IMF approves further payment to Georgia

The Government of Georgia has announced that on 23 March 2009 the Executive Board of the International Monetary Fund (IMF) completed its second review of Georgia's performance under the 18-month Stand-By Arrangement. The completion of the review allowed for the disbursement of USD 186.6 million earmarked for the National Bank of Georgia (NBG), which will help stabilize its foreign currency reserves.

According to the IMF, “Economic and financial conditions in Georgia have become more challenging since the last programme review, as Georgia feels the effects of the global crisis. However, the authorities have been mitigating the impact of the economic slowdown through a donor-financed fiscal stimulus and a reorientation of expenditures. Foreign exchange auctions have been introduced, an important step toward exchange rate flexibility and the preservation of external stability. This will also help the authorities to protect, and ultimately to rebuild, international reserves.

“Georgia’s economic policies are being crafted not only in response to the immediate crisis, but also with a view to supporting sustained economic growth over the medium term. The authorities are encouraged to build on their strong track record of reforms and their commitment to fiscal prudence and low inflation,” the report reads.

The IMF’s Stand-By Arrangement of about US$750 million was approved in September 2008 and is designed to support the Georgian authorities’ macroeconomic policies, rebuild gross international reserves and bolster investor confidence. The NBG’s foreign currency reserves grew by 9% to USD 1,467.8 million in 2008 and have further increased by 1.4% to USD 1,488 million in the year to date.

“Regardless of the global recession, the economy of Georgia has managed to meet all the performance benchmarks and as a result has received another IMF disbursement. All this implies that the country has relatively strong macroeconomic fundamentals, as illustrated by its monetary and fiscal performance, which target economic stability and recovery,” said Nika Gilauri, Prime Minister of Georgia