Georgia to get $41.6 million under IMF Extended Fund Facility programme

Georgia will get about $41.6 million from the International Monetary Fund (IMF) under the fifth review of the Extended Fund Facility (EFF) programme after it will be finalised by IMF Management and Executive Board in December 2019.

The Georgian authorities and the IMF team reached a staff-level agreement today on completing the fifth review under the IMF Extended Fund Facility programme and on extending the programme for one year.

After finalising the fifth review the entirety of the funding of the IMF to Georgia under the Extended Fund Facility (EFF) programme will be $0.25 billion.

Extending the IMF program by one year, will be an additional signal and guarantee for investors and international partners to prove that we are still committed to the main fiscal goals and principles underlying the program," said Georgian Finance Minister Ivane Matchavariani today.

The one-year extension of the program is important for our country in terms of increasing the credibility of economic policy in the environment of external shocks, especially given the unstable situation in the region and the growing impact of so-called" trade wars "on the global economy,” said the president of the National Bank of Georgia Koba Gvenetadze.

Finance Minister Matchavariani said that after three years since starting the programme, the main goals are reached.

These goals were:

• Increasing control of current expenses

Current expenses decreased from 25.9 per cent to 23.3 per cent since 2016. It means that government size (government expenditure as a percentage of GDP) has decreased significantly.

• Increasing capital expenditures
• Normalization of budget deficit

Since 2017, all three rating agencies (Moody's, Fitch and S&P Global) have improved Georgia’s credit ratings and we are two steps away from the investment grade rating," said Ivane Matchavariani.

• Standard & Poor’s upgrades Georgia to 'BB' with stable outlook

The banking sector remains well-capitalized, liquid and profitable. We support the government's efforts to enhance financial stability, including strengthening control of non-bank institutions," said Martin.

Further investments in infrastructure and implementation of the government's reforms will support the growth of the economy…the private sector will create jobs and ensure inclusiveness of growth," Martin said.

[IMF] expects the [Georgian] economy to grow by 4.6 percent in 2019 and by 4.3 per cent in 2020. Inflation will return to the target of 3 per cent by the end of 2020 ..." said IMF mission Chief Mercedes Vera-Martin.

In the first half of 2019, the annual growth rate of the economy was 4.7 per cent. The current account deficit has dropped to a historic low (4.6 per cent of GDP), but the depreciation of Georgian currency has increased annual inflation to 6.9 per cent as of October 2019.

• October 2019: annual inflation reaches 6.9 per cent

[IMF] supports the government's commitment to the inflation targeting regime," said Vera Martin.

The National Bank of Georgia increased refinancing rate from 6.5 to 8.5 per cent in September-October 2019.

• National Bank of Georgia increases refinancing rate to 8.5%

IMF delegation headed by IMF mission Chief Mercedes Vera-Martin has been in Georgia since October 23.