Georgian authorities' IMF-supported programme to address macroeconomic stability

Georgian authorities have adopted a programme supported by the International Monetary Fund and focused on addressing macroeconomic challenges of the country, Bo Li, the Deputy Managing Director of the IMF said on Tuesday.

Li said the IMF’s new three-year, $280 million Stand-by Arrangement would be treated by authorities "as precautionary", with the programme aiming to rebuild fiscal buffers while reducing debt and “protecting the vulnerable”.

• IMF approves $280mln stand-by arrangement for Georgia

The authorities recognise the importance of adhering to the fiscal rule to anchor policy credibility, and are targeting full compliance with the fiscal rule’s deficit ceiling by 2023", Li said.

He added strengthening public financial management and reforming state-owned enterprises would also help to mitigate fiscal risks. 

Praising the monetary policy of the National Bank of Georgia, which he said was focused on "bringing down high inflation", Li still warned that "given Georgia’s vulnerability to spillovers from the war in Ukraine" he expected inflation to increase and the current account deficit to widen.

The authorities are committed to maintaining exchange rate flexibility, strengthening reserves, and enhancing the central bank’s communication strategy. They have managed the initial impact of sanctions, with the central bank requiring banks to adhere to international sanctions, which has limited risks. The authorities have made commendable progress on enhancing financial sector regulation and supervision, aiding financial sector resilience to recent shocks", he said.

Li concluded that "a sound financial sector along with sustained strong macroeconomic policy implementation" would help reduce dollarisation, while a reinvigorated structural reform agenda would contribute to ensuring “stronger and more inclusive” growth.