IMF Executive Board Completes the Fourth Review of the Extended Arrangement under the Extended Fund Facility for Georgia
On June 19, the Executive Board of the International Monetary Fund (IMF) completed the Fourth Review of Georgia's economic reform program supported by a three-year extended arrangement under the Extended Fund Facility (EFF). The completion of the review will release SDR 30 million (about $41.4 million), bringing total disbursements under the arrangement to SDR 150 million (about $207.2 million).The extended arrangement for SDR 210.4 million (100 percent of quota) was approved by the Executive Board on April 12, 2017 (see Press Release No. 17/130).
Following the Executive Board discussion, Mr. David Lipton, First Deputy Managing Director and Acting Chair, said:
"Georgia's economic performance remains robust with resilient growth, inflation under control, and reduced external vulnerabilities. Although the outlook is favorable, the authorities need to be prepared to address any negative spillovers from external developments and persevere with structural reforms to promote higher and more inclusive growth.
"The fiscal deficit is projected to remain relatively stable in 2019 and over the medium term reflecting the authorities' commitment to fiscal sustainability. Higher spending on public education will be offset with slower growth in infrastructure investment. Regarding education spending, salary increases can only be effective if accompanied by other steps to boost education quality, which requires further work on a comprehensive education reform.
"Monetary policy is rightly focused on price stability. As recent increases in inflation are driven by temporary factors, a neutral monetary policy stance remains appropriate. Tighter lending standards have slowed credit growth as expected, making credit growth more sustainable. The inflation‑targeting framework, combined with exchange rate flexibility, and interventions that help build reserves continue to serve Georgia well.
"Continued implementation of the authorities' reform agenda remains vital to ensure that growth is sustainable and inclusive. The authorities are advancing education reform to reduce skills mismatches in the labor force. A new insolvency law, together with making the pension agency fully operational and reforms to promote a transparent and independent judiciary, would help mobilize investment. The authorities' energy market reforms could improve market competition and energy efficiency.
"Sound policies and further reforms under the IMF program will help preserve the gains made, strengthen economic resilience, and foster stronger and more inclusive growth."