The Executive Board of the International Monetary Fund (IMF) approved a three-year extended arrangement under the Extended Fund Facility (EFF) for Georgia for an amount of SDR 210.4 million (about $285.3 million or 100 percent of quota) to support the authorities’ economic reform program.
The EFF-supported program will help Georgia reduce economic vulnerabilities, pursue well-coordinated policies, and promote economic growth. 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 Executive Board’s approval allows for an immediate disbursement of SDR30 million (or about US$40.7 million). The remaining amount will be phased over the duration of the program, subject to six semi-annual reviews.
Following the Executive Board discussion, Mr Tao Zhang, Deputy Managing Director and Acting Chair, 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.
“The central bank will continue to strengthen its ability to meet inflation targets. While the financial sector has shown resilience to depreciation, the central bank is introducing macroprudential instruments to address currency mismatches, concentration risks, and systemically important banks. The authorities have also announced a comprehensive set of de-dollarization measures. The introduction of deposit insurance will help strengthen the financial safety net.
“Fiscal policy will aim to reduce the deficit gradually through measures to raise revenue and cut current expenditures, while spending on infrastructure investment will rise, supporting growth. Efforts will be made to increase efficiency in public healthcare while maintaining adequate healthcare coverage, especially for the most vulnerable. Control and disclosure of fiscal risks are being strengthened.
“Structural reforms are critical for the success of the program, enabling higher inclusive growth and economic diversification. The reform effort will focus on capital market development, pension reform, a PPP framework, public financial management, private sector governance and competition, and education reform.
“Risks to program implementation are significant, but should be mitigated by the authorities’ determined commitment to the policy package and the broad political support for the program.”
- The approval allows for an immediate disbursement of SDR30 million (or about US$40.7 million)
- The program will help Georgia’s ambitious structural reforms to generate higher and more inclusive growth, focusing on: improving education; investing in road infrastructure; making the public administration more efficient.
- Fiscal consolidation over the medium term aims to anchor public debt to the current level and shifting spending toward capital investment to address infrastructure bottlenecks.