The Georgian government and an IMF delegation agreed at the staff level on guidelines for finishing the first review under the Stand-By Arrangement (SBA).
From October 26 to November 7, 2022, the James John-led IMF team met in Tbilisi to discuss the first assessment of Georgia's economic reform program funded by the IMF SBA. The deal is pending IMF management's approval and the Executive Board's assessment, which is anticipated in December 2022. Georgia will have access to SDR 30 million (about $38 million) upon completion of the review. The initiative is being handled cautiously by the authorities.
John said the Georgian economy had performed strongly in 2022 as adverse spillovers from the war in Ukraine thus far have generally been less impactful than expected.
"Buoyant tourism revenues, a surge in immigration and financial inflows triggered by the war, and a rise in transit trade through Georgia come on the heels of a robust recovery from the pandemic and have lifted growth, and fiscal revenues strengthened the current account balance and the lari and supported accumulation of foreign currency reserves. Credit growth has slowed, but inflation remains elevated, reflecting high commodity prices and strong domestic demand. Quick and appropriate NBG action has helped limit the impact of the war on the financial sector, including by requiring banks to adhere to relevant sanctions," he asserted. He noted that the growth is now projected at 10 percent in 2022, while annual inflation is forecast to close the year at 10½ percent.
"Growth and inflation are expected to slow in 2023, on the back of moderating external inflows, deteriorating global economic and financial conditions, smaller fiscal deficits, and a sufficiently tight monetary policy stance. Over the medium term, growth is projected to converge to its potential rate of about 5 percent, supported by infrastructure investments and structural reforms to increase productivity. Inflation is forecast to fall to the NBG’s target level of 3 percent in 2024," John stated.
