IMF: Georgia has “weathered shocks well”, needs to continue strengthening resilience

The International Monetary Fund’s mission on Monday issued its statement summarising “main conclusion and recommendations” after completing an assessment of Georgia's economy during a visit to the country between March 6-18. 
 

The mission led by Matthew Gaertner held discussions for this year’s consultation with the Georgian Government during the visit to Tbilisi, and noted reform of state enterprises, strengthening of independence of the National Bank and improvements in education, infrastructure and governance remained priorities. 
 

Georgia has weathered well multiple shocks since the Covid-19 pandemic, supported by increased tourism, transit trade, and financial inflows linked to Russia’s war in Ukraine and swift policy responses. Going forward, the global environment is expected to remain highly uncertain due to ongoing conflicts and shifting geo-economic patterns”, the statement said.
 

It added the country should continue to strengthen its resilience to “adverse shocks” by maintaining “prudent” macroeconomic policies and increasing its growth potential, addressing long-term structural challenges and exploiting “new” economic opportunities.
 

Priorities include reforming State-Owned Enterprises to limit their fiscal risks and enhance their efficiency, strengthening the independence of the National Bank of Georgia, and improving education, infrastructure, and governance to raise productivity and address entrenched high unemployment and economic disparities”, it noted.
 

The IMF also said Georgia's growth trend, which exceeded the 7.5 percent growth rate of the country’s economy last year, was supported by tourism, trade, construction, and financial services, as well as investments, and noted the growth this year was expected to decrease to 5.7 percent annually.
 

The statement reviewed inflation indicators, and added inflation was expected to to reach four percent by the end of the year as the impact of favourable external factors from last year faded and restrictions of the monetary policy were eased.
 

Macroeconomic and financial policies should be geared towards ensuring strong, sustained, and inclusive growth, continued resilience in the face of an uncertain external environment, and the goal of making decisive progress towards the European Union accession”, the IMF added.
 

The body recommended strengthening the governance and independence of the National Bank, which it said was needed for the “credibility” of the monetary policy. It also noted amendments - such as ensuring the majority of non-executive members in the Supervisory Board of the National Bank, specification and strengthening alternating rule - should be made to the NBG law.
 

The amendments also include specification and strengthening of qualification criteria of the members of the Council and changing the existing presidential model of management to a management model based on collegial decisions.