IMF Assesses Recent Economic Developments in Georgia
An IMF team, led by John Wakeman-Linn, Head of the IMF’s Middle East and Central Asian Department, which visited Georgia on May 12-19, said Georgia’s “macroeconomic performance remains strong,” the IMF mission in Tbilisi reported.
During the talks with senior governmental officials IMF representatives discussed recent economic developments and assessed progress with the implementation of the economic reforms.
According to the IMF mission, real GDP growth in 2005 was more than 9% and the overall fiscal deficit (cash basis) for 2005 was 2.4% of GDP. As of end-April 2006, twelve-month inflation was about 6%. The mission supported the authorities’ efforts to target an annual inflation rate of between 5 and 6 percent for 2006.
“The mission urged the adoption of a cautious fiscal stance that includes greater accumulation of international reserves. An expansionary fiscal stance could lead to higher interest rates and inflationary pressure. Such a fiscal stance would be especially risky given the recent curtailment of key exports to Russia, which may reduce growth this year and in 2007 and contribute to a shortfall in external financing. These challenges will require carefully crafted macroeconomic policies and effective implementation,” the IMF mission stated.
