IMF: Georgian Economy Recovery Pace Slowed Down

By Thea Morrison

An International Monetary Fund (IMF) concluded its visit to Georgia and published preliminary findings, which says that Georgian economy has shown resilience and continues to recover from the external shock, although at a slower pace than envisaged.

The delegation of IMF, led by Mercedes Vera-Martin, visited Georgia on November 15-22 to hold technical discussions on recent economic and financial developments and the authorities’ economic plans over the medium term.

At the conclusion of the visit, Vera-Martin released a statement, which says that in the context of subdued global growth, the Georgian economy has shown resilience to external shocks but the economy is developing more slowly that before.

“Real GDP growth is now estimated at 2.7 percent in 2016, with average inflation at 2 percent. For 2017, economic growth is projected to pick up to 4 percent supported by investment, while inflation is projected at 3 percent,” the statement of Vera-Martin reads.

Moreover, the IMF said that its mission discussed with the Georgian authorities their medium-term plans, including the upcoming budget plan and structural reforms. The IMF reports they were assured that Georgian authorities aim to put in place an ambitious infrastructure program to promote trade and tourism while preserving medium-term fiscal sustainability.

The Mission stated Georgian side also plans a comprehensive package of structural reforms, including those to mobilize domestic savings, diversify the economy, and expand the use of the national currency Lari in the economy.

“In addition, exchange rate and financial policies will continue to focus on maintaining a flexible exchange rate and preserving a sound financial system, enhancing the resilience of the economy to external shocks. These reforms are needed to boost medium-term growth, improve living standards, and create jobs,” IMF said in its statement.

International Monetary Fund expressed readiness to continue its engagement with the Georgian side in the coming months and thanked Georgian government, the National Bank of Georgia, development partners and private sector representatives for the “open and constructive discussions” during the visit.