IMF Delays Approval of Second Review for Georgia’s Stand-By Arrangement

The International Monetary Fund (IMF) has postponed the submission and approval by its Board of Directors of the second review of Georgia’s Stand-By Arrangement. Fitch Ratings, the world’s leading credit rating agency, referred to the decision in its latest report on 14 July. The report stated that the delay in board approval was “partly due to disagreement on a change to NBG’s management structure”.

In April 2022, the Georgian government and the IMF reached an agreement on the three-year Stand-by Arrangement, which included a loan of $289 million. The first tranche, amounting to $40 million, has already been completed. Negotiations for the allocation of the second tranche were held in May 2023, during which the Georgian authorities and the IMF mission agreed to complete the second review at the technical level.

As for the change in NBG’s management structure, the changes went through after Parliament expedited the adoption of draft amendments to the Organic Law on the National Bank of Georgia on February 9. However, President Salome Zurabishvili vetoed the amendments on February 23, citing concerns that they might undermine the Bank’s independence. On June 20, the Parliament overrode the President’s veto and approved the amendments. Consequently, Natia Turnava was elected the First Vice-President of the National Bank of Georgia (NBG) by the NBG’s Board of Directors on June 22.

The National Bank of Georgia had expressed its opposition to the amendments, stressing that, within the framework of the program agreed with the IMF, any substantial changes in the Bank’s management should be made after prior consultation with the organization’s representatives. “Otherwise, a three-year program supported by the International Monetary Fund in the country may be hampered.”

According to the amendments, the position of the First Vice President is added to the three existing Vice Presidents of the Bank, who deputizes for President in the event of the latter’s absence. Previously, one of the three Vice-Presidents had performed the duties of the President. In addition, the number of executive members in the board has been increased from four to five.

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