IMF Staff Concludes Visit to Georgia

IMF News, December 16, 2025

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IMF team led by Mr. Alejandro Hajdenberg held meetings in Tbilisi during December 10-16, 2025, to discuss recent economic and financial developments and progress on reform priorities.
End-of-mission statement issued December 16, 2025. The mission will not result in a Board discussion.
The views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

Real GDP is expected to grow by 7.3 percent in 2025, a deceleration from last year but high by historical standards.
Economic activity led by the information technology, transport, and education sectors, which expanded rapidly post pandemic and since the start of the war in Ukraine.
Unemployment declined to a record low of 13.3 percent but remains structurally elevated.
Medium-term growth is expected to gradually converge to a potential rate of 5 percent.

Inflation accelerated in 2025 and stood at 4.8 percent year-on-year in November, above the NBG target of 3 percent.
Increase driven mainly by domestic food prices and is expected to be transitory; core inflation remains below target.
The National Bank of Georgia (NBG) has kept its policy rate unchanged at 8 percent.
Recommendation: NBG should keep a cautious monetary policy stance and stand ready to tighten if inflation proves more persistent than currently anticipated.

Gross international reserves rose to a historical high of USD 5.8 billion in November from last year’s low of USD 4.1 billion.
Reserves reached around 100 percent of the IMF’s Assessing Reserve Adequacy (ARA) metric.
Improvement reflects resumption of deposit de-dollarization, strong current account inflows from services exports and remittances, NBG foreign exchange purchases, and higher gold prices.
Recommendation: If market conditions allow, further accumulation of reserves is desirable.

Budget deficit in 2025 is expected to remain below the original target of 2.5 percent of GDP, reflecting strong revenue and under-execution of planned capital spending.
The 2026 budget targets a deficit of 2.5 percent of GDP, envisaging a recovery in public investment and increased social spending.
The USD 500 million Eurobond maturing in April 2026 is expected to be rolled over smoothly under current market conditions.
Recommendation: Scope to mobilize more revenue by expanding the tax base and streamlining tax expenditures; further improvements in public investment management and spending efficiency to fund investment in infrastructure and education.

Government intention to undertake comprehensive reform of state-owned enterprises (SOEs) is welcomed.
Progress noted on fiscal risk management and financial oversight of SOEs.
Further reform should focus on strengthening SOE corporate governance and accountability, ultimately separating the state’s shareholder, regulatory, and policy functions.
Recent legislative change eliminating the possibility of NBG discretionary financial transfers to the government is welcomed.
Mission reiterated recommendations to:
- Ensure a non-executive majority on the NBG’s governing board.
- Strengthen qualification requirements for board members.
- Eventually adopt a collegial decision-making model.
A technical assistance mission is planned for February to support work on central bank governance.

Financial sector assessed as healthy with strong bank capital, profitability, liquidity, and asset quality.
Risks warranting continued vigilance:
- High share of unhedged foreign currency bank loans.
- Rapid expansion of consumer loans.
- Riskier FX bond issuances and lending by real estate developers.
These risks are not assessed to be systemic at this stage, but continued close monitoring is essential.
Efforts welcomed to improve payment system efficiency, introduce more competition among payment service providers, and foster innovation and cyber security.

Primary uncertainty: resolution of the war in Ukraine, which could reverse gains from migration, financial inflows, and transit trade, or alternatively create more regional stability for longer-term investment.
Georgia’s strained relations with the EU could weigh on investor sentiment and dampen foreign direct investment.
Announced USD 6.5 billion real estate project by a United Arab Emirates’ investor, if implemented as planned, presents an upside risk to growth and job creation.
Policy recommendation: Maintain fiscal and external buffers and pursue structural reforms that improve governance and generate more jobs amid geopolitical uncertainty.

The team met with Governor of the NBG Turnava, Minister of Finance Khutsishvili, Minister of Economy and Sustainable Development Kvrivishvili, other senior officials, and representatives of the private sector, civil society organizations, and development partners.
The 2026 Article IV consultation is planned for March 2026.

IMF Staff Concludes Visit to Georgia — December 16, 2025

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