IMF Approves USD 385.6m Precautionary Program for Georgia

The International Monetary Fund (IMF) approved on April 11 a 24-month USD 385.6 million precautionary loan program for Georgia, evenly divided between Standby Arrangement (SBA) and Standby Credit Facility (SCF) arrangements.

IMF said in a statement on April 12, that the Georgian authorities “intend to treat the arrangements as precautionary”, meaning that Georgia will not draw upon approved resources, but retain the option to do so in the event of a significant worsening of external economic and financial conditions.

Georgia’s previous program with IMF, running for 33 months under the Stand-By Arrangement, expired last June; total of USD 893 million was disbursed under that previous program.

Loan under the Standby Credit Facility arrangement was added to the new program for Georgia, which is used by IMF for low-income countries, which have reached broadly sustainable macroeconomic positions, but may experience episodic, short-term financing needs.
 
IMF said in the statement, that Georgia’s economic performance in 2011 was stronger than originally envisaged, with growth reaching 7%; inflation converging to the low single digits; government debt falling to 34% of GDP and international reserves increasing to USD 2.8 billion.

“Despite these achievements, the unsettled external environment has increased external risks. At this juncture, the economic outlook for 2012 remains relatively favorable, with growth projected to slow to 6 percent and inflation remaining subdued,” IMF said.

It said that medium-term challenges remain, notably in terms of lowering the current account deficit, which stood at 11.8% of GDP in 2011 and reducing unemployment, which according to official data stood at 16.3% in 2010.