International Monetary Fund approves $285m, 3-year program in Georgia

  • The IMF positively assessed its cooperation with the Revenue Service of Georgia and the country’s authorities. Photo by Georgia's Ministry of Finance., 13 Apr 2017 - 15:07, Tbilisi,Georgia

The International Monetary Fund has approved a new, $285 million, large-scale technical assistance program for Georgia in an effort to support the country’s economic policy.

This is a $285.3 million program within the Extended Fund Facility (EFF). The money will be spent not on any specific program, but will be used for increasing the foreign exchange reserves,” said Georgia’s Finance Minister Dimitry Kumsishvili.

The EFF-supported program will help Georgia reduce economic vulnerabilities, pursue well-coordinated policies, and promote economic growth, said the IMF.

The program includes ambitious structural reforms to generate higher and more inclusive growth, focusing on: improving education; investing in infrastructure; making the public administration more efficient; and improving further the business environment to boost the private sector as a growth engine.

The Minister said this assistance was "a guarantee of development of our reforms”.

During the next three years we will have a program that will support economic development and reforms in Georgia. This means our spatial development will be implemented; this means that the educational reform will be successful; we will have more efficient governance and will have many structural reforms that will increase our economy,” Kumsishvili added.

Meanwhile, IMF's Deputy Managing Director and Acting Chair Tao Zhang said:

The Georgian authorities have adopted an economic program aimed at promoting growth while maintaining macroeconomic stability. Georgia faces several economic challenges, including a narrow production base, external and fiscal imbalances, and subdued economic growth with high unemployment. This situation has been exacerbated by low growth in major trading partners largely resulting from lower oil prices. The authorities’ program supported by the Extended Fund Facility will help address these challenges by reducing fiscal deficits while shifting public spending toward investment, accelerating structural reforms, strengthening the monetary policy framework, and enhancing financial sector supervision, safety nets, and bank resolution frameworks."

Earlier in March the IMF mission visited Georgia. During the two-week mission, the National Bank of Georgia (NBG), the Government of Georgia and the IMF worked on a three-year plan within the Extended Fund Facility (EFF).

An initial agreement was reached in March, however the program was finally approved today.