IMF Approves USD 20,7 mln for Georgia

IMF executive board approved USD 20,7 million disbursement for Georgia on September 29 after it completed the fourth review of Georgia’s performance under a three-year program supported by the Poverty Reduction and Growth Facility (PRGF), IMF said on September 29.

The IMF approved the PRGF arrangement in 2004 for an amount equivalent to about USD 145 million.

Takatoshi Kato, Deputy Managing Director, said that Georgia’s economy continues to perform well and hailed the government?s efforts to improve the business environment. He also welcomed ?a bold liberalization of the trade regime.?

He noted that the Georgian authorities? economic program for the rest of 2006 and 2007 aims to bring inflation back into single digits. The IMF said in August that inflation in Georgia, which accelerated to 14,5% by the end of July, was well above planned targets and ?poses a serious risk to macroeconomic stability.?

?In this regard, the government plans to limit demand pressures and money growth, in order to preserve hard-fought gains and avoid the entrenchment of inflationary expectations. Under the 2007 budget, the fiscal deficit will be reduced to just over 2 percent of GDP, and the National Bank of Georgia will limit interventions in the foreign exchange market to smoothing short-term fluctuations, making price stability the governing objective of its policies. Going forward, the government and the central bank should, if necessary, be ready to tighten fiscal and monetary policies beyond the levels now envisaged,? Takatoshi Kato said.

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