Summary of International Monetary Fund Briefing
01 March, 2017
The head of the International Monetary Fund (IMF) mission- Mercedes Vera Martin, first Vice Prime Minister, Minister of Finance of Georgia – Dimitry Kumsishvili and the Governor of the National Bank of Georgia – Koba Gvenetadze held a joint meeting announcing the 3-year program in Georgia of 285 million dollar amount. As the head of IMF mission stated, the IMF team reached a staff-level agreement to commence the 3 year program, which will provide $ 285 million within the framework of "Extended Fund Facility (EFF)." IMF will consider the agreement in April.
As the Governor of NBG stated, the program will support and strengthen the reserves of NBG. Koba Gvenetadze recognizes the positive signal the program will send to the investors:
"I would like to welcome the head of IMF mission in Georgia, Mrs. Mercedes Vera Martin and the Minister of Finance, Mr. Dimitry Kumsishvili. I am eager to announce the agreement on the 3 year program today. The program is significant, it was developed by the Georgian government and is being implemented with the support of IMF. The “Extended Fund Facility” program provides assistance to countries, facing medium-term balance of payments problems because of structural weaknesses. Such countries receive aid while facing BoP problems. . Within the framework of the three year arrangement, NBG will receive an amount of SDR 210.4 million (about $285.3 million or 100 percent of quota). The 435 percent of quota is the maximum amount a country can receive, however under the terms of agreement, Georgia will receive 100 percent. Programs supported by IMF serve the sole purpose to sharpen and increase the reserves of national bank, since strong reserves increase the country’s sustainable positioning towards the shocks.
Moreover, there’s an increase in investments and macroeconomic stability. The presence of the IMF mission in Georgia displays and sends the positive signals to potential (both foreign and local) investors, , that macroeconomic policy implemented in the country is decent and positive, proposing additional motivation for the foreign investors to invest.
The NBG is involved in wide range of topics. Implementation of the topics is planned within the frameworks of the program. The aim is further development of national bank’s monetary policy transmission mechanisms to a new level. The Ministry of Finance of Georgia and the National Bank of Georgia will formulate a memorandum regarding the forecast of market liquidity, giving us a better opportunity to forecast the market liquidity in the future, decreasing the risks of the market liquidity in the system.
We pay attention to development of securities and capital market. To develop secondary market for the securities, we have worked out a strategy for the development of capital market and we are implementing the strategy step-by-step. While implementing the program, publicity of the implementation of the monetary policy will increase and so will the credibility of NBG as well.
For the financial sector, we have outlined several measures to support the implementation of better standards and limit the growth of excessive debt. Furthermore, one of the measures is oriented to increase the minimum capital for banks; level of which currently in Georgia is the lowest. This indicates financially strong institutions, which facilitates the opportunity to engage in banking within the country. In due course, we will inform you with further details regarding the measures, which are encompassed in the program. Consultations on the above mentioned topics, have already commenced with the representatives of the financial sector and I hope that the board of directors of IMF will approve the program. I would like to thank the Minister of Finance of Georgia and the employers of the ministry for their intense work done to achieve the agreement, also I would like to thank Mrs. Mercedes and the staff of IMF, that have been developing the program. I have been participating in developing similar projects and I fully acknowledge the intense work and energy required from IMF team" - stated the Governor of NBG, Koba Gvenetadze.
Other News