling. Revenue mobilization should be advanced through tax policy and administration reforms that expand the tax base and streamline tax expenditures, based on a strengthened medium-term revenue strategy that clearly outlines planned reforms, implementation timelines, and expected yields. Spending efficiency can be enhanced through better implementation of public investment management processes and spending reviews. Social assistance should be better targeted to the most vulnerable households, alongside efforts to improve the public works program and employment incentives.
Advancing SOE reform is essential to enhance performance, governance, and oversight to contain fiscal risks. A strong oversight role of the Ministry of Finance must be ensured. The authorities should move expeditiously to develop and implement a reform roadmap. Key objectives should include separating the state’s shareholder, regulatory, and policy functions to avoid conflicts of interest and strengthening corporate governance.
The financial sector is sound, and reforms have advanced, but further steps are needed to strengthen resilience and address evolving risks. Sustained efforts are needed to further reduce dollarization, along with continued monitoring of rapid consumer loan growth and lari funding pressures. Enhancing macroprudential and crisis management frameworks is essential to mitigate risks from systemic banks. Priority should be given to fully operationalizing the resolution framework and strengthening deposit insurance, including by resolving remaining legal and operational issues. Establishing an effective supervisory framework for virtual asset service providers and developing a consolidated supervision framework are key priorities, given the expansion of cross-border and nonbank activities. Competition in financial services should be improved, including through open banking.
Sustained structural reform is essential to support inclusive, job-rich growth and raise Georgia’s growth potential. Key priorities include addressing high structural unemployment, low agricultural productivity, and skill gaps through improved vocational training, teacher quality, and targeted agricultural support. Harnessing the benefits of emigration will require promoting return migration, leveraging remittances, and attracting foreign talent. Continued infrastructure investment and regional integration are needed to reduce transport and logistics costs and boost competitiveness. While Georgia outperforms peers on many governance indicators, recent backsliding underscores the need to reinforce judicial independence, empower the Anti-Corruption Bureau, and ensure effective enforcement of asset declaration reforms.
Staff recommend that the next Article IV consultation take place on the standard 12-month cycle.
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Table. Georgia: Selected Economic Indicators, 2024-30 |
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|
2024 |
2025 |
2026 |
2027 |
2028 |
2029 |
2030 |
|
|
Actual |
Projections |
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|
|
|
|
|
|
|
|
|
|
National accounts and prices |
(annual percentage change; unless otherwise indicated) |
||||||
|
Real GDP |
9.4 |
7.2 |
5.3 |
5.0 |
5.0 |
5.0 |
5.0 |
|
Nominal GDP (in billions of laris) |
91.9 |
102.5 |
111.7 |
121.5 |
131.9 |
143.4 |
155.9 |
|
Nominal GDP (in billions of U.S. dollars) |
33.8 |
36.7 |
39.2 |
41.4 |
43.6 |
46.1 |
48.6 |
|
GDP per capita (in thousands of U.S. dollars) |
9.1 |
9.9 |
10.6 |
11.2 |
11.8 |
12.5 |
13.2 |
|
GDP deflator, period average |
3.8 |
4.1 |
3.5 |
3.5 |
3.5 |
3.5 |
3.5 |
|
CPI, period average |
1.1 |
3.4 |
3.1 |
3.0 |
3.0 |
3.0 |
3.0 |
|
CPI, end-of-period |
1.9 |
3.6 |
3.0 |
3.0 |
3.0 |
3.0 |
3.0 |
|
|
|
|
|
|
|
|
|
|
Consolidated government operations |
(in percent of GDP) |
||||||
|
Revenue and grants |
28.0 |
27.7 |
27.8 |
27.7 |
27.6 |
27.8 |
27.7 |
|
o.w. Tax revenue |
25.3 |
25.0 |
25.6 |
25.6 |
25.6 |
25.8 |
25.8 |
|
Total Expenditure |
30.3 |
30.0 |
30.1 |
29.9 |
29.8 |
29.9 |
29.9 |
|
Current expenditures |
22.5 |
22.6 |
22.5 |
22.5 |
22.5 |
22.6 |
22.5 |
|
Net acquisition of nonfinancial assets |
7.7 |
7.4 |
7.5 |
7.5 |
7.3 |
7.4 |
7.4 |
|
Net lending/borrowing (GFSM 2001) |
-2.3 |
-2.3 |
-2.3 |
-2.3 |
-2.2 |
-2.2 |
-2.2 |
|
Augmented net lending/borrowing 1/ |
-2.4 |
-2.4 |
-2.4 |
-2.4 |
-2.3 |
-2.3 |
-2.3 |
|
Public debt |
36.1 |
34.7 |
34.1 |
34.3 |
34.5 |
34.9 |
35.7 |
|
o.w. Foreign-currency denominated |
25.2 |
23.1 |
22.0 |
21.7 |
20.9 |
20.0 |
18.9 |
|
|
|
|
|
|
|
|
|
|
Money and credit |
(annual percentage change; unless otherwise indicated) |
||||||
|
Credit to the private sector |
18.5 |
13.7 |
9.0 |
8.7 |
8.6 |
8.7 |
8.7 |
|
In constant exchange rate |
17.0 |
15.5 |
8.5 |
7.4 |
7.3 |
7.4 |
7.4 |
|
Broad money |
14.5 |
13.3 |
11.5 |
11.3 |
11.2 |
11.3 |
11.3 |
|
Excluding FX deposits |
10.4 |
13.7 |
11.9 |
11.7 |
11.6 |
11.7 |
11.6 |
|
Deposit dollarization (in percent of total) |
52.7 |
52.1 |
51.9 |
51.7 |
51.4 |
51.2 |
51.0 |
|
Credit dollarization (in percent of total) |
42.9 |
42.5 |
42.1 |
41.7 |
41.3 |
40.9 |
40.5 |
|
Credit to GDP (in percent) 2/ |
66.0 |
67.4 |
67.4 |
67.4 |
67.4 |
67.4 |
67.4 |
|
|
|
|
|
|
|
|
|
|
External sector |
(in percent of GDP; unless otherwise indicated) |
||||||
|
Current account balance (in billions of US$) |
-1.5 |
-1.6 |
-1.8 |
-2.0 |
-2.1 |
-2.2 |
-2.4 |
|
Current account balance |
-4.4 |
-4.4 |
-4.6 |
-4.8 |
-4.8 |
-4.9 |
-5.0 |
|
Trade balance |
-19.2 |
-18.9 |
-19.1 |
-19.2 |
-19.3 |
-19.3 |
-19.4 |
|
Terms of trade (percent change) |
-2.8 |
-0.2 |
0.1 |
-0.3 |
0.5 |
-0.3 |
-0.6 |
|
Gross international reserves (in billions of US$) |
4.4 |
4.7 |
4.9 |
5.5 |
6.2 |
6.8 |
7.1 |
|
In percent of IMF ARA metric 3/ |
79.6 |
81.1 |
82.4 |
88.0 |
95.5 |
100.5 |
n.a. |
|
In months of next year's imports |
2.7 |
2.6 |
2.6 |
2.7 |
2.9 |
3.0 |
n.a. |
|
Gross external debt |
66.8 |
62.4 |
58.5 |
55.9 |
53.0 |
49.4 |
45.7 |
|
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|
|
|
|
|
|
|
|
Sources: Georgian authorities; and Fund staff estimates.
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1/ Augmented Net lending / borrowing = Net lending / borrowing - Budget lending. |
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2/ Banking sector credit to the private sector. |
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3/ IMF's adequacy metric for assessing reserves in emerging markets. |
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[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.
[2] Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/en/Countries/GEO page.
[3] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
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