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IMF visits Georgia to discuss new programme

The International Monetary Fund starts a two-week mission to Georgia on Wednesday to discuss the possibility of a new IMF-backed programme that could underpin economic reform and encourage investors.

The former Soviet republic, through which pipelines carry oil and gas from the Caspian Sea to Europe, has been hit by a decline in exports, a plunge in the currencies of its main trade partners and a strengthening of the U.S. dollar. Growth slowed to 2.2 percent last year from 2.8 percent in 2015.

“The IMF mission will discuss the government’s reform agenda and Georgia’s macroeconomic prospects and challenges,” Francois Painchaud, the IMF representative in Georgia, told Reuters.

“In this context, the authorities and the mission will assess prospects for an IMF-supported programme.”

Georgian authorities requested the mission, central bank governor Koba Gvenetadze told Reuters.

“Discussions will be about initiation of a new programme, which the fund may support in Georgia,” he said, declining to elaborate on whether Tbilisi was in urgent need of funding.

“It might be a programme under which the country can borrow or a precautionary programme under which the country may not borrow at all,” Gvenetadze said. “But once you are in the programme, reviews are going on and if there is a need for money, it can be withdrawn.”

An IMF programme was “usually a very good signal for foreign and domestic investors that the country’s macroeconomic policies are sound,” he added.

The IMF approved a previous three-year stand-by arrangement worth about $136 million in 2014 but only 80 percent was disbursed, and the last two reviews were not completed.

Gvenetadze said this was due to some disagreements over fiscal sustainability issues and banking supervision.

“If we are able to start a new programme, it will be a very good sign from our side that we want to keep macroeconomic stability in the country,” he said. (Editing by Mark Trevelyan)

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