The Executive Board of the International Monetary Fund approved a disbursement of USD 200 million for budget support to “help Georgia meet urgent balance of payments and fiscal needs” prompted by the coronavirus pandemic.
The Board also concluded reviewing the sixth review of Georgia’s economic reform program, paving the way for increasing Fund’s total assets available for Georgia to USD 448 million.
The IMF Executive Board approved US$200 million financing to #Georgia to address the effects of the #COVID19 pandemic. The Board also completed the 6th review for Georgia's economic program. https://t.co/uGzINNNbmO pic.twitter.com/IQ8i2iRFS1
— IMF (@IMFNews) May 1, 2020
The major international financial organization pledged to support Georgia financially in order to address increased spending in healthcare and social safety nets.
IMF Board also eased requirements on observing fiscal performance criteria to allow the Georgian government maintain augmented budget deficit due to the circumstances.
“The pandemic is expected to have a significant impact on Georgia’s economy, interrupting the positive economic trajectory of past years,” IMF stated, emphasizing that “weakened” macroeconomic outlook and fiscal situation have engendered “urgent” external and fiscal financing needs for the country.
Tao Zang, IMF Deputy Managing Director and Chair, commented, that “a drop in external demand and tourism has widened [Georgia’s] current account deficit, led to a depreciation of the exchange rate, and a substantial decline in economic activity.” The Georgian government, Zang stated, “acted rapidly by introducing sweeping containment measures and targeted support to households and to most affected sectors.”
He stressed the need for “vigilance” to “safeguard debt sustainability, particularly against fiscal risks arising from state-owned enterprises.”
Deputy Director noted that Georgian Central Bank – which “appropriately maintained a moderately tight monetary policy” – should base its decisions on “close monitoring of inflationary expectations.”
As for the fiscal policy, Tao Zang said that adopting the indexation rule for public pensions would contribute to sustaining pensioners’ income. He further advised the Government to complete the “banking resolution framework” and implement “insolvency framework” in due course to support economic recovery.
Grateful to @KGeorgieva, IMF Executive Board & MCD Mission for VI Review and augmentation of the current program with $200 mil. It is a strong message for int'l donor community. Together we will combat the invisible enemy! pic.twitter.com/mnmSsVvoVb
— Giorgi Gakharia (@GakhariaGiorgi) May 2, 2020
Expressing his gratitude to IMF leadership, Georgian Prime Minister Giorgi Gakharia said “it is a strong message to international donor community.”
Also read:
Int’l Organizations Pledge Funds to Help Georgia Tackle Coronavirus Fallout
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