On 5 November, the Georgian government agreed to a deal with the International Monetary Fund (IMF) to receive a sum of $41.6 million under the fifth review of the Extended Fund Facility (EFF) programme. After finalising the fifth review the total amount of IMF funding to Georgia under the Extended Fund Facility (EFF) programme will be $0.25 billion.

The Georgian Finance Minister Ivane Matchavariani said that since the start of the programme three years ago, the main goals were reached. “These goals were: 1. Current spending control - Current spending decreased from 25.9 percent in 2016 to 23.3 percent and continues to decline. 2. Accelerating Capital Expenditures - We were able to significantly accelerate capital expenditures. All of these capital expenditures are fully incorporated into our fiscal framework and are fully funded by financial institutions; 3. Deficit Normalization - Our fiscal deficit is steadily within 2.5 percent of GDP. This… benchmark indicates that the budget sector is [a] guarantor of a stable macroeconomic environment in the country. The macroeconomic and fiscal policies supported by the Fund have enabled our economy to cope with the most difficult economic situation in the region. While the region is growing at a rate of less than 1%, we have experienced an average of 5% economic growth throughout this period. The International Monetary Fund (IMF) predicts that Georgia will continue to be the leader in the region. Since 2017, all three rating agencies (Moody's, Fitch and S&P Global) have improved the country's credit rating and we are two steps apart from the investment rating now,” he said.

“The [program’s] one-year extension… is important for our country in terms of increasing the credibility of economic policy in the environment of external shocks, especially given the unstable situation in the region and the growing impact of so-called ‘trade wars’ on the global economy,” said the president of the National Bank of Georgia Koba Gvenetadze.

The chief of the mission to Georgia Mercedes Vera Martin briefed the public on the current developments in Georgian finance policy. “Performance under the IMF-supported program was satisfactory in the first half of 2019, with most commitments for the completion of the Fifth Review met. Growth has proven resilient in the face of external shocks. In the first half of 2019, growth reached 4.7 percent (y/y), with the current account deficit falling to a historic low (4.6 percent of GDP). Corporate credit and lari-denominated mortgages sustained credit growth. Lari depreciation has, however, increased inflation, to 6.9 percent y/y in October,” she said.

“We welcome the authorities’ continued commitment to the inflation targeting framework. The National Bank of Georgia (NBG) increased its policy rate by a cumulative 200 basis points since September 2019, and appropriately maintains a tightening bias until inflation expectations are firmly anchored around its inflation target. Fiscal policy has appropriately balanced infrastructure investment and social spending with fiscal discipline. Smoother execution of the budget has accelerated public investment. Tax collection has been exceeding projections, partly due to improved tax administration. The banking sector remains well capitalized, liquid, and profitable. We welcome the authorities’ efforts to strengthen financial stability, including by enhancing supervision for nonbanks,” she continued.