Economic recovery to continue at “moderate pace” in Georgia, IMF says

The economic recovery which started in the second half of 2009 is expected to continue in 2010 at a “moderate pace”, IMF Senior Resident Representative/Mission Head Edward Gardner said on Friday. Speaking at a press conference on the outcomes of the recent IMF mission at the National Bank of Georgia, Gardner hailed the Georgian authorities for being “successful in putting a floor on the contraction of economic activity in 2009 and in restoring confidence.”

The 2010 economic programme is built on a 2 percent real GDP growth projection and CPI inflation of 5 percent, according to Gardner. “The containment of public expenditures within the budget envelope approved by Parliament should lead to a reduction of the Government deficit to 7.4 percent of GDP, down from 9.2 percent in 2009,” the IMF delegation head said “By contrast, the external current account deficit is projected to widen to 14 percent of GDP, largely on account of a pick up of import growth. With private capital inflows expected to lag behind, IMF financing will help cover the resulting balance of payments gap,” he added.

Speaking about the fifth review of the Stand-By Arrangement (SBA) programme with Georgia, Gardner said that performance against the programme “continues to be good.” “All quantitative performance criteria established for the end-2009 were met,” the IMF official noted. “Based on the Georgian authorities’ policy performance through 2009 and the policies agreed for 2010, the mission will recommend completion of the fifth review of the SBA. The IMF’s Board of Executive Directors is expected to consider this recommendation in March. Upon completion of the review, an amount of SDR 97.3 million would become available for disbursement,” Gardner stated.

The SBA with Georgia was approved on September 15, 2008 for an amount of SDR 477.1 million (about USD 750 million). On August 6, 2009, the size of the financial package provided under the SBA was increased to SDR 747.1 million (About USD 1.2 billion) and the SBA was extended to June 14, 2011, according to the International Monetary Fund officials.