TBILISI - An International Monetary Fund (IMF) mission and the government of Georgia have reached agreement on a new cooperation program to run for two years, mission chief and head of the IMF's offices in Georgia Edward Gardner said.
The program involves providing Georgia with 250 million SDR (about $387 million) in the form of a Stand-by Arrangement and credit mechanism Stand-by Credit Facility in equal parts, Gardner said.
The government can use the monies when it thinks it necessary for the implementation of economic an financial programs in the period 2012-2013, Gardner said.
The mission-level agreement will be submitted for approval to the IMF’s Executive Board on April 11, he said.
This program is logically tied to the previous 33-month IMF program for the support of Georgia’s economy, which expired on June 14 last year, Gardner said. The goals of the program were generally achieved, he said. In particular, there was economic stabilization, a resumption of economic growth, fiscal adjustments were made, and private capital was attracted, he said.
Last year proved better than expected for Georgia, Gardner said. Real GDP growth amounted to 7%, inflation was low at 2%, state debt did not exceed 34% of GDP, and the country’s international reserves were over $2.8 billion.
Despite these achievements, there are challenges that are mainly driven by an unstable economic environment outside Georgia, Gardner said. Georgia’s prospects for this year, nevertheless, are encouraging, as GDP growth is projected at 6% and inflation is expected to be low.
In the event the external economic and financial situation deteriorates, Georgia could use the funds provided in the new program, Gardner said. Those monies could be put to work increasing fiscal reserves, improving the country’s foreign trade balance, and also could play a role as a catalyst for attracting financial resources from varying sources to the country, he said.
The middle-term task for Georgia remains the reduction of its balance of payments deficit – which amounted to 11.5% of GDP last year – and lowering the unemployment rate.
On September 15, 2008, the IMF opened for Georgia an 18-month reserve credit line in the context of a stand-by program weighing in at 477.1 million SDR ($750 million). The funds were mainly put into filling out the National Bank’s forex reserves. In August of 2009, the IMF board of directors expanded the credit line by 270 million SDR ($428 million) and extended its term to June 14 of last year. The additional funds were for supporting Georgia’s budget and balance of payments.
Georgia used 577.1 million of the SDR (roughly $893 million at the current exchange rate).
As of March 1 this year, Georgia owed the IMF $994.2 million, including $401.3 million worth of state debt and $592.9 million owed by the National Bank.
