Georgia: Selected Issues
IMF Staff Country Reports, July 28, 2025
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- Georgia: Selected Issues
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Bibliographic details
- Published: July 28, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229021029.002
Application of the Integrated Policy Framework (IPF)
- The paper discusses an application of the integrated policy framework (IPF) in Georgia.
- Georgia experienced significant swings in both international and domestic demand for the lari in recent years.
- The IMF’s IPF offers guidance on how Georgia did and should respond to these swings.
Monetary and Macro‑prudential Policy Assessment
- Prudent monetary and macro-prudential policy by the National Banking Group (NBG) has limited the need for further policy responses to these shocks.
- Shallow foreign exchange (FX) markets in Georgia indicate that movements in the exchange rate can sometimes be inefficient—creating the potential for beneficial government FX intervention (FXI).
- FX intervention (FXI) comes with risks and should be used cautiously.
Review of NBG FX Intervention since 2020
- The paper reviews the NBG’s major FXI operations since 2020.
- Within the modeling framework used in the paper, interventions benefited the economy in the short run.
- Given the low level of reserves and the institutional conditions of the NBG, the risks and long run costs of FXI likely outweighed the benefits.
Key Findings and Implications
- FX market shallow‑ness can lead to inefficient exchange rate movements.
- Short‑run benefits from FXI were identifiable within the model employed.
- Low reserves and institutional constraints materially increase the long‑run cost and risk of FXI, suggesting caution in relying on FXI as a primary policy tool.
Content in this bundle
- Georgia: Selected Issues; IMF Country Report No. 25/217; July 7, 2025