The International Monetary Fund’s Executive Board completed its first review of Georgia’s performance within the three-year extended arrangement under the Extended Fund Facility (EFF).
An International Monetary Fund (IMF) team visited Tbilisi from September 25 to October 9, 2017 and conducted discussions on the first review of the program supported by an Extended Fund Facility. The program was initiated to support Georgia’s ambitious reform agenda with the aim to reduce economic and financial vulnerabilities.
As a result of the review, the following statements were issued:
“The Georgian authorities and the IMF reached a staff-level agreement on the first review. 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).”
The review was completed on the 9 of December 2017 and IMF has issued funds to Georgia - SDR 30 million (about $42.4 million), bringing the total disbursements under the arrangement to SDR 60 million (about $84.8 million).
IMF has pointed out in their statement that the economy of Georgia has improved significantly and the external position has strengthened. “Revenue overperformance provides room for additional capital spending and VAT repayments in 2017. The banking sector remains liquid, profitable, and well capitalized. Despite the positive outcomes, the authorities need to remain vigilant and sustain reform efforts to address structural obstacles to growth,” it says, adding that, “The 2018 budget appropriately targets further fiscal consolidation, envisaging a further decline in the deficit while allowing for an increase in capital spending.”
Amongst other recommendations IMF has pointed out that Georgia needs to strengthen its revenue administration, to improve the targeting of social programs, and to reduce subsidies and equity injections to state-owned enterprises.
Continued effort to advance structural reforms is key to achieving higher and more inclusive growth. Upgrading infrastructure and strengthening trade integration will boost growth prospects. To further support growth, Georgia also critically needs to advance on education reforms.