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IMF expects Georgia's conomic growth to strengthen over medium term

Georgia Materials 9 October 2017 18:24 (UTC +04:00)

BAKU, Trend -

The Georgian authorities and the IMF reached a staff-level agreement on the first review under an Extended Fund Facility (EFF).

This was announced by Mercedes Vera Martin, who led an International Monetary Fund (IMF) team on visit to Tbilisi to conduct discussions on the first review of the program supported by an EFF.

The program aims to support Georgia’s ambitious reform agenda to generate higher and more inclusive growth and reduce economic and financial vulnerabilities.

“The agreement is subject to approval by the IMF’s Executive Board, which is expected to consider it in November. Completion of the review will make an additional SDR 30 million ($42.3 million) available to Georgia under the EFF, bringing total disbursements to SDR 60 million ($84.6 million)," said Vera Martin.

The IMF official further added that Georgia’s economic reform program is off to a strong start.

"All quantitative performance targets for end-June were met, most by large margins. The economy has grown faster than expected this year due to prudent policies and stronger economic activity in Georgia’s main trading partners. Growth has been revised upwards to 4.3 percent in 2017 from 3.5 percent, supported by exports, tourism, and investment. The current account balance is projected to narrow to 10.4 percent of GDP in 2017, from 12.8 percent of GDP in 2016. Economic growth is expected to strengthen over the medium term with continued implementation of the economic reforms," Vera Martin said adding that these reforms will promote private investment, productivity growth, and improve export competitiveness.

“Fiscal performance has been robust, driven by stronger-than-expected revenues, while expenditures stayed within the program targets. Revenues have been higher than expected and current spending has been contained which will allow for higher capital spending and repayment of VAT credits. The fiscal deficit under the program is now projected at 3.6 percent of GDP in 2017.

Vera Martin noted that the current monetary policy stance under the program is adequate, and rightly focuses on price stability.

“Meanwhile, financial sector reforms have focused on strengthening financial regulation, supervision, and financial safety nets. The mission welcomes the authorities’ plans to bring non-banking lending institutions under oversight, and to improve the role of the central bank as the lender of last resort. Following the implementation of Georgia’s larization program, dollarization of deposits and loans has been declining," she said.

The IMF also welcomed progress in advancing the structural reforms.

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