An International Monetary Fund (IMF) team, led by Ms. Mercedes Vera-Martin, visited Tbilisi during February 7-13, 2018 to discuss recent economic and financial developments and progress with structural reforms. At the conclusion of the visit, Ms. Vera-Martin issued the following statement:
“Economic developments in 2017 were positive. Growth reached 4.8 percent driven by consumption and external demand. Rapid growth in exports, tourism, and remittances supported economic activity and narrowed the current account deficit to 7 percent of GDP through 2017Q3. Inflation in 2017 was above the target due to higher excise rates on fuel and tobacco and reached 6.7 percent by end-year. In response to a pickup in inflation expectations towards the end of the year, the National Bank of Georgia increased the policy rate by 25 basis points, to 7¼ percent, in mid-December. As expected, annual inflation declined to 4.3 percent in January 2018.
“Preliminary estimates show a better-than-expected fiscal performance in 2017. The fiscal deficit (program definition) reached 2.9 percent of GDP, ½ percentage point lower than projected. The performance was driven by broad-based revenue strength. Current primary expenditure remained contained and public investment expanded. Going forward, containing current spending and improving revenue collection remain critical for increasing public investment to address infrastructure bottlenecks.
“The IMF mission discussed with the Georgian authorities progress towards implementing structural reforms to support higher, sustainable, and more inclusive growth. The authorities have taken steps to strengthen revenue administration, support capital market development, improve financial safety nets, and have submitted to Parliaments draft laws on public-private partnership and pension reforms. The recent rebound in growth offers an opportunity to advance these reforms, with a view to mobilize domestic savings, increase private investment, and diversify the economy. These reforms are needed to boost medium-term growth, create jobs, and improve living standards.
“The team met with First Deputy Prime Minister Kumsishvili, Governor of the National Bank Gvenetadze, Minister of Finance Bakhtadze, other senior officials, and representatives of the private sector, civil society, and the diplomatic community. The team would like to thank the authorities for the open and constructive dialogue during the visit. The IMF team looks forward to continuing its engagement with the authorities in the context of the forthcoming Article IV consultation and second review of Georgia’s IMF-supported program in April.”