Statement by IMF Mission to GeorgiaPress Release No. 10/35
February 12, 2010
An International Monetary Fund (IMF) mission, led by Mr. Edward Gardner, visited Tbilisi January 26-February 10 for discussions on the fifth review of the economic program supported by a Stand-By Arrangement (SBA). The SBA with Georgia was approved on September 15, 2008 (see Press Release No. 08/208) for an amount of SDR 477.1 million (about US$750 million). On August 6, 2009, the size of the financial package provided under the SBA was increased to SDR 747.1 million (about US$1.2 billion) and the SBA was extended to June 14, 2011 (see Press Release No. 09/277).
The IMF mission reached a staff-level agreement to conclude the fifth review under the SBA. The agreement will be subject to approval by IMF management and the Executive Board.
At the end of the mission, Mr. Gardner issued the following statement in Tbilisi:
“The authorities’ economic program has been successful in putting a floor on the contraction of economic activity in 2009 and in restoring confidence. On the back of these achievements, the economic recovery that started in the second half of 2009 is expected to continue in 2010, although at a moderate pace. The 2010 economic program is built on a 2 percent real GDP growth projection, and CPI inflation of 5 percent. The containment of public expenditures within the budget envelope approved by parliament should lead to a reduction of the government deficit to 7.4 percent of GDP, down from 9.2 percent in 2009. By contrast, the external current account deficit is projected to widen to 14 percent of GDP, largely on account of a pick up of import growth. With private capital inflows expected to lag behind, IMF financing will help cover the resulting balance of payments gap.
“Performance under the SBA continues to be good. All quantitative performance criteria established for end-2009 under the program were met. The authorities’ economic policies for 2010 remain consistent with the program objectives of: (i) steady fiscal deficit reduction to preserve debt sustainability and macroeconomic stability; (ii) exchange rate flexibility to facilitate balance of payments adjustment in response to sustained pressures; and (iii) continued strengthening of banking sector supervision to reduce risks and support sustainable credit growth as the economy recovers.
“Based on the Georgian authorities’ policy performance through 2009 and the policies agreed for 2010, the mission will recommend completion of the fifth review of the SBA. The IMF's Board of Executive Directors is expected to consider this recommendation in March. Upon completion of the review, an amount of SDR 97.3 million (about US$150 million) would become available for disbursement.”