International Monetary Fund

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Program Note


Last Updated: April 6, 2015

Current IMF-Supported Program

The IMF’s Executive Board approved a 36-month Stand-By Arrangement (SBA) on July 30, 2014. Under the program, Georgia has access to IMF credits of up to SDR 100 million (67 percent of quota), of which SDR 80 million have already been disbursed. Performance under the program is monitored through semi-annual reviews. The third review mission is tentatively scheduled for September 2015. The First Review under the program was approved by the Executive Board on December 19, 2014, and the second review is tentatively planned for May 2015. The Georgia country page of the IMF website contains the latest information on Georgia and the IMF.


Georgia made a peaceful transition of power following the 2012 and 2013 presidential and parliamentary elections, further demonstrating its commitment to a democratic process. Corruption and ease of doing business indices continue to be favorable. An Association Agreement and a Deep and Comprehensive Free Trade Area agreement was signed with the European Union in 2014. Trade with Russia opened up in 2013 and has since grown significantly.

Georgia handled the difficult 2008–2009 period well, including through the support of an IMF program. Following the dramatic slow-down of the economy—with a contraction of 3.7 percent in 2009—growth returned, reaching 4.8 percent in 2014. Fiscal deficits averaging close to 7.5 percent of GDP in the period 2008–10 were reduced to 2.9 percent of GDP in 2014. Inflation—which reached 10 percent in 2008—has remained in recent years. However, the current account deficit has remained stubbornly high, reaching close to 10 percent of GDP in 2014. External debt is also high at around 80 percent of GDP. Demonstrating its commitment to the floating exchange rate regime, the lari was allowed to adjust to exchange rate pressures at the end of 2014 and beginning of 2015, with the National Bank of Georgia making only limited interventions.

Role of the IMF

The key objectives of the authorities’ IMF-supported program are to ensure fiscal sustainability, reduce external vulnerabilities, strengthen resilience to external shocks, further develop the inflation targeting regime, improve competitiveness and make growth more inclusive. Consistent with these objectives the IMF-supported program sets targets for central policy parameters and benchmarks for key policy reforms. The program also includes an inflation consultation clause, to make sure that inflation stays within a 3 percent range around the National Bank’s inflation target. Semi-annual reviews make sure that policies are in line with the program.

The IMF also provides technical assistance to Georgia on a wide range of topics. In the first quarter of 2015, technical assistance on National Accounts Statistics, Public Financial Management, Revenue Administration, Tax Policy, Inflation Targeting, and Central Bank Internal Controls have been delivered to the Georgian authorities.

The IMF regularly makes broader assessments of the economy under its Article IV consultations. The latest such consultation took place in July 2013, and an update is planned for the second half of 2015. In 2014, the IMF also updated its Financial System Stability Assessment (FSAP) of Georgia.

Challenges Ahead

Faced by a regional slow-down and currency depreciations, Georgia is experiencing lower exports and remittances, a widening current account deficit, weaker growth, lower fiscal revenues, and depreciation against the dollar (which hurts those that have borrowed in dollars but whose income is in domestic currency). The challenge is how to contain external vulnerabilities, while providing support to the economy and ensuring continued financial sector stability. Guaranteeing social assistance to poor and vulnerable during the slowdown is essential.