Koba Gvenetadze - The Discussion with the International Monetary Fund Regarding The Financial Assistance Has Been Started
After presenting the MPC decision, the Governor of the NBG Koba Gvenetadze, the Minister of Finance of Georgia Ivane Matchavariani and the Resident Representative of the International Monetary Fund in Georgia Selim Cakir made a joint statement.
According to the NBG Governor, the discussion with the IMF regarding the financial assistance has been started.
As Koba Gvenetadze pointed out, the decision, made last year, on the extension of the program supported by an IMF Extended Fund Facility (EFF) was a prudent action. He also mentioned that IMF assistance will help Georgia attract more resources from other donor organizations.
"As you may know, Georgia extended 3-year program supported by an IMF Extended Fund Facility (EFF) in December of the last year, and it will be completed in April 2021.
Having an active IMF program is also a good umbrella to cope with unexpected external or domestic shocks. Now the Georgian authorities are taking advantage of this. We have a very fluid communication and open dialogue, and have started discussions to augment access to financial resources under the IMF program. Having the IMF assistance provides a necessary platform to the other international as well as bilateral donors to allocate quick financial assistance to Georgia. A sizable package under this assistance will enable the authorities to cope with the economic challenges posed by Coronavirus pandemic and minimize the impact of the external shock in the domestic economy. All these, including the mobilization of material financial resources, will have a positive impact on the medium-term inflation dynamics", said the NBG Governor.
According to Koba Gvenetadze, discussions with donors have been started and the size of the assistance and other details will be announced later.
He also mentioned that, the NBG expresses its readiness to use all the instruments, if necessary, including selling foreign currency reserves, to support the foreign exchange market.
"The government and the National Bank of Georgia have all instruments to respond to the current challenges," the Minister of Finance, Ivane Matchavariani said at the briefing held in the NBG today.
According to him, the world economy is facing quite significant global slowdown, which will affect Georgia's economy as well.
"The tourism and related sectors will take the biggest hit worldwide. In this respect, Georgia is relatively vulnerable, as these sectors represent the driving force of our economy. In addition, the global oil price collapse is a very negative factor for us. This has created additional challenges for the economy of our country. However, the Government and the NBG have all instruments in response to these challenges and we are not alone in this process, " said the Minister of Finance.
As Ivane Matchavariani noted, the intensive communications with partners, international and bilateral donor organizations were being held during these days, and they together will develop the complex support measures for the economy.
"The Georgian side has a strong track record of the sound macroeconomic policy implementation, which has contributed significantly to the creation of foreign reserves and fiscal reserves. Using them may become the part of a political response, in dealing with the economic effect and impact of coronavirus on the Georgian economy. The IMF continues a highly productive, open and constructive dialogue with the Georgian authorities. We work together to assess the effect and impact of the shock, to develop timely and decisive steps to counteract the economic impact of the pandemic. The International Monetary Fund is ready to assist Georgia in these difficult and challenging circumstances", said Selim Cakir, the IMF Resident Representative for Georgia.