IMF views on Georgia’s economy

“One of the main challenges for Georgia’s economy is the growing foreign debt,” Edward Gardner, International Monetary Fund representative told journalists yesterday. IMF assessed the regional economic trends as of October and according to Gardner, the total foreign debt reaches almost 40% of Georgia's GDP. However he also said that the fact that Georgia borrowed from international financial institutes rather than other sources facilitates the situation. He added that although the rate is not very critical it needs close attention.

Gardner also compared economic growth with the high unemployment rate in Georgia. “The high rate of economic growth isn't reflected in the employment rate,” said Gardner. According to him, despite the high education level of Georgian society, their skills do not meet market demands. Gardner said that Georgia's economic growth is impressive this year--by the end of the year the economic growth indicator will be 6% and the economy will continue to grow though at a lesser rate next year.

Gardner said inflation issues are not urgent compared to the summer months as the rate of inflation has significantly declined. According to the IMF forecasts a 5% inflation rate for 2012. The IMF representative was positive about the business environment in Georgia compared to its neighbors.

However Gardner raised the question of money transfers and their importance for the Georgian economy, especially from Russia and Greece. He said, “In Russia the situation is relatively stable but the volatile situation in Greece could well impact Georgia's economy." IMF recommendations to the Georgian Government include: Amelioration of the competitiveness of Georgian markets, maintaining exchange rate flexibility and more infrastructure projects should be implemented.