IMF Mission Completes Review, Reaches Staff-Level Agreement on Extension and Additional Financing of Stand-By Arrangement with GeorgiaPress Release No. 09/267
July 27, 2009
An International Monetary Fund (IMF) mission, led by Mr. Edward Gardner, visited Tbilisi July 7-22 as part of the third review of the country’s Stand-By Arrangement (SBA) and reached staff-level agreement with the Georgian authorities on an SDR 270 million (about US$420 million) increase in the financial package provided under the SBA and the SBA’s extension to June 2011. The SBA was approved on September 15, 2008 (see Press Release No. 08/208).
At the end of the mission, Mr. Gardner issued the following statement in Tbilisi:
“The mission has reached a staff-level agreement with the authorities of Georgia on a policy package that can lead to the completion of the third review under the SBA. Following a request by the authorities for additional IMF financial support to cover expected balance of payments financing needs in 2010-11, the IMF mission also reached an agreement in principle on an SDR 270 million (about US$420 million) increase in the financial package provided under the SBA, and an extension of the SBA from 18 months to 33 months, with expiration in June 2011.
“The proposed increase in financing would raise the total amount made available under the SBA to SDR 747.1 million (equivalent to 497 percent of quota, or about $1,164 million), of which about US$450 million has already been disbursed. The completion of the Third Review, extension of the arrangement, and increase in the financial package require the approval of the IMF Executive Board, which is expected to consider Georgia’s request in August. Conditional on the IMF Executive Board’s approval, another SDR 94.6 million (about US$147 million) would become available for disbursement.
“The increase in the financial package and extension of the SBA through mid-2011 would help support the economic policies put in place by the Georgian authorities to overcome the pressures created by the international financial and economic crisis, which came on top of the economic and financial disruption caused by the conflict with Russia. In the face of a deeper and more prolonged slowdown of economic activity, as well as a slower recovery of private capital inflows, the authorities’ program balances the need to sustain the economic recovery in 2009 with that of restoring sound fiscal and external position over the medium term. To that end, the authorities’ program targets a steady and sizeable reduction of the fiscal deficit starting in 2010.
“Georgia’s strong record of reform and good performance under the SBA give confidence about the authorities’ ability to steer the economy through a difficult adjustment period. The main objective of the Stand-by Arrangement remains that of providing temporary financial support to facilitate policy adjustment and restore the confidence of markets and investors.”